Primary Health Properties Plc · LSE:PHP
Primary Health Properties — H1 2016 Earnings Presentation
36 slides from Primary Health Properties's earnings presentation, Jun 30, 2016
Slide 1: Interim Results – six months ended 30 June 2016
Interim Results – six months ended 30 June 2016 Investing in the future of integrated healthcare Primary Health Properties PLC (PHP.L) A dedicated healthcare REIT www.phpgroup.co.uk
Slide 2: Agenda
2016 Interim Results Presentation AGENDA - Introduction - Financial results - Successful equity issue - Strong sector fundamentals - Positive outlook - Appendices | 2
Slide 3: Introduction
2016 Interim Results Presentation INTRODUCTION | 3
Slide 4: Overview of Primary Health Properties PLC (“PHP”)
2016 Interim Results Presentation Overview of Primary Health Properties PLC (“PHP”) UK Real Estate Investment Trust (“REIT”) Leading investor in flexible, modern primary healthcare accommodation 292 properties located across the UK; 91% of income from UK government Tenants include GPs, NHS &
Slide 5: Highlights
2016 Interim Results Presentation Highlights Further earnings and dividend growth Successful £150m equity issue EPRA earnings £12.6m (+27.3%) Issue at 100p per share oversubscribed Total dividend paid 2.5625 p (+2.5%) 14% premium to Dec ‘15 EPRA NAV Dividend fully covered £54m invested i
Slide 6: Financial Results
2016 Interim Results Presentation FINANCIAL RESULTS | 6
Slide 7: Key performance indicators
2016 Interim Results Presentation Key performance indicators Six months ended Six months ended Performance 30th June 2016 30th June 2015 Change Net rental income (£’m) 32.2 30.6 5.2% EPRA earnings (£’m) 12.6 9.9 27.3% EPRA earnings per share (pence) 2.4 2.2 9.1% Position 30 June 2016 31 December 201
Slide 8: Efficient management and funding
2016 Interim Results Presentation Efficient management and funding EPRA cost ratio 12.25% Efficient cost base as portfolio grows 12.00% 12.00% EPRA cost ratio maintained at 11.5% (31 Dec 2015: 11.5%) 11.75% Lowest cost ratio in UK listed 11.50% 11.50% 11.50% property sector 11.25% 2014 (year)
Slide 9: Continued growth in shareholder returns
2016 Interim Results Presentation Continued growth in shareholder returns Income return 20th successive year of dividend growth 2.5625p per share paid in H1 2016, a 2.5% increase over total paid in H1 2015 (2.5p1) H1 2016 dividend fully covered (Year ended 31 Dec 15: 98%) Third quarterly d
Slide 10: Successful Equity Issue
2016 Interim Results Presentation SUCCESSFUL EQUITY ISSUE | 10
Slide 11: Successful equity issue
2016 Interim Results Presentation Successful equity issue Oversubscribed issue; gross proceeds of £150 million Issued at 100 pence per share – 14% premium to 31 Dec 15 EPRA NAV Tiered structure to allow existing shareholders demand to be satisfied Introduces new institutional investors to sh
Slide 12: Use of Proceeds – continued investment
2016 Interim Results Presentation Use of Proceeds – continued investment 1 £66.5 million invested in new acquisitions and funding development commitments in six months to 30 June 2016: Property Cost Investment Completed acquisitions Investment property acquisitions £54.0m acquisitions and add £3.0
Slide 13: Secure, long term property portfolio
2016 Interim Results Presentation Secure, long term property portfolio 292 healthcare centres – 289 completed and owned, 3 under development Portfolio value (incl. commitments): £1.2bn – net initial yield 5.21% Average lot size: £4.1m; average age of buildings – 11 years Annual contracted re
Slide 14: Investment acquisition
2016 Interim Results Presentation Investment acquisition Bingham Medical Centre, Bingham Tenants: GP Practice Date acquired: April 2016 WAULT: 18.7 years Date built: 2013 Size: 1,300m² Patient list size: 11,400 | 14
Slide 15: Development funding
2016 Interim Results Presentation Development funding Two Rivers Medical Centre, Ipswich Tenants: 16 GP practice and pharmacy Date completed: July 2016 WAULT: 25 years Size: 1,990m² (NIA) Acquisition Cost: £6.6m Patient list size: 25,000 | 15
Slide 16: Asset Management Project
2016 Interim Results Presentation Asset Management Project South Coast of England – Completion due February 2017 An 85 sqm surgery extension of a purpose built medical centre for an 8 GP practice serving 15,000 patients and 20 sqm pharmacy extension. Enables existing practices to merge operations on
Slide 17: Use of Proceeds – debt management
2016 Interim Results Presentation Use of Proceeds – debt management Debt facility management Balance of proceeds used to pay down revolving credit facilities Group Loan to Value initially reduced LTV to 49% Group LTV at 30 June stood at 53% (31 Dec 15: 62.7%) Interest rate management Int
Slide 18: Secure Long Term Funding
2016 Interim Results Presentation Secure Long Term Funding 30 June 2016 31 December 2015 £m £m Total debt facilities Secured 592.3 645.2 Unsecured 157.5 157.5 749.8 802.7 Average maturity of debt facilities 5.6 years 5.8 years Net debt Drawn debt 634.8 692.7 Cash on deposit (6.0) (2.9) 628.8 689.8 H
Slide 19: Strong Sector Fundamentals
