Primary Health Properties Plc · LSE:PHP
Primary Health Properties — H1 2022 Earnings Presentation
35 slides from Primary Health Properties's earnings presentation, 2022
Slide 1: Investing for the Future
INVESTING FOR THE FUTURE Primary Health Properties PLC Half Year Results Presentation 2022
Slide 2: Agenda
AGENDA KEY HIGHLIGHTS DIVIDEND TRACK RECORD STRONG RELATIVE PERFORMANCE FINANCIAL REVIEW PROPERTY REVIEW PIPELINE AND OUTLOOK APPENDICES Primary Health Properties PLC Half Year Results Presentation 2022 1
Slide 3: Key Highlights
KEY HIGHLIGHTS STRONG SECTOR FUNDAMENTALS AND FOCUS ON INCOME DRIVE EARNINGS AND DIVIDEND GROWTH Primary Health Properties PLC Half Year Results Presentation 2022 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 143.7p 4.5% 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 Q1 –
Slide 6: Strong Track Record of Relative Performance
STRONG TRACK RECORD OF RELATIVE PERFORMANCE ✓ IRR over period since inception of 12.8%1 (Average annual inflation (RPI) over same period: 3.2%) CAGR total shareholder returns PHP TSR (absolute change) over 1, 3 and 5 years PHP Assura EPRA UK 6 months (16.4%) (9.4%) (37.8%) 1 year (7.7%) (7.9%) (6.1%
Slide 7: Financial Review
FINANCIAL REVIEW REFINANCINGS DELIVER SIGNIFICANT REDUCTION IN NET FINANCING COSTS Primary Health Properties PLC Half Year Results Presentation 2022 6
Slide 8: Key Financial Highlights
KEY FINANCIAL HIGHLIGHTS Performance 30 June 2022 30 June 2021 Change Net rental income (£m) 71.1 67.7 +5.0% Adjusted earnings (£m) 44.7 40.7 +9.8% Adjusted earnings per share (pence) 3.4p 3.1p +9.7% Dividends paid (£m) 43.3 41.1 +5.4% Dividend cover 103% 99% Dividend per share (pence) 3.25p 3.1p +4
Slide 9: Income Statement
INCOME STATEMENT 30 June 2022 30 June 2021 Change £m £m Net rental income 71.1 67.7 +5.0% Administrative expenses (5.5) (5.0) -10.0% Operating profit before financing costs 65.6 62.7 +4.6% Net financing costs (20.9) (22.0) Adjusted earnings 44.7 40.7 +9.8% Revaluation surplus and profit on sales 51.
Slide 10: Balance Sheet Strengthened
BALANCE SHEET STRENGTHENED Adjusted NTA (NAV) per share (pence) 125.0 3.4 (3.2) 3.8 0.1 120.8 120.0 116.7 115.0 110.0 105.0 100.0 95.0 90.0 85.0 Opening Adjusted Dividends Portfolio revaluation Other Closing NAV per earnings paid NAV per share share 30 June 2022 31 December 2021 Change Adjusted net
Slide 11: Debt Summary
DEBT SUMMARY Euro private placements £169m/€196m (11%) • Total debt facilities of £1.55bn (90% secured/10% unsecured) • Net debt drawn £1.26bn Convertible bond £150m (10%) • £291m undrawn headroom after capital commitments and post period end transactions Aviva £532m (34%) • 95% of net debt fixed or
Slide 12: Delivering Financial Management
DELIVERING FINANCIAL MANAGEMENT Refinanced or raised £115m of debt facilities locking in historically low rates of interest at start of year ✓ MetLife €75m (£65m) for 12-year term at a fixed rate of 1.64% with option to increase to €150m in next 3-years ✓ Santander RCF renewed and increased to £50m
Slide 13: 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 14: 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 81% ✓ Operationally light portfolio, assets wit
Slide 15: Pipeline and Outlook
DISCIPLINED APPROACH TO INVESTMENT AND DEVELOPMENT WITH ATTRACTIVE TARGETED PIPELINE Primary Health Properties PLC Half Year Results Presentation 2022 14
Slide 16: Investment Activity
INVESTMENT ACTIVITY ✓ Disciplined approach to investment in a robust market notwithstanding the outlook for longer-dated interest rates ✓ 13 smaller assets sold for £27.7m, 13% above Dec.21 book value representing 60bps of yield compression ✓ Three assets selectively acquired in the year-to-date for
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: First NZC development on-site at Croft West Sussex with £6.8m GDV / YOC 4.5% ✓ Direct developments: seven s
Slide 18: Ireland – Continued Strategic Expansion
IRELAND – CONTINUED STRATEGIC EXPANSION Strong income accretion ✓ Growing and ageing 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 Centre
Slide 19: Foundations for Future Growth
