Primary Health Properties Plc · LSE:PHP
Primary Health Properties — FY2021 Earnings Presentation
36 slides from Primary Health Properties's earnings presentation, 2022
Slide 1: Investing for the Future
INVESTING FOR THE FUTURE Primary Health Properties PLC Annual Results Presentation 2021
Slide 2: Agenda
AGENDA KEY HIGHLIGHTS DIVIDEND TRACK RECORD STRONG RELATIVE PERFORMANCE FINANCIAL REVIEW PROPERTY REVIEW PIPELINE AND OUTLOOK APPENDICES Primary Health Properties PLC Annual Results Presentation FY 2021 1
Slide 3: Key Highlights
KEY HIGHLIGHTS Strong sector fundamentals and focus on income drive earnings and dividend growth Primary Health Properties PLC Annual Results Presentation FY 2021 2
Slide 4: Key Highlights
KEY HIGHLIGHTS 26 years of consecutive Strong sector fundamentals and focus on income drive earnings and dividend growth dividend growth Long-term demographic, macro and political trends supportive across UK and Ireland Portfolio ✓ Populations are growing, ageing and suffering more instances of chro
Slide 5: 26 Years of Consecutive Dividend Growth
26 YEARS OF CONSECUTIVE DIVIDEND GROWTH 7.0 E 6.50p Implied PHP 2022 dividend yield2 Historic dividend progression CAGR 8.7% 1 5.90p 6.20p 6.0 Share price3 Yield 5.60p 5.40p 5.25p 134p 4.9% 4.88p 5.00p 5.125p 5.0 4.63p 4.75p 4.38p 4.50p 4.13p 4.25p 4.0 3.75p 3.38p 3.00p 3.0 2.75p 2.50p 2.25p 2.00p 2
Slide 6: Strong Track Record of Relative Performance
STRONG TRACK RECORD OF RELATIVE PERFORMANCE ✓ IRR over period since inception of 13.1%1 (Average annual inflation (RPI) over same period: 2.9%) CAGR total shareholder returns PHP TSR (absolute change) over 1, 3 and 5 years PHP FTSE All Share Index FTSE EPRA Nareit UK Index PHP Assura EPRA UK 110% 85
Slide 7: The Future of Primary Care in the UK: Eastbourne
THE FUTURE OF PRIMARY CARE IN THE UK Case study: Eastbourne Rationale • Failing GP practices unable to cope with increasing patient demand for services have affected service provision, patient care, outcomes and staff retention • Merged into one super-practice operating as a single Primary Care Netw
Slide 8: Financial Review
FINANCIAL REVIEW INTERNALISATION OF MANAGEMENT STRUCTURE AND REFINANCING DELIVER SUBSTANTIAL ANNUAL COST SAVINGS Primary Health Properties PLC Annual Results Presentation FY 2021 7
Slide 9: Key Financial Highlights
KEY FINANCIAL HIGHLIGHTS Performance 31 December 2021 31 December 2020 Change Net rental income (£m) 136.7 131.2 +4.2% Adjusted earnings (£m) 83.2 73.1 +13.8% Adjusted earnings per share (pence) 6.2p 5.8p +6.9% Dividends paid (£m) 82.4 73.3 +12.4% Dividend cover 101% 100% - Dividend per share (pence
Slide 10: Income Statement
INCOME STATEMENT 31 December 2021 31 December 2020 Change £m £m Net rental income 136.7 131.2 +4.2% Administrative expenses (10.5) (13.2) -20.5% Operating profit before financing costs 126.2 118.0 6.9% Net financing costs (43.0) (44.9) Adjusted earnings 83.2 73.1 +13.8% Revaluation surplus and profi
Slide 11: Balance Sheet Strengthened
BALANCE SHEET STRENGTHENED Adjusted NTA (NAV) per share (pence) 125.0 8.3 (2.4) 120.0 6.2 (6.2) (1.9) (0.2) 116.7 115.0 112.9 110.0 105.0 100.0 95.0 90.0 85.0 Opening Adjusted Dividends Portfolio Nexus Aviva Other Closing NAV per earnings paid revaluation internalisation refinancing NAV per share sh
Slide 12: Debt Summary
DEBT SUMMARY • Total debt facilities of £1.55bn (90% secured/10% unsecured) Euro private placements £165m/€196m (11%) • Net debt drawn £1.2bn • 100% of debt fixed or capped with broad and diverse range of lending partners Convertible bond £150m (10%) Aviva £533m (34%) • Undrawn headroom after capita
Slide 13: Delivering Financial Management
