Primary Health Properties Plc · LSE:PHP
Primary Health Properties — FY2024 Earnings Presentation
42 slides from Primary Health Properties's earnings presentation, Feb 28, 2025
Slide 1: Annual Results Presentation FY24
Primary Health Properties PLC Annual Results Presentation FY24 28th February 2025
Slide 2: Agenda and presentation team
Agenda and presentation team Mark Davies CEO 1. Introduction and overview 2. Financial results 3. Rental growth Richard Howell CFO 4. PHP in Ireland 5. Asset management and development 6. Summary and outlook 7. Q&A James Buckley Axis PHP Managing Director Primary Health Properties PLC Annual Results
Slide 3: Preliminary approach to Assura plc for a possible all-share combination
Preliminary approach to Assura plc for a possible all-share combination The Board of PHP believes that an all-share combination with Assura would deliver significant value for both sets of shareholders, including: • Creating a portfolio of significantly enhanced scale; • Reducing the cost of capital
Slide 4: PHP investment case and overview
PHP investment case and overview Demographic UK population is growing and ageing, demand Dividend 29-year track record of dividend growth tailwind for space is leading to high occupancy currently yielding at c.7.7% Significant shift to primary care which will NHS policy Rental growth Rental growth o
Slide 5: CEO: FY24 highlights
CEO: FY24 highlights • Solid set of results slightly ahead of market consensus • Another year of profit and dividend growth • Positive rental growth • Continued disciplined approach to investment, efficiency and hands on management focused on delivering the strategy set out at the Capital Markets Da
Slide 6: Acquisition in Ireland
Acquisition in Ireland Laya Health and Wellbeing Clinic • Accretive earnings yield 7.1%, fully occupied and let to Laya Healthcare Limited • State-of-the-art health and wellbeing clinic with urgent care and diagnostics facilities • Great relationship with the occupier who has invested €5.5 million i
Slide 7: What the new 10-year plan could mean for PHP
What the new 10-year plan could mean for PHP Fundamental changes on NHS policy anticipated with shift towards primary care The UK government should consider the use of private 1. Hospitals to primary and community care capital to fix the NHS’s 2. Treatment to prevention crumbling buildings and 3. An
Slide 8: Financial results
Financial results Primary Health Properties PLC Annual Results Presentation FY 2024 8
Slide 9: Financial and operational highlights
Financial and operational highlights Performance 31 December 2024 31 December 2023 Change Net rental income (£m) 153.6 149.3 +2.9% Adjusted earnings (£m) 92.9 90.7 +2.4% Adjusted earnings per share (pence) 7.0p 6.8p +2.9% Dividends paid (£m) 92.1 89.5 +2.9% Dividend cover 101% 101% – Dividend per sh
Slide 10: Property valuation stabilising in the second half of the financial year
Property valuation stabilising in the second half of the financial year Adjusted NTA per share (pence) 115.0 Every 10bps change in 113.0 3.5p (3.45p) NIY impacts the valuation by c.£52m or 3.9p per 111.0 share and LTV by 109.0 108.0 (3.0p) 3.5p (3.45p) c.100bps 107.0 p 105.0 0.1p (0.2p) 105.0 105.0
Slide 11: Delivering financial management
Delivering financial management • £271m undrawn headroom after capital commitments available to deal with future refinancings • £200m nominal fixed at 3.0% for two years until January 2027 increasing proportion of Group debt fixed or hedged to 100% • £170m term and RCF facility with Barclays used to
Slide 12: Debt summary
Debt summary Broad range of lending partners • Total debt facilities of £1.63bn (91% secured / 9% unsecured) Euro private placements £202m/€244m (13%) • Net debt drawn £1.32bn Convertible bond Aviva • £271m undrawn headroom after capital commitments and post period end transactions £150m (9%) £526m
Slide 13: Growth drivers – rental growth
Growth drivers – rental growth Primary Health Properties PLC Annual Results Presentation FY 2024 13
Slide 14: Drivers of rental growth supported by favourable Government policies
Drivers of rental growth supported by favourable Government policies Increased spend on the NHS Sickness to prevention Analogue to digital Healthcare expenditure, £bn The King’s Fund’s suggestions for digitally enabled care % increase in number of staff from Jun-19 in the local community: 350 Labour
