Assura Plc · OTC:ARSSF
Assura — FY2021 Earnings Presentation
66 slides from Assura's earnings presentation, May 18, 2021
Slide 1: Results for the year ended 31 March 2021
Assura ple results for the year ended 31 March 2021 18 May 2021 assura
Slide 2: Overview
Overview Jonathan Murphy CEO assura
Slide 3: Key highlights
Results for the year ended 31 March 2021 Key highlights Sustained Excellent service & year delivery opportunities emerging
Slide 4: Key highlights
Results for the year ended 31 March 2021 Key highlights Over £300m Social bond of additions Quarterly Pipelines dividend replenished / © Ge increased to 0.74)
Slide 5: Social impact strategy underpins business model
Results for the year ended 31 March 2021 Social impact strategy underpins business model Through the Assura Community Fund's grant-making and our support for shared community space, to help improve the wellbeing of more than one million people Develop a sustainable supply chain which shares our comm
Slide 6: Sustainability & innovation
Results for the year ended 31 March 2021 Sustainability & innovation Continual development of offering for the benefit of all stakeholders Net zero carbon development Design for Surgery of Everyone the Future EPC: Energy Performance Certificate
Slide 7: Assura Community Fund
Results for the year ended 31 March 2021 Assura Community Fund Year 2 Supporting local initiatives si recently £0. m launched E Distributed Of national 3 i grant applications ‘ J | received supporting } ex r fi) mental health, 8. ; r isolation and disadvantage Community Health Partner of 2021 Rugby
Slide 8: Year in review
Slide 9: Financial summary
Results for the year ended 31 March 2021 Financial summary Earnings growth driven by acquisitions and developments Income statement 2021 2020 Change 112.0 103.7 8% 75.4 67.5 12% 2.8 2.8 a 2.82 IS) 3% Balance sheet 2021 __ 2020 Change 2,453 2,139 15% mies 53 6% VP 38 Ippt TEPRA earnings adjusted to a
Slide 10: Portfolio growth
Results for the year ended 31 March 2021 Portfolio growth Investment property (£m) Growth in rent roll from across portfolio teams £m £m 3,000, 125 2,500 120 2,000 CAGR: 17% 1S 1,500 110 1,000 1,979 1,733 BA F 500 “| ° 100 Mar-16, Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-20 Disposals Asset Development
Slide 11: Net asset growth
Results for the year ended 31 March 2021 Net asset growth Diluted EPRA NTA (pence per share) EPRA NTA boosted by revals and equity raise £m pence 70 58 60 CAGR: 5% 7 56 50 55 40 54 30 _ 49.3 52.4 53.3 53 20 52 i 51 oO 50 Mar-16, Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-20 Dividends ACF Revaluations &
Slide 12: Strong financial position
Results for the year ended 31 March 2021 Strong financial position All facilities now on unsecured basis LTV & interest rate history - £300m 10-year Social Bond issued Sep-20 Interest rate - 1.5% fixed rate TTT, 6.% - Issued in line with Social Finance Framework - £110m 4.75 % secured bond due 2021
Slide 13: Deployment of capital
Results for the year ended 31 March 2021 Deployment of capital At Apr-20 equity Delivered to placing Mar-21 Current 12 developments completed 16 developments (£72m) on site 15 developments (£81m) on site 13 developments moved on site Developments 4 projects completed (£1.2m spend), 4 on site (spend
Slide 14: Development completions in year
Results for the year ended 31 March 2021 Development completions in year aunceston assura
Slide 15: Acquisition of Apollo
Results for the year ended 31 March 2021 Acquisition of Apollo A further boost to our in house development capabilities - Acquisition of development pipeline and team completed in February 2021 - Experienced 4 person team adds complementary skills to the Assura team - Team now stands at 11 developme
Slide 16: Acquisitions & disposals
Results for the year ended 31 March 2021 Acquisitions & disposals uality portfolio additions supported by capital recyclin 50 Prospect View Medical Centre acquisitions Warwick Gates Medical Centre 29 disposals £26m proceeds Herstmonceux Integrative Health Centre Upton Surgery ofa assura