FOUNDATIONS FOR FUTURE GROWTH - STRONG PIPELINE OF ACQUISITIONS, DEVELOPMENTS AND ASSET MANAGEMENT PROJECTS Total funding requirement of c. £285m over the next 2-3 years to fund a mix of future acquisition pipeline, direct developments and asset management projects Funding requirement Number Est. co
Slide 20: Property Review
PROPERTY REVIEW STRONG ORGANIC RENTAL GROWTH FROM RENT REVIEWS AND ASSET MANAGEMENT PROJECTS Primary Health Properties PLC Half Year Results Presentation 2022 19
Slide 21: Property Portfolio Overview
PROPERTY PORTFOLIO OVERVIEW 50% already agreed terms to renew and 30% at advanced discussions to renew Key Figures1 30 June 2022 Income Expiry Profile £m % Total number of properties 524 < 3 years 10.2 7% Including properties in Ireland 20 Investment portfolio value (£bn) 2.9 4-5 years 11.2 8% Floor
Slide 22: Rent Reviews - Long Leases with Improving Rental Growth Outlook
RENT REVIEWS - LONG LEASES WITH IMPROVING RENTAL GROWTH OUTLOOK ✓ Effectively upward only rent roll in UK Drivers of rental growth £m Additional income from rent reviews – growing momentum 2.5 ✓ Rents in Ireland linked to Irish CPI ✓ Completion of historic rent reviews 2.0 ✓ Total weighted average r
Slide 23: Asset Management – Updating Our Current Portfolio
ASSET MANAGEMENT – UPDATING OUR CURRENT PORTFOLIO ✓ Limited lease expiry risk, £10.2m or 7% of income expiring in next 3 years, 80% have agreed to renew and subject to a planned asset management project ✓ 14 projects completed to-date and further eight currently on site, investing £15m, £0.3m additi
Slide 24: Outlook
OUTLOOK 26 years of consecutive dividend growth ✓ Long-term demographic, macro and political trends supportive across UK Portfolio and Ireland £2.9 billion (2021: £2.8 billion) ✓ Strong stewards of underinvested, key social infrastructure assets with Rent roll c.40% of all assets in the UK considere
Slide 25: Further Background on PHP
FURTHER BACKGROUND ON PHP Primary Health Properties PLC Half Year Results Presentation 2022 24
Slide 26: Rent Review Results
RENT REVIEW RESULTS ✓ £1.5m (3.0% p.a.) increase from 183/£1.4m rent reviews completed in UK and 9/£0.1m in Ireland OMV Number of outstanding Six months to 30 June 2022 Rent reviews ✓ £2.3m or 2.7% uplift expected on 633 open market value reviews outstanding reviews (current rent) completed with ERV
Slide 27: 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 which has affected service provision, patient care, outcomes and staff retention ✓ Merged into one super-practice operating as a single Primary Care Network ✓ Ex
Slide 28: 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 29: 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 30: Balance Sheet
BALANCE SHEET £m 30 Jun. 22 31 Dec. 21 Investment properties (including properties held for sale) 2,912.2 2,795.9 Cash 29.7 33.4 Debt (1,285.0) (1,232.9) Net debt (1,255.3) (1,199.5) Other net current liabilities (45.2) (40.5) Adjusted net tangible assets (NAV) 1,611.7 1,555.9 Convertible bond fair
Slide 31: 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 32: 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 33: EPRA Cost Ratio
EPRA COST RATIO 30 June 2022 30 June 2021 31 December 2021 £m £m £m Gross rent less ground rent, service charge and other income 73.5 69.1 139.6 Direct property expense 5.7 4.0 8.9 Less: service charge costs recovered (3.2) (2.4) (5.8) Non-recoverable property costs 2.5 1.6 3.1 Administrative expens
Slide 34: Contact Details
CONTACT DETAILS Harry Hyman Richard Howell David Bateman Chief Executive Officer Chief Financial Officer Chief Investment Officer harry.hyman@phpgroup.co.uk richard.howell@phpgroup.co.uk david.bateman@phpgroup.co.uk Primary Health Properties PLC Half Year Results Presentation 2022 33
Slide 35: Disclaimer
DISCLAIMER This document comprises the slides for a presentation in respect of Primary Health Properties PLC (the “Company”) and its 2022 interim results presentation (the “Presentation”). No reliance may be placed for any purposes whatsoever on the information in this Presentation or on its complet
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