Slide 15: Rent reviews – improving open market rental growth outlook
Rent reviews – improving open market rental growth outlook • Effectively upward only rent roll in UK • £3.2m additional rent in 2024 from rent reviews, 7.7% increase over previous rent • Total weighted average rental growth: 2.9% p.a. • 68% reviewed to open market (ave. 1.9% p.a.), most reviews sett
Slide 16: Growth drivers – Ireland
Growth drivers – Ireland Primary Health Properties PLC Annual Results Presentation FY 2024 16
Slide 17: PHP in Ireland
PHP in Ireland Attractive income accretion Existing portfolio • Growing and ageing population: 5.38 million people growing to 6+ million by 2050 6.0% 5.0% 2.5% 5.0% • Government support: programme to modernise healthcare in Ireland and establish a network of 350 purpose- 4.0% built primary care cent
Slide 18: Axis PHP
Axis PHP • Provides a permanent presence on the ground in Ireland, further strengthening our position as we seek out new investment, development and asset management opportunities • Property manager looking after 30 commercial properties located across Ireland focused on healthcare, pharmaceuticals
Slide 19: Ireland – source of future growth
Ireland – source of future growth Attractive property fundamentals Favourable market conditions • 25+ year lease with the HSE • Euro area interest rates falling • Larger lot size, increased rent with yield and • Solid pipeline of development opportunities valuation improvements • HSE retender proces
Slide 20: Growth drivers – asset management and risk controlled development
Growth drivers – asset management and risk controlled development Primary Health Properties PLC Annual Results Presentation FY 2024 20
Slide 21: Asset management – South Petherton
Asset management – South Petherton South Petherton Medical Centre, Somerset • Community medical centre situated adjacent to South Petherton Community hospital • Expansion space created to meet demand • Hub site for South Somerset West PCN services • Capex of £0.3m delivered a yield on cost of 9% • I
Slide 22: Asset management – Rosyth
Asset management – Rosyth Primrose Lane Medical Centre, Fife • Primrose Lane Medical Centre is a 2000 purpose-built primary care facility located in Rosyth, 3 miles north of the Forth Bridge and 16 miles northwest of Edinburgh city centre • Repurposed void unit and underutilised space to create new
Slide 23: Asset management – Leeds
Asset management – Leeds East Park Medical Centre, Leeds • GP and Dental Practices expansion in Leeds health facility through reconfiguration, refurbishment and lease renewal and letting of expansion space • Multi tenant medical centre; occupied by a GP Practice, Dental Surgery and Pharmacy • Expans
Slide 24: Risk controlled development
Risk controlled development • Short-cycle and de-risked development activity: Adding high quality assets, capturing attractive development margins and supporting ESG commitments • Direct developments: Advanced pipeline of one further project being progressed and rents being renegotiated • Irish forw
Slide 25: Summary and outlook
Summary and outlook Primary Health Properties PLC Annual Results Presentation FY 2024 25
Slide 26: Significant opportunity ahead as a focused primary care property business
Significant opportunity ahead as a focused primary care property business Strategic direction • Our long-term goal remains to be the leading owner, manager and developer of primary care property • Government-backed secure income will remain at the core of our business model • We will increase the sc
Slide 27: Summary and outlook
Summary and outlook • Solid set of results – earnings and dividend growth plus values stabilising Mark Davies CEO • Growth opportunities particularly in Ireland, supported by improving rental growth, asset management and developments in the UK • Supportive government and NHS policy • Resilience of t
Slide 28: Appendices
Appendices Primary Health Properties PLC Annual Results Presentation FY 2024 28
Slide 29: PHP’s property portfolio overview
PHP’s property portfolio overview 31 December 2024 Rent expiry profile £m % Total number of properties 516 Holding over1 7.8 5.1 Including properties in Ireland 21 Investment portfolio value (£m) 2,750 < 3 years1 15.8 10.3 Floor area (000’s sqm / 000’s sq. ft.) 712 / 7,668 4 - 5 years 19.3 12.5 Capi
Slide 30: PHP’s property portfolio overview