Slide 17: Portfolio management
Results for the year ended 31 March 2021 Portfolio management Contracted rent roll & WAULT Rent reviews
Slide 18: Prospective growth driven by developments
Results for the year ended 31 March 2021 Prospective growth driven by developments Rent reviews settled during period - Annvalised uplifts Rent review settlements - Average 1.5% — RPI/fixed/other 2.0% - Open market 1.2% r\ - Linkage to cost inflation on new developments creates evidence for LE \ | o
Slide 19: Quality of long-term cash flows
Results for the year ended 31 March 2021 Quality of long-term cash flows Asset enhancement and portfolio additions have positive impact on metrics Total contracted rent roll WAULT history aul mAdditions and asset enhancement m™ Passage of time =m ™ Additions and asset enhancement _m Passage of time
Slide 20: Looking ahead
Looking ahead Jonathan Murphy CEO assura
Slide 21: Market overview
Results for the year ended 31 March 2021 Market overview Strong underlying demand and robust fundamentals Yield progression Equivalent Yield py oO OVO aot —===15 year Gilt === Assura Net Initial Yield ==MSCI monthly UK index initial yield ofa assura
Slide 22: Strong pipeline
Results for the year ended 31 March 2021 Strong pipeline Continued successful replenishment of pipelines across teams Developments Asset Enhancements No. Pipeline Cost No. Pipeline Rent 16 On site £72m 39 Regears (existing rent) £5.0m 17 Immediate pipeline £111m 6 New tenants £0.3m 37. Extended pipe
Slide 23: Development pipeline
Results for the year ended 31 March 2021 Development pipeline On site and pipelines increased in addition to schemes being delivered Total development pipeline £405m Completions in the year £69m Extended pipeline Immediate pipeline Extended pipeline pointe Immediate pipeline ofa assura
Slide 24: Proforma rent roll demonstrates positive impact of pipeline
Results for the year ended 31 March 2021 Proforma rent roll demonstrates positive impact of pipeline Development and asset enhancement strategy key contributor to future growth £m - Opportunities in -_ development pipeline expected to flow through 145 rent roll 140 - Positive outlook in respect 135
Slide 25: Recent market themes
Results for the year ended 31 March 2021 Recent market themes Shift to telephone or video triage Adapted space requirements g term impact of COVID Waiting list backlog Need for mental health provision Face-to-face consultations still essential Need for joined up service delivery across the NHS with
Slide 26: Assura's response to market themes
Results for the year ended 31 March 2021 Assura's response to market themes Innovation in development Community diagnostic centres Mental health services ina community setting Premises solutions for primary care at scale providers Selective partnerships with private sector health <7 assura
Slide 27: Summary
Results for the year ended 31 March 2021 Summary Strong Excellent year ] growth prospects Dividend opportunitie oP growth emerging n oma assura
Slide 28: Additional information
Additional information
Slide 29: Additional information
Results for the year ended 31 March 2021 Additional information 1.1. Our market 4.1 Activity & pipeline 1.2 Our position 4.2 Acquisition process 1.3. Assura's position and strengths 4.3, Development process 1.4 Business model & strategy 4.4 Our typical range of medical centres 1.5 Primary care model
Slide 30: 1.1 Our market
Results for the year ended 31 March 2021 1.1 Our market Highly attractive sector characteristics Strong demand - Supportive demographics - over 85s predicted to double by 2040 - More GP-led services delivered in communities - Significant investment required - Pace of new development approvals gather
Slide 31: 1.2 Our position