2016 Interim Results Presentation STRONG SECTOR FUNDAMENTALS | 19
Slide 20: Demand for healthcare services increasing
2016 Interim Results Presentation Demand for healthcare services increasing Ageing population, declining health 12.4 million currently aged over 65, projected to increase by 10% over next 15 years Increasing incidence of chronic disease, projected to affect 2.9 million by 2018 Age 105 98 91 20
Slide 21: Positive long-term demand drivers in UK
2016 Interim Results Presentation Positive long-term demand drivers in UK Government commitment Demographic drivers of demand Government targets 24/7 access to GP services by UK population to grow by 12% to 71 million by 2035 2020 11.4 million currently aged over 65 Over 1.3 million GP visit
Slide 22: Opportunity in Republic of Ireland
2016 Interim Results Presentation Opportunity in Republic of Ireland Government support Demographic drivers of demand DoHI aim to implement “single-tier health service” Population of 4.6 million, projected to rise to 5.2 million by 20311 Health Service Executive, executive agency of DoHI, majo
Slide 23: Investment acquisition
2016 Interim Results Presentation Investment acquisition Primary Care Centre, Republic of Ireland ˃ Tenants: HSE (75% of income), GP’s (3%), Pharmacy (22%) Planned construction completion: August 2016 Date to be acquired: August 2016 Size: 2,430 m² Acquisition Cost: €6.6m | 23
Slide 24: Positive Outlook
2016 Interim Results Presentation POSITIVE OUTLOOK | 24
Slide 25: Positive yield gap
2016 Interim Results Presentation Positive yield gap Market conditions provide attractive yield spread Illustrative yield gap on property investment 1. Net margin over funding cost – UK Acquisitions 1 Positive yield gap on acquisitions in UK and ROI Earnings 6.000% growth from Asset management c
Slide 26: Positive outlook
2016 Interim Results Presentation Positive outlook Development opportunities emerging in UK Low risk, long term, non- cyclical market New pool of opportunity in Republic of Ireland, priced very attractively Majority of rents in both jurisdictions funded by government for long lease terms Pos
Slide 27: Appendices
2016 Interim Results Presentation APPENDICES | 27
Slide 28: Income Statement
2016 Interim Results Presentation Income Statement 30 June 2016 30 June 2015 £m £m Net rental income 32.2 30.6 Administrative expenses (3.5) (3.4) Operating profit before revaluation gain and financing 28.7 27.2 Net financing costs (16.1) (17.3) EPRA earnings 12.6 9.9 Net result on property portfoli
Slide 29: Balance Sheet
2016 Interim Results Presentation Balance Sheet 30 June 2016 31 December 2015 EPRA Net Assets £539.9m £391.6m EPRA net asset value per share 90.4p 87.7p Property portfolio1 £1,187.0m £1,100.6m Net Debt £628.8m £689.8m LTV 53.0% 62.7% Future minimum lease payments receivable2 £917m £899m EPRA NAV per
Slide 30: Portfolio analysis by rent
2016 Interim Results Presentation Portfolio analysis by rent 289 completed assets spread across the UK 91% of rental income directly or indirectly from UK Government Wide geographical spread Strong rental covenant Gov’t Body Other London 1% Wales 1% 5% Pharmacy 10% South West 8% 5% Scotland 12%
Slide 31: Long leases with growth potential
2016 Interim Results Presentation Long leases with growth potential(1) 40% of rent with more than 15 yrs remaining Analysis of leases unexpired by rent roll 82 reviews completed in H1 2016 generated additional rent of £0.1m p.a. More than 20 years Less than 5 Average increase 1.0% p.a. (2015:
Slide 32: Spread of Funding Sources
2016 Interim Results Presentation Spread of Funding Sources Secured Unsecured facilities(1) Facilities Provider RBS/ HSBC Barclays/ Aviva Aviva Secured Aviva Aviva Retail Convertible Santander AIB Bond Bond Bond Tenor Bullet Bullet Bullet Bullet Bullet Bullet Amortising Amortising Bullet Bullet Expi
Slide 33: Borrowing Facilities
2016 Interim Results Presentation Borrowing Facilities Total facilities available to PHP: £749.8m(1) Available headroom: £109.8m (after development commitments) 26% of net debt on an unsecured basis – Retail Bond and Convertible Bond PHP Debt Profile 100.0% 100.0% 90.0% 90.0% Unsecured 30.3% 8
Slide 34: Advisers and fee base
2016 Interim Results Presentation Advisers and fee base Enhances service quality and information management Reduced Group’s overhead costs Average fee rate for services of advisers reduced to 50 bps (2014: 55 bps) Including overheads, EPRA cost ratio reduced to 11.5% (2014: 12.0%) Scope fo
Slide 35: Contact details
2016 Interim Results Presentation Contact details Harry Hyman Phil Holland Managing Director Finance Director harry.hyman@nexusgroup.co.uk phil.holland@nexusgroup.co.uk | 35
Slide 36: Disclaimer
Disclaimer 2016 Interim Results Presentation IMPORTANT NOTICE This presentation and the information contained within it is strictly private and confidential and may not be distributed in any way to any other person without the consent of Primary Health Properties Plc (“PHP”). The information contain
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