PHP’s property portfolio overview Covenant exposure by rent (£154 million) 516 Assets, inc. 21 in Ireland, with over 99% occupancy Other Pharmacy 3% 8% Government backed income (UK GPs/NHS/HSE) 89% Geographical spread by value (£2.75 billion) South West Wales 5% 7% Midlands and Scotland East Anglia
Slide 31: 29th year of consecutive growth and sector outperformance
29th year of consecutive growth and sector outperformance 8.0 7.10p 2 Implied PHP 2025 dividend yield 6.70p 6.90p Historic dividend progression CAGR 8.1%1 6.20p 6.50p Share price3 Yield 5.90p 6.0 5.40p 5.60p 4.75p 4.88p 5.00p 5.125p 5.25p 92p 7.7% 4.38p 4.50p 4.63p 4.13p 4.25p 3.75p 4.0 3.38p 2.75p
Slide 32: Robust rent review results
Robust rent review results Drivers of future rental growth Number of Open market • Typically 3-yearly review cycle 2024 outstanding reviews rent reviews completed (current rent) • Building cost inflation Reviews relating to calendar years: No. % p.a. No. £m • Completion of historic rent reviews <=20
Slide 33: Income statement
Income statement 2024 2023 Change £m £m Net rental income 153.6 149.3 +2.9% Axis PHP contribution net of overheads 1.2 1.1 +9.1% Administrative expenses (12.1) (11.6) +4.3% Operating profit before revaluation and net financing costs 142.7 138.8 +2.8% Net financing costs (49.8) (48.1) +3.5% Adjusted
Slide 34: Balance sheet
Balance sheet 2024 2023 £m £m Investment properties 2,753 2,779 Cash 4 3 Debt (1,327) (1,310) Net debt (1,323) (1,307) Other net current liabilities (27) (29) Adjusted net tangible assets (NTA) 1,403 1,443 Convertible bond fair value adjustment 2 3 Axis PHP intangible asset (amortised value) 5 6 Fix
Slide 35: Spread of funding sources
Spread of funding sources Unsecured Secured Facilities3 Facilities1 Convertible Secured Standard Provider Santander Barclays RBS1 HSBC Lloyds Aviva bond bond Life Tenor Bullet Bullet Bullet Bullet Bullet Bullet Bullet Bullet Bullet Expiry Jul-2025 Jan-2026 Oct-2027 Oct-2026 Dec-2027 Oct-2027 Mar-202
Slide 36: Spread of funding sources (continued)
Spread of funding sources (continued) Cash / unfettered Secured Facilities3 Total assets MetLife Provider Ignis Euro PP Euro PP Euro PP Aviva Aviva Euro PP Tenor Bullet Bullet Bullet Bullet Amortising Bullet Bullet Dec-2028 Expiry Dec-2028 Sept-2031 Dec-2033 Sept- 2033 Feb-2034 Oct-2036 Dec-2030 £42
Slide 37: EPRA cost ratio – A strong control on costs
EPRA cost ratio – A strong control on costs 31 December 2024 (£m) 31 December 2023 (£m) Gross rent less ground rent, service charge and other income 160.7 155.8 Direct property expense 26.2 18.2 Less: service charge and recovered costs (21.0) (13.3) Non-recoverable property costs 5.2 4.9 Administrat
Slide 38: Top predictions for what will change in primary care in the new NHS 10-year plan
Top predictions for what will change in primary care in the new NHS 10-year plan Topic area Prediction Premises strategy National programme of primary care premises refurbishments and new developments Practice entity Mixed model of GP partnerships, super-practices, Foundation Trusts and perhaps Prim
Slide 39: The Darzi Diagnosis – September 2024
The Darzi Diagnosis – September 2024 Health Inequality Gap Call for Reform of Rising Demand Reducing Supply Growing Funding Allocation Population growth Staff shortages No change to NHS principle but Housing reform will be required Reducing productivity in Ageing and multi-morbidity hospitals Focus
Slide 40: PHP’s approach to ESG
PHP’s approach to ESG PHP’s net zero carbon (NZC) framework Continued progress on ESG commitments Strategy supports a low carbon approach 2023 Operations to be NZC EPC ratings 2024 2023 2022 • Operations, developments and asset management • Achieved in 2022, 2023 and 2024 using high A 11% 12% 9% act
Slide 41: Disclaimer
Disclaimer This document comprises the slides for a presentation in respect of Primary Health Properties PLC (the “Company”) and its Annual Results Presentation for the year ended 31 December 2024 (the “Presentation”). No reliance may be placed for any purposes whatsoever on the information in this
Slide 42: Disclaimer (continued)
Disclaimer (continued) Other jurisdictions The distribution of this Presentation or any information contained in it may be restricted by law in certain jurisdictions, and any person into whose possession any document containing this Presentation or any part of it comes should inform themselves about
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