Primary Health Properties Plc · LSE:PHP
Primary Health Properties — H1 2017 Earnings Presentation
38 slides from Primary Health Properties's earnings presentation, 2017
Slide 1: Primary Health Properties
eP) Primary Health Properties
Slide 2: Gr primary Heath Properties
Gr primary Heath Properties Introduction Financial results Strong sector fundamentals Positive outlook Appendices
Slide 3: Primary Health Properties PLC at a glance
Primary Health Properties PLC at a glance > UK Real Estate Investment Trust (“REIT”) > Leading investor in flexible, modern primary healthcare accommodation > Portfolio of over 303 properties valued at £1.3 billion > Properties located across the UK and in the Republic of Ireland > 91% of income fun
Slide 4: Key financial highlights
Key financial highlights Pert Six months ended Six months ended Ch d etrotiNiaies 30 June 2017 30 June 2016 ange Net rental income (£m) 34.8 32.2 8.1% EPRA earnings (£m) 154 12.6 22.2% EPRA earnings per share (pence) 2.6 24 8.3% Dividend per share (pence) 2.62 2.5625 2.2% Investment property (£bn) 1
Slide 5: Financial results
eP) Primary Health Properties
Slide 6: Income Statement June 2017
Income Statement 30 June 2017 £m Net rental income 34.8 Administrative expenses (3.9) Operating profit before revaluation gain and financing 30.9 Net financing costs (15.5) EPRA earnings 15.4 Net result on property portfolio 29.9 Fair value gain/(loss) on interest rate derivatives 0.4 Fair value (lo
Slide 7: Progressive dividend policy - 21st successive year of dividend growth
Progressive dividend policy - 21% Successive year of dividend growth 60 5.0 40 3.0 20 1.0 0.80p 1.40p 1-50p 1.75p 2.25p 2.75p 5.125 8250 5.00p 4.88p 4.75p 4509 463P 5 3 3 8 001 8 3 5 2011 o 3S a 2012 2013 2014 2016 E Renn Six months to 30 Six months to One year to June 2017 30 June 2016 | 31 Decembe
Slide 8: EPRA NAV per share (pence)
EPRA NAV per share (pence) 97.0 5.0 96.1 95.0 2.6 (2.6) 93.0 91.1 91.0 89.0 87.0 85.0 Opening NAV per EPRA Earnings Dividends paid Portfolio Closing NAV per share Revaluation share
Slide 9: eP) Primary Health Properties
eP) Primary Health Properties
Slide 10: Property Portfolio
Property Portfolio Vv > Disciplined approach to acquisitions > 4 properties acquired in H1 2017 for £18.6 m (excl. purchase costs) > Annual contracted rent roll: £69.3m™; 99.7% occupancy rate > 3 properties acquired PPE for £35.5m (excl. purchase costs) adding a further £1.7m to contracted net roll.
Slide 11: Investment Acquisition
Investment Acquisition Carrigaline, County Cork, Ireland > Tenants: HSE, GP practice and Pharmacy > Date acquired: March 2017; completion due August 2017. >» WAULT: 25 years > Size: 2,900m? > Acquisition Cost: £6.4m (€7.5m) > Patient list size: c. 20,000 wSaueiee Gr Primary Health Properties 2017 In
Slide 12: Development delivery
Development delivery Swindon, Town Centre, Wiltshire > > > Tenants: NHS, GP’s x2 Date completed: May 2017 WAULT: 20 years Size: 2,454m? Development Cost: £10m Patient list size: c 20,000 Gr brimary Heath Properties 2017 Interim Results Presentation 12
Slide 13: eP) Primary Health Properties
eP) Primary Health Properties
Slide 14: Strong management contributes to income growth
Strong management contributes to income growth > > > Portfolio 99.7% occupied Rental growth on reviews expected to increase Average of 1.6% per annum achieved on reviews completed in H1 2017 (0.9% in FY16) 25% of PHP portfolio benefits from RPI or fixed, upwards only reviews Four asset management pr
Slide 15: Long leases with growth potential
Long leases with growth potential > Effectively upward only rent roll Analysis of leases unexpired by rent roll > Total weighted average rental growth 1.6% ~ayears > 6% on fixed uplift (ave. 4.6% p.a.) More than 20 nad > 19% index linked (ave. 3.0% p.a.) “he > 75% reviewed to open market (ave 0.3%)
Slide 16: Asset Management Project
Asset Management Project Woolston Lodge Surgery, Woolston — completion due January 2018 110 sqm extension provides an additional 3 consulting rooms, administration space and pharmacy to facilitate a merger of 3 practices at the centre, serving 15,000 patients. Lease re-geared back to 24 years; Capex
Slide 17: Asset Management Project
Asset Management Project Belmont Surgery, Uxbridge - completion September 2017 Internal refurbishment of an existing medical centre, modernising to current NHS standards. Lease re-geared back to 20 years; Capex: £0.25m. Gr brimary Heath Properties 2017 Interim Results Presentation 17
Slide 18: eP) Primary Health Properties
eP) Primary Health Properties
Slide 19: Delivering Financial Management
Delivering Financial Management 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% > £100m 10 year private debt placement at 2.83% > £50m RBS facility, option to increase to £100m > Marginal cost of debt 2.3% > £20m 4.76% SWAP cancelled for £6.2m (equivalent to lp per share), saving £0.8 interest p.a. L