Results for the year ended 31 March 2021 1.2 Our position Positioning leaves us well placed to respond to the needs of the market Diversified portfolio of scale - 609 assets across the UK with value of £2.4bn - Resilient income with 84% of leases NHS funded - WAULT of 11.9 years and 98% let - £1.57b
Slide 32: 1.3 Assura's position and strengths
Results for the year ended 31 March 2021 1.3 Assura's position and strengths Our market Suepertad (iy More GP-led : services in the a community Significant 4 investment term income | required / streams / it No speculative Secure long- Barrier to entry development » - Assura \ SS ee eee assura
Slide 33: 1.4 Business model & strategy
Results for the year ended 31 March 2021 1.4 Business model & strategy Designed to deliver resilient and predictable income Manage Supporting the evolving requirements of the GPs Tnvesnnen managers identify opportunities to build lasting relationships with GPs, helping them realise their long-term a
Slide 34: 1.5 Primary care model is key to meeting growing UK healthcare demand
Results for the year ended 31 March 2021 1.5 Primary care model is key to meeting growing UK healthcare demand Assura operates in primary care which is recognised critical to NHS delivery and faces growing demand 1. Primary healthcare sector - c.9,000 primary care medical centres - 300m+ patient con
Slide 35: 1.6 GP funding structure
Results for the year ended 31 March 2021 1.6 GP funding structure How the funding mechanism works Lease Agreement _GMS Contract (typically, 20-25 years) (lifetime contract) os C) a Oa! assura ray NHS England Rental income GMS Payments (4.75-5% NIY) GP (Partnership) (inc. Premises Payment) Notes 1. G
Slide 36: 1.7 Rent reimbursement mechanism
Results for the year ended 31 March 2021 1.7 Rent reimbursement mechanism Changes to the rent reimbursement mechanism are considered unlikely 1. There is significant historical precedent for this arrangement - The rent reimbursement mechanism has been in place for 70 years since the NHS was founded
Slide 37: 1.8 Risk reward spectrum
Results for the year ended 31 March 2021 1.8 Risk reward spectrum Total return vs standard deviation - 14 years (since inception of index) to Dec 2020 (source: MSCI) 10% s Residential index 9% Primary Healthcare 8% ® Industrial 7% e All Healthcare 6% . ® Bonds Office _# 5% 7 All property S Equities
Slide 38: 2.1 Social impact strategy
Results for the year ended 31 March 2021 2.1 Social impact strategy Ambition to positively impact six million people by 2026 Actions that count toward our target to impact six million: — Built a new sustainable development - Extended or refurbished an existing building sustainably - Improved energy
Slide 39: 2.2 Portfolio EPCs
Results for the year ended 31 March 2021 2.2 Portfolio EPCs — Assessment of portfolio EPCs across our portfolio completed during the year — 30% of certificates at rating of B or better, target 100% by March 2026 — Built into existing individual property strategies aiming to complete works alongside
Slide 40: 2.3 Net zero carbon development
Results for the year ended 31 March 2021 2.3 Net zero carbon development K Green Building Council definitions & framewo Establish building carbon baseline Kg CO,e/m? Building Area of focus: 18 regulations C J rn FON = Insulation : Current work Somplsoy ~ Air tightness perationa y Reduce construction
Slide 41: SixBySix - 2021/22 priorities
Results for the year ended 31 March 2021 BySix - 2021/22 prio Pledge 2021/22 priorities Portfolio EPC B Roll out EPC improvement program at a building level Finalise design plans on two identified pilot schemes, aiming for at least Net zero carbon development one to be on site by March 2022 Innovati
Slide 42: 3.1 Portfolio statistics
Results for the year ended 31 March 2021 3.1 Portfolio statistics Number Rent WAULT Totalflogor Value <£1m £1-5m £5-10m >£10m (£m) (years) area (m2) (£m) North East 139 = 29.0 12.6 147,328 552.4 10.2 228.2 138.7 WANS Midlands 104 22.7 13.4 119,949 465.8 7.0 175.0 141.7 142.1 South East 104 18.8 9.6
Slide 43: 3.2 Security of tenant and lease length
