Health centre investor Primary Heath Properties says that Ireland is the focus for its expansion plans.
The group already operates 21 health centres across Ireland, having most recently acquired an enhanced community care facility in Ballincollig, Co Cork in a €29.6 million deal at the end of last year.
Its Irish portfolio, which is valued at €282 million at the end of 2023, up €22 million on the year, accounts for 9 per cent of the portfolio of the UK-based and London-listed real estate investment trust (Reit), which specialises in building and leasing out health centres.
The group noted that rents in the UK were falling in real terms which has made investing in GP facilities there “less appealing”.
“Construction costs have risen significantly over the past decade, surpassing the growth in primary care rents, driven by material and labour costs and increasing sustainability requirements, all of which have been compounded by Brexit, the Covid-19 pandemic and the fiscal policy outlook,” said chairman Stephen Owen.
“Future developments will now need a significant shift of between 20 per cent to 30 per cent in rental values to make them economically viable.”
As a result, Primary Health said it had paused future UK developments pending discussions with the National Health Service.
“In the current environment, Ireland continues to be the group’s preferred area of future investment activity and we have ambitions to continue to grow the portfolio there to around 15 per cent of the total,” said Mr Owen.
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He said the company’s acquisition last year of Irish property management group Axis Technical Services gives the company “a permanent presence in Ireland, an important strategic move as we seek out new investment, development and asset management opportunities and try to strengthen our relationship with the HSE as the leading provider of modern primary care infrastructure in the country”.
Axis manages 30 properties, including all of Primary Health’s Irish portfolio. It also provides fit-out, property and facilities management services to the Health Service Executive and other businesses located across Ireland
The company said it had also signed a long-term development pipeline agreement providing access to a strong pipeline of future primary care projects in Ireland.
Profit more than halved at the group to £27.3 million (€31.9 million) from £56.3 million in 2022, despite a 5.5 per cent rise in net rental income. The company blamed a £17 million downward adjustment in the value of its portfolio to £2.78 billion in large part.
It reported 99.3 per cent occupancy, down fractionally, with 89 per cent of its rent roll being funded by public money.
The group’s loan-to-value ratio edged up to 47 per cent from 45.1 per cent a year earlier.
“With a market-leading portfolio across the UK, and increasingly in Ireland, we are well positioned for long-term success,” said Harry Hyman, the group’s founder and chief executive who is retiring after 30 years in the role. He is expected to become non-executive chairman at the group’s forthcoming annual general meeting.
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