Slide 20: Secure Long Term Funding
Secure Long Term Funding pT une 2017] a Decomber 2016 | Total debt facilities Secured £626.6m £592.0m Unsecured £157.5m £157.5m £784.1m £749.5m Average maturity of debt facilities 5.8 years 5.1 years Net debt Drawn debt £678.8m £660.8m Cash on deposit (£8.1m) (£5.1m) £670.7m £655.7m Total collateral
Slide 21: Maturity of debt extended
Maturity of debt extended > Weighted maturity period increased to: 5.8 years (31 December 2016: 5.1 years) > New £100m 2.83%/ 10 year secured bond issued, PHP’s first transaction in PP market > New £50 RBS 4 year facility, with an option to extend term by one year and increase loan to £100m > Positi
Slide 22: Prudent debt management to benefit H2 2017 onwards
Prudent debt management to benefit H2 2017 onwards > Cost Of Debt >» Reduced by 39bp to 4.26% (31 December 2016: 4.65%) > Interest rate management > £20m/ 4.76% fixed interest rate swap, maturing July 2027, cancelled > One off cost of £6.2m, equivalent to 1p per share, discount to MtM > Reduces grou
Slide 23: eP) Primary Health Properties
eP) Primary Health Properties
Slide 24: Age
Age 105 98 91 2039 2039 84 77 70 63 56 Females Males 49 2014 42 2014 35 28 21 14 7 0 600,000 400,000 200,000 0 200,000 400,000 600,000 Population
Slide 25: Supply
Supply
Slide 26: Opportunities in the Republic of Ireland
Opportunities in the Republic of reland Population of 4.6 million, projected to rise to 5.2 million by DoHI aim to implement “single-tier health service” Health Service Executive, executive agency of DoH, majority occupier in new centres Vv Healthcare budget saw further increase in 2016, up 7% (€880
Slide 27: Further initiatives to support primary care
Further initiatives to support primary care NHS focuses on primary care Irish government commitment » NHS England publishes GP Forward View and reaffirms > Irish healthcare services face similar pressures to that in the UK commitment to GP services, NHS FYFV Next Steps. > Department of Health publis
Slide 28: eP) Primary Health Properties
eP) Primary Health Properties
Slide 29: Positive yield gap
Positive yield gap Illustrative a 1. Net margin over funding cost - UK Acquisitions Positive yield gap on acquisitions in UK and ROL 6.00% Asset management contribution 5.04% ional . 5.00% — Rental growth from reviews Es ns 4.00% (0.30%) Management fee reductions 3.00% (1.18%) Driving down the cost
Slide 30: Strong pipeline of opportunities
Strong pipeline of opportunities > UK market > > > > Three properties acquired in July 2017 for a total of £35.5 million, £1.7m additional rent Well established links to GP owner occupiers leading to opportunities Pipeline agreements with developers delivering forward funding transactions ETTF sanct
Slide 31: Positive Outlook
Positive Outlook » Development opportunities emerging in UK > Opportunities in Ireland, priced very attractively > Majority of rents in both jurisdictions funded by government for long lease terms > Positive yield gap between acquisition yield and funding costs > Effectively upward-only or indexed r
Slide 32: Appendices
eP) Primary Health Properties
Slide 33: Portfolio Analysis by Rent
Portfolio Analysis by Rent > 300 completed assets spread across the UK > 91% of rental income directly or indirectly from UK Government Wales London me South West 5% South East 19% ay East Anglia Yorkshire “ Humberside East 1% Midlands ™% North West West Midlands 14% 12% Gov't Body Other 1% Pharmacy
Slide 34: Spread of Funding Sources
Spread of Funding Sources Secured Unset Facilities Provider Aviva HSBC Barclays/ RBS Aviva Secured Secured Aviva Aviva Convertable Retail AIB Bond Bond Bond Bond Bullet Bullet Bullet Bullet Bullet Bullet Bullet Amortising Amortising Bullet Bullet Nov-18 Jul-20 Jan-21 Mar-21 Dec-22 Dec-25 Mar-27 Aug-
Slide 35: Borrowing Facility
Borrowing Facility > Total facilities available to PHP: £784.1m") >» Available headroom: £96.5m (after development and asset management commitments) > 20% of net debt on an unsecured basis —Convertible Bond and Retail Bond 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% PHP Debt Pr
Slide 36: Advisors and fee base
Advisors and fee base > — Enhances service quality and information management > — Revised terms to property advisory agreement with lower fee increments. > — Fee payable for amounts above £1.5bn reduced to 0.275%, above £1.75bn reduced to 0.25% > Incremental fee rates for advisory fee Gross asset va
Slide 37: Contact Details
Contact Details Harry Hyman Managing Director harry.hyman@nexusgroup.co.uk Richard Howell Finance Director richard.howell@nexusgroup.co.uk Gr brimary Heath Properties 37
Slide 38: Disclaimer
Disclaimer 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 Primary Health Properties Plc (“PHP”). The information contained in this presentation has been e
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