Results for the year ended 31 March 2021 3.2 Security of tenant and lease length GPs NHS Body Of rent Pharmacy roll stil = = contracted Private providers In 2030 . Other Remaining Lease term Up to 5 years ‘As at March 2020, 34) 5-10 years leases (£1.5m of rent) were due to expire within 12 months. 9
Slide 44: 3.3 Contracted rent
Results for the year ended 31 March 2021 3.3 Contracted rent Currently contracted rent Lease expiry profile £m 30 125 255 = .GMS/NHS leases gg ™ Pharmacy/other 2s leases 100 20 E 75 & _ 149 w leases 215 tea 5 100 ng 50 8 leases leases & 10 25 5 Le leases Dm Pm mm Do om DP A Dd x i : y : , i ss Ree y
Slide 45: 3.4 Property and net debt
Results for the year ended 31 March 2021 Mar 2021 Mar 2020 3.4 Property and net debt Completed investment property Investment property under construction Pharmacy lease premium / rent adjustments Head lease obligations Property assets held for sale Total Property and net debt Movement in investment
Slide 46: 3.5 Sensitivity analysis
Results for the year ended 31 March 2021 3.5 Sensitivity analysis -— A 25bps movement would result in a valuation movement of approximately £132m or 4.9 pence per share - A100bps movement would result in a valuation movement of approximately £416m or 15.6 pence per share Equivalent yield ERV per +1%
Slide 47: 4.1 Activity & pipeline
Results for the year ended 31 March 2021 4.1 Activity & pipeline Developments | No. | Completed 20/21 Pipeline maintained, completions increasing [No [ Pipeline | Cost_| a Asset Enhancements omo assura
Slide 48: 4.2 Acquisition process
Results for the year ended 31 March 2021 4.2 Acquisition process c. 9,000 GP buildings in the F , market - Database provides crucial market information : " For example: - Referrals, direct marketing Focus in core due diligence Patient list ' ' : Service provision conferences and events key Desktop r
Slide 49: 4.3 Development process
Results for the year ended 31 March 2021 4.3 Development process 1. How we source new developments New opportunities are secured by: - Direct approach from the GPs and referral - Approach from smaller sector developer requiring funding - Approach from one of our “partner” developers mailing - Our ex
Slide 50: 4.4 Our typical range of medical centres
Results for the year ended 31 March 2021 4.4 Our typical range of medical centres Small - Serves neighbourhood of rural town/village - Around 5,000 patients - 400m? - 800m? - c.6 consulting rooms and 2 treatment rooms - Dispensary Medium Serves small town or district 800m? - 1,800m? Up to 15,000 pat
Slide 51: 4.5 On site developments
Results for the year ended 31 March\2021 Newcastle 4.5 On site developments Increase in number of live development schemes; delivery from immediate pipeline to on site ES es e@ - Geographically spread across country - Increasing data points for district valuers - Apollo & GPI acquisitions have stren
Slide 52: 4.6 Innovations in development
Results for the year ended 31 March 2021 4.6 Innovations in development Cinderford Designed to certified as the first "Dementia-Friendly" medical centre in the UK. 14,000 patients benefitting Ware Sustainable solution for new premises involves as a police and fire Hub. 14,500 patients benefitting Pr
Slide 53: 4.7 Cinderford - social & environmental impact
Results for the year ended 31 March 2021 4.7 Cinderford - social & environmental Social value Innovative design = =) Over £3.5m of social value generated through local employment, construction spend & 40 weeks of apprenticeships Over 14,000 patients served Community allotment operated by local chari
Slide 54: 4.8 Knowledge & partnerships
i}... — Results for the year ended. 31 March 2021 4.8 Knowledge & partnerships Cross team collaboration drives value for customers and shareholder alike Example of Kingfisher Primary Care Network in Redditch Remodelling core building Exploring to improve telehealth development of provision & PCN cap
Slide 55: 4.9 Developments drive rental growth