DELIVERING FINANCIAL MANAGEMENT 2.9% average cost of debt 60 bps reduction achieved in year Refinanced or raised £413m of debt facilities locking in historically low rates of interest ✓ Aviva £200m for 15-year term at a fixed rate of 2.52% with sustainability KPIs ✓ MetLife €75m (£63m) for 12-year t
Slide 14: Property Review
PROPERTY REVIEW STRONG ORGANIC RENTAL GROWTH FROM RENT REVIEWS AND ASSET MANAGEMENT PROJECTS Primary Health Properties PLC Annual Results Presentation FY 2021 13
Slide 15: Property Portfolio Overview
PROPERTY PORTFOLIO OVERVIEW 70% already agreed terms to renew or planned asset management initiative Key Figures1 31 December 2021 Income Expiry Profile £m % Total number of properties 521 < 3 years 8.9 6% Including properties in Ireland 20 Investment portfolio value (£bn) 2.8 4-5 years 9.3 7% Floor
Slide 16: Ireland – Continued Strategic Expansion
IRELAND – CONTINUED STRATEGIC EXPANSION Strong income accretion ✓ Growing and aging population: 5 million people growing to 6 million by 2050 Ireland acquisitions ✓ Government support: programme to modernise healthcare in Ireland and establish a network of 200 6.0% purpose-built Primary Care Centres
Slide 17: Development Activity
DEVELOPMENT ACTIVITY ✓ Short-cycle and de-risked development activity adding high quality assets, capturing attractive development margins and supporting ESG commitments ✓ Direct developments: 21 projects with GDV of £163m. Two due to start imminently and a further five significantly advanced with t
Slide 18: The Future of Primary Care in the UK: Spilsby
THE FUTURE OF PRIMARY CARE IN THE UK The Future Let for 25 years to both the local NHS Trust and GP partnership allowing Case study: Spilsby, Lincolnshire PHP’s first NZC development patients and the wider Primary Care Network to access a wide range of health and care services including: Rationale •
Slide 19: Investment Activity
INVESTMENT ACTIVITY ✓ Disciplined approach to investment in a competitive UK market with a lack of suitable product ✓ Nine hub primary care centres acquired in year for £87m, seven in UK and two in Ireland ✓ Advanced pipeline totaling £105m across UK (8/£87m) and Ireland (3/£18m or €22m) ✓ One secon
Slide 20: Long Leases with Rental Growth Potential
LONG LEASES WITH RENTAL GROWTH POTENTIAL • Effectively upward only rent roll in UK Drivers of rental growth • Rents in Ireland linked to Irish CPI • Completion of historic rent reviews – increased momentum • Total weighted average rental growth 1.7% p.a. • Increased development activity ✓ 69% review
Slide 21: Asset Management – Updating Our Current Portfolio
ASSET MANAGEMENT – UPDATING OUR CURRENT PORTFOLIO ✓ Limited lease expiry risk, £8.9m or 6% of income expiring in next 3 years, 70% already agreed to renew or subject to a planned asset management project ✓ 30 projects completed in year and further nine currently on site, investing £15m, £0.4m additi
Slide 22: PHP's Approach to ESG
PHP’S APPROACH TO ESG • Environmental - committed to transitioning to net zero carbon (NZC) by 2030 for all operational, development and asset management activities0 for all of PHP’s operational, development and asset management activities • Social - activities result in better patient experiences a
Slide 23: Premises, Health and People
PREMISES, HEALTH AND PEOPLE: INVESTING IN THE HEALTH Net Zero Carbon AND WELLBEING OF OUR COMMUNITIES by 2030 Strategy supports a low carbon approach Portfolio EPC ratings A-C ✓ Operations, developments and asset management activities to be NZC by 2030 82% ✓ Operationally light portfolio, assets wit
Slide 24: Pipeline and Outlook
PIPELINE AND OUTLOOK ATTRACTIVE TARGETED PIPELINE AND POSITIVE OUTLOOK Primary Health Properties PLC Annual Results Presentation FY 2021 23
Slide 25: Foundations for Future Growth - Strong Pipeline
