Primary Health Properties (PHP), an investor in primary health facilities, increased its net rental income by 7.1% to £71.3m in 2017, driven by acquisitions and organic rental growth. This led to an increase in EPRA earnings of 15.7% to £31.0m and EPRA earnings per share of 8.3% to 5.2p. The group's portfolio was valued at the year end at just over £1.36bn, which generated a revaluation surplus of £64.5m, an increase of 5% after allowing for costs associated with acquisitions and capital expenditure. The revaluation surplus was due mainly to the portfolio's valuation average net initial yield which tightened by 26bps in the year to 4.91%, together with strong asset management activity. The EPRA earnings and revaluation surplus resulted in an IFRS profit of £91.9m, an increase of 110.3% and equivalent to IFRS earnings per share of 15.3p. Asset management activity, including annualised rental growth of 1.1% achieved on rent reviews, and further asset management projects helped to add £0.6m to the annualised rent roll. The company said achieving rental growth continues to be challenging, due primarily to the lack of new development schemes to act as benchmarks, but it is beginning to see positive signs of upwards pressure on rents. The company distributed a total of 5.25p per share in the year to 31 December 2017, an increase of 2.4% over the 2016 total of 5.125p per share and representing the company's 21st successive year of dividend growth. The total value of dividends distributed in the year increased by 17.2% to £31.4m. Harry Hyman, managing director of PHP, said: "Increasing our income and dividends is key to our strategy as a modern healthcare REIT. Importantly, we have continued our progressive dividend policy into 2018 by increasing the first quarterly payment, which on an annualised basis reflects a return of 5.4p per share. "PHP is providing capital for the modernisation of the primary healthcare estate both in the UK and Ireland. Our well-financed and disciplined approach to investment and active asset management is delivering for shareholders."
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