Results for the year ended 31 March 2021 4.9 Developments drive rental growth - New developments Relationship of increased costs and rent capture increased land and Cost (¢/m?) Rent (£/m2) construction costs 3,500 300 resulting in increased rent 280 - Higher rental tone linked Bc00 | \ : : . to incr
Slide 56: 5.1 Open market review results
Results for the year ended 31 March 2021 5.1 Open market review results Number of ; . Open market outstanding - 1.5% annualised increase from rent reviews only reviews reviews settled in period Annualised % (passing rent) v 1.2% from open market rent Rent reviews settled in year to 31 March 2021 1.2
Slide 57: 5.2 Basis of rent reviews and timing
Results for the year ended 31 March 2021 5.2 Basis of rent reviews and timing 80% 70% ™ Upward/downward review basis - Split of current rent roll by rent review Pov tenant can instigate (4%) basis and frequency of review: ™ Upward/downward review basis - Ss landlord only trigger (16%) Annually __ 3
Slide 58: 6.1 Portfolio growth flows through to earnings
Results for the year ended 31 March 2021 6.1 Portfolio growth flows through to earnings 15% growth in investment portfolio 6% growth in adjusted EPRA earnings! £m £m 2500 233 78.0 8.3 76.0 2400 74.0 2300 72.0 59 70.0 2200 42 68.0 1.0 2100 66.0 (20) 64.0 (1.4) Boao 62.0 1900 60.0 Mar-20 Disposals Val
Slide 59: 6.2 Strong track record in key metrics
Results for the year ended 31 March 2021 6.2 Strong track record in key metrics Number of properties Rent roll (£m) Average annual rental growth 2.2% 563 576 608 1217 518 1027 108.9 16% 17% 1.8% 398 91.0 ‘ 1.5% The 1.2% [ I | I 2016 «2017 2018 +2019 2020 2021 2016 2017 2018 2019 2020 2020 2016 2017
Slide 60: 6.3 EPRA NTA
Results for the year ended 31 March 2021 6.3 EPRA NTA EPRA NTA EPRA NTA £m__ Pence per Mar 2021 Mar 2020 share £m £m Net assets 1,530.7 1,302.4 Diluted EPRA NTA at 31 March 2020 Deferred tax (0.5) Cem come (EPRA earnings) EPRA NTA 1,530.2 1,301.9 Capital (revaluations and capital gains) Dividends Eq
Slide 61: 6.4 New EPRA net asset measures
Results for the year ended 31 March 2021 6.4 New EPRA net asset measures — New EPRA measures for net assets, provided for indicative purposes - Two of the measures closely align to existing NAV and NNNAV for Assura — NRV is Net Reinstatement Value (assuming entities never sell assets, representing v
Slide 62: 6.5 EPRA EPS & cash flow
Results for the year ended 31 March 2021 6.5 EPRA EPS & cash flow Mar 2021 Mar 2020 EPRA EPS £m £m Profit for the period 108.3 78.9 Opening cash EPRA earnings 72.9 Py Aetin ececasn inom cberations Cash flows from investing acti Adjusted EPRA earnings 75.4 67.5 - Property and other acqui (236.8) Weig
Slide 63: 7.1 Facilities & maturity profile
Results for the year ended 31 March 2021 Weighted average maturity Weighted average interest Gross debt £957m LTV 37% 7.1 Facilities & maturity profile Facility Fixed/ Maturity Effective Secured/ Outstanding31 £™ Private placements description floating interest rate unsecured March 2021 350 ™ Unsecu
Slide 64: 7.2 Covenants
Results for the year ended 31 March 2021 7.2 Covenants All coyenant gonditions complied wit! Interest cover LTV / leverage NHS Priority debt Unencumbered asset value Total secured net debt RCF / PPs Unsecured bonds Covenant Mar-21 Covenant Mar-21 21.75 441 2150% 346% <60% 40% <65% 37% 2 p <0.25:1 £n
Slide 65: 8.1 REIT overview & dividend calendar
Results for the year ended 31 March 2021 8.1 REIT overview & dividend calendar - REIT status is a tax election available to listed real 2021/ Payment date Exdiv date Record date PID Non PID estate companies - REITs are tax exempt on property rental income and a TAB 202 UM ite 202 Ua 20a asia Gale CY
Slide 66: Disclaimer
Results for the year ended 31 March 2021 Disclaimer This presentation contains certain statements that are neither financial results nor other historical information. These statements are forward-looking in nature and are subject to risks and uncertainties. Actual future results may differ materiall