FOUNDATIONS FOR FUTURE GROWTH - STRONG PIPELINE OF ACQUISITIONS, DEVELOPMENTS AND ASSET MANAGEMENT PROJECTS Total funding requirement of c. £444m over the next 2-3 years to fund a mix of future acquisition pipeline, direct developments and asset management projects Funding requirement Region Number
Slide 26: Outlook
OUTLOOK 26 years of consecutive dividend growth ✓ Long-term demographic, macro and political trends supportive across UK Portfolio and Ireland £2.8 billion (2020: £2.6 billion) Rent roll ✓ Strong stewards of underinvested, key social infrastructure assets with c.40% of all assets in the UK considere
Slide 27: Further Background on PHP
Further background on PHP Primary Health Properties PLC Annual Results Presentation FY 2021 26
Slide 28: Rent Review Results
RENT REVIEW RESULTS ✓ £2.0m (1.7% p.a.) increase from 375 rent reviews completed OMV Number of outstanding Year to 31 December 2021 Rent reviews reviews (current rent) ✓ 1.1% p.a. achieved on 235 open market value reviews, including 74 nil increases completed ✓ 2.8% p.a. achieved on 125 indexed link
Slide 29: Primary Health Care Opportunity in the UK
PRIMARY HEALTH CARE OPPORTUNITY IN THE UK ✓ The UK population has been steadily getting older and this trend is projected to continue in the future. ✓ By 2066, it is estimated there will be a further 8.6 million UK residents aged 65 years and over, an increase broadly equivalent to the size of the p
Slide 30: Primary Health Care Opportunity in the UK
PRIMARY HEALTH CARE OPPORTUNITY IN THE UK ✓ However, many GP Premises in the UK remain unfit for their current purpose, let alone this expanded role. Common challenges include lack of space in waiting rooms, consultation rooms and administration space together with growing list sizes and lack of dis
Slide 31: Balance Sheet
BALANCE SHEET £m 31 Dec. 21 31 Dec.20 Investment properties 2,795.9 2,576.1 Cash 33.4 103.6 Debt (1,232.9) (1,159.3) Net debt (1,199.5) (1,055.7) Other net current liabilities (40.5) (35.1) Adjusted net tangible assets (NAV) 1,555.9 1,485.3 Convertible bond fair value adjustment (21.6) (25.0) Fixed
Slide 32: Spread of Funding Sources
SPREAD OF FUNDING SOURCES Secured facilities 3 Secured Secured Provider Barclays RBS1 HSBC Lloyds Santander Aviva Aviva bond bond Tenor Bullet Bullet Bullet Bullet Bullet Bullet Bullet Bullet Bullet Expiry Dec-2023 Oct-2024 Nov-2024 Dec-2024 Jan-2025 Dec-2025 Oct-2036 Mar-2027 Nov-2028 Facility £100
Slide 33: Spread of Funding Sources (Continued)
SPREAD OF FUNDING SOURCES (CONTINUED) Secured facilities3 Unsecured Cash/ Unfettered Total facilities1 assets Standard MetLife Convertible Provider Ignis Euro PP Euro PP Aviva Life Euro PP bond Tenor Bullet Bullet Bullet Bullet Bullet Amortising Bullet Dec-2028 Expiry Dec-2028 Sept-2028 Sept-2031 Fe
Slide 34: EPRA Cost Ratio
EPRA COST RATIO 31 December 2021 31 December 2020 £m £m Gross rent less ground rent, service charge and other income 139.6 134.6 Direct property expense 8.9 7.8 Less: service charge costs recovered (5.8) (4.3) Non-recoverable property costs 3.1 3.5 Administrative expenses 10.5 13.2 Less: ground rent
Slide 35: Contact Details
CONTACT DETAILS Harry Hyman Richard Howell Chris Santer David Bateman Chief Executive Chief Financial Officer Chief Investment Officer Investment Director harry.hyman@ richard.howell@ chris.santer@ david.bateman@ phpgroup.co.uk phpgroup.co.uk phpgroup.co.uk phpgroup.co.uk Primary Health Properties P
Slide 36: Disclaimer
DISCLAIMER This document comprises the slides for a presentation in respect of Primary Health Properties PLC (the “Company”) and its 2021 Annual results presentation (the “Presentation”). No reliance may be placed for any purposes whatsoever on the information in this Presentation or on its complete
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