Primary Health Properties Plc · LSE:PHP
Primary Health Properties — FY2014 Earnings Presentation
37 slides from Primary Health Properties's earnings presentation, 2015
Slide 1: Full Year Results – year ended 31 December 2014
Full Year Results – year ended 31 December 2014 Investing in the future of integrated healthcare Primary Health Properties PLC (PHP.L) A dedicated healthcare REIT www.phpgroup.co.uk
Slide 2: Company overview
2014 Annual Results Presentation Company overview Primary Health Properties PLC (“PHP”) is a UK Real Estate Investment Trust (“REIT”) with a successful track record of investing in the healthcare real estate sector in the UK since its formation in 1995. PHP works with General Practitioner groups and
Slide 3: Agenda
2014 Annual Results Presentation AGENDA Review of the year Financial Results Portfolio Funding Experienced Management Outlook | 3
Slide 4: A year of growth
2014 Annual Results Presentation A year of growth Growth in income Net rental income increased by 42.5% to £59.3m (2013: £41.6m) Average annualised uplift on rent reviews completed 1.8% (2013: 2.2%) Annualised rent roll increased by 5.7% to £60.9m (2013: £57.6m) Growth in earnings Profit
Slide 5: A year of growth
2014 Annual Results Presentation A year of growth Portfolio growth Gross assets increased by 9.0% to £1.03bn (2013: £941.6m) Valuation surplus of £29.2m (2013: £2.3m), like-for-like growth of 3.2% Net portfolio initial valuation yield 5.52% (2013: 5.65%) Including development properties po
Slide 6: A year of cost reduction
2014 Annual Results Presentation A year of cost reduction Reducing debt costs Fully refinanced £178m debt acquired with PPP portfolio, rate reduced by 100bps Unsecured Convertible Bond issued in May 2014 £82.5m, five year bond, coupon 4.25%, conversion price 390p per share 24% of debt now
Slide 7: Delivering on strategic objectives
2014 Annual Results Presentation Delivering on strategic objectives Shareholder returns increased Progressive dividend policy maintained, cover increased to 84% (2013: 57%) Total EPRA shareholder return 12.8% (2013: 4.6%) Continued portfolio growth Portfolio now 265 assets, £43m acquired i
Slide 8: Financial Results
2014 Annual Results Presentation FINANCIAL RESULTS | 8
Slide 9: Results in brief
2014 Annual Results Presentation Results in brief 2014 2013 £m £m Net rental income 59.3 41.6 Administrative expenses (6.8) (6.1) Operating profit before revaluation gain and financing 52.5 35.5 Net financing costs (34.3) (26.0) Non-recurring operating costs(1) - (2.7) EPRA earnings 18.2 6.8 Net res
Slide 10: Balance Sheet
2014 Annual Results Presentation Balance Sheet 31 December 2014 31 December 2013 EPRA Net Assets £354.6m £330.9m EPRA net asset value per share 319.0p 300.0p Property portfolio(1) £1,026.3m £941.6m Net Debt £658.1m £579.7m LTV 64.1% 61.6% Future minimum lease payments receivable(2) £885m £867m EPRA
Slide 11: Dividend growth, increased cover
2014 Annual Results Presentation Dividend growth, increased cover 18th successive year of dividend growth 19.5p per share paid in 2014, a 2.6% increase over total paid in 2013 (19.0p) Significant increase in dividend cover to 84% (2013: 57%) First interim dividend declared for 2015 – 10.0p p
Slide 12: Relative performance
2014 Annual Results Presentation Relative performance PHP total FTSE shareholder return(1) for 1, 3 and 5 years compared to indices 1 year 3 years 5 years Primary Health Properties 10.9% 12.6% 14.0% FTSE All-Share Real Estate Index 23.7% 31.1% 17.7% FTSE All-Share Index 1.2% 12.4% 10.4% Source: Bl
Slide 13: Portfolio
2014 Annual Results Presentation PORTFOLIO | 13
Slide 14: Property portfolio
2014 Annual Results Presentation Property portfolio 265 healthcare centres – 260 completed and owned, 5 under development Portfolio value (incl. commitments) – £1.04bn – net initial yield 5.52% Average lot size - £3.9m; average age of buildings – 9 years Annual contracted rent roll - £60.9m(
Slide 15: Portfolio analysis by rent
2014 Annual Results Presentation Portfolio analysis by rent 260 completed assets spread across the UK 91% of rental income directly or indirectly from UK Government Wide geographical spread Strong rental covenant London Wales 5% South West 10% 3% NHS 23% Scotland South East 13% 19% GPs 67% HM Go
Slide 16: Long leases with growth potential
2014 Annual Results Presentation Long leases with growth potential(1) 48% of rent with more than 15 years remaining Analysis of leases unexpired by rent roll 135 reviews completed in 2014 generated Less than 5 years additional rent of £0.6m per annum More than 20 years 1% 12% Average increase
Slide 17: Investment acquisition
2014 Annual Results Presentation Investment acquisition Hume Street Medical Centre, Kidderminster Tenants: 2 GP Practices and pharmacy Date acquired: August 2014 Date built: October 2012 NIA: 2,387 m² Acquisition Cost: £11.0m Patient list size: 25,493 | 17
Slide 18: Development commitment - 2014
2014 Annual Results Presentation Development commitment - 2014 The Fountains Health Centre, Chester Tenants: 4 GP Practices and pharmacy Date committed: February 2014 Expected completion: March 2015 NIA: 5,754 m² Total Cost: £18.5m Patient list size: 24,235 | 18
Slide 19: Development Delivery - 2014
2014 Annual Results Presentation Development Delivery - 2014 Lion Medical Centre, Stourbridge Tenants: GP Practice and Pharmacy Constructed: March 2014 NIA: 2,600 m² Value: £9.4m Patient list size: 29,500 | 19
Slide 20: Asset Management Projects
2014 Annual Results Presentation Asset Management Projects Cowbridge, Cardiff – On site January 2015, completion due May 2015 A development project at the Cowbridge Medical Centre, near Cardiff in South Wales to construct a 120 sqm pharmacy unit pre-let to Lloyds Pharmacy for a 17 year term from com
Slide 21: Asset Management Project
2014 Annual Results Presentation Asset Management Project Hornchurch, Essex – On site October 2013, completion October 2014 Extension of a medical centre housing a GP practice and dental unit and the creation of a new pharmacy. Providing new 5 consulting rooms for the GPs and dentist to provide expa
Slide 22: Funding
2014 Annual Results Presentation FUNDING | 22
Slide 23: Secure Long Term Funding
2014 Annual Results Presentation Secure Long Term Funding 2014 2013 £m £m Total debt facilities Secured 628.9 589.0 Unsecured 157.5 75.0 786.4 664.0 Average maturity of debt facilities 6.2 years 5.8 years Net debt Drawn debt 670.1 589.0 Cash on deposit (12.0) (9.3) 658.1 579.7 Total collateral 1,026
Slide 24: Funding activity
2014 Annual Results Presentation Funding activity Debt assumed with PPP acquisition refinanced to lock in lower fixed rates: New £50m, ten year and £63m, fifteen year facilities with Aviva Interest rate reduced by an overall 100 bps New five year £50m revolving debt facility completed with H
Slide 25: Maturity of Debt
2014 Annual Results Presentation Maturity of Debt Weighted maturity period at 31 December 2014 – 6.2 years (2013: 5.8 years) Discussions commenced to extend Club facility due to mature in 2017 £’m | 25
Slide 26: Spread of Funding Sources
2014 Annual Results Presentation Spread of Funding Sources Secured Unsecured facilities(1) Facilities Provider Club(2) HSBC Barclays Aviva Aviva Secured Aviva Aviva Retail Bond Convertible Bond Bond Tenor Bullet Bullet Bullet Bullet Bullet Bullet Amortising Amortising Bullet Bullet Expiry Aug-17 Apr
Slide 27: Borrowing Facilities
2014 Annual Results Presentation Borrowing Facilities Total facilities available to PHP - £786.4m(1) Available headroom - £116.7m (after development commitments) 24% of net debt on an unsecured basis – Retail Bond and Convertible Bond PHP Debt Profile 100.0% 100.0% 90.0% 90.0% Unsecured 80.0%
Slide 28: Interest rate protection
2014 Annual Results Presentation Interest rate protection Long term interest rate protection 87% of debt as at 31 December 2014 fixed or hedged Incremental debt to fund new acquisitions able to access historic low rates Hedge portfolio matched to term of variable rate facilities 700,000 £'m
Slide 29: Experienced Management
2014 Annual Results Presentation EXPERIENCED MANAGEMENT | 29
Slide 30: Board of Directors
2014 Annual Results Presentation Board of Directors Alun Jones, Chairman Harry Hyman, Managing Director(1) Phil Holland, Finance Director(1) Steven Owen, Non-Executive Director and Senior Independent Director Jamie Hambro, Non-Executive Director William Hemmings, Non-Executive Director
Slide 31: Advisers and fee base
2014 Annual Results Presentation Advisers and fee base Nexus provide all advisory services from 1 May 2014 Enhances service quality and information management Reduced Group’s overhead costs Average fee rate for services of advisers(1) reduced to 55 bps (2013: 71 bps) Including overheads, T
Slide 32: Outlook
2014 Annual Results Presentation OUTLOOK | 32
Slide 33: Healthcare property demand drivers
2014 Annual Results Presentation Healthcare property demand drivers Cross party political support Demographic drivers of demand Main political parties state support for UK population to rise by 10% in 15 years NHS, strong focus for General Election Continued ring fence of NHS budget %’age ol
Slide 34: Acquisitions contribute due to yield gap
2014 Annual Results Presentation Acquisitions contribute due to yield gap 7.00% 6.00% Assumed market yield – 5.6% 5.00% Surplus to bottom line – 1.9% 4.00% Management fee – 0.325% 3.00% Margin on debt – 185 bps 2.00% 1.00% 0.00% 5 Year Gilt Valuation Yield GBP 5 year swap rate | 34
Slide 35: Investment Case
2014 Annual Results Presentation Investment Case Low risk, long term, non-cyclical market 99.8% occupancy rate; WAULT - 15.3 years Strong, visible and growing cash flows 91% of rents funded by UK Government Effectively upward-only rent reviews Positive yield gap between acquisition yield
Slide 36: Contact details
2014 Annual Results Presentation Contact details Harry Hyman Phil Holland Managing Director Finance Director harry.hyman@nexusgroup.co.uk phil.holland@nexusgroup.co.uk | 36
Slide 37: Disclaimer
Disclaimer 2014 Annual 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 PHP. The information contained in this presentation has been ex
Primary Health Properties — FY2014 Earnings Presentation on 6ix