Primary Health Properties PLC · LSE:PHP
Primary Health Properties — MedicX Fund — FY2011 Earnings Presentation
37 slides from Primary Health Properties's earnings presentation, December 2011
Slide 1: Specialist primary healthcare infrastructure fund: 2011 annual results presentation
Specialist primary healthcare infrastructure fund 2011 annual results presentation 1
Slide 2: Agenda
Agenda 1. Introduction 2. Key financials 3. Portfolio review 4. Investment opportunity 2
Slide 3: Introduction
Introduction 3
Slide 4: MedicX Fund objectives and overview
MedicX Fund objectives and overview • Leading investor in modern purpose-built primary healthcare properties leased to doctors and the NHS generating government- funded long term secure cash flow • FTSE All Share £143 million* market capitalisation • Not a developer or operator • External investment
Slide 5: Highlights of the year
Highlights of the year • £250 million committed investment in 63 properties at a valuation net initial yield of 5.84% compared to 20 year gilt rate of 3.54% • EBITDA £9.0 million (£7.7 million 2010) and adjusted earnings including revaluation £7.2 million (£8.9 million 2010) • £35.8 million net proc
Slide 6: Continuing to deliver returns
Continuing to deliver returns Sept 2007 Sept 2008 Sept 2009 Sept 2010 Sept 2011 Dividend declared per share 5.00p 5.20p 5.33p 5.40p 5.50p Increase v 5.00p 4.0% 6.6% 8.0% 10.0% Dividend Sept 2010 Sept 2011 Movement Share price 5.475p 73.75p 75.00p 1.25p Sept 2009 Sept 2010 Sept 2011 Total return* 11.
Slide 7: NHS and primary care update
NHS and primary care update • NHS Bill much modified has now reached the Lords • Clinical Commissioning groups now involve wider community and only impact on 50% of the NHS budget (originally 80%) • Likely to become law in February 2012 • Increasing move to integrate services at a local level increa
Slide 8: Key financials
Key financials 8
Slide 9: Key financials – income statement
Key financials – income statement 12 months to 30 Sept 2011 12 months to 30 Sept 2010 Change £000 £000 Rent receivable 11,770 10,825 9% Other income 708 250 184% Total income 12,478 11,075 13% Direct property costs* 551 521 6% Investment advisory fee** 2,250 2,250 0% Overheads 675 649 4% Total expen
Slide 10: Dividend cover
Dividend cover 12 months to 12 months to 12 months to 30 Sep 2011 30 Sep 2010 30 Sep 2009 £000 £000 £000 Dividends paid 9,131 6,593 6,146 Adjusted earnings excluding revaluation 4,043 2,674 1,383 Dividend cover 44% 41% 22% Revaluation 3,119 6,180 (1,499) Adjusted earnings including revaluation 7,451
Slide 11: Key financials – balance sheet
Key financials – balance sheet As at 30 Sep 2011 As at 30 Sep 2011 £000 Pence per share Gross assets excluding cash* 223,000 115.8 Debt 100,495 52.2 Cash 18,112 9.4 Net debt 82,382 42.8 Adjusted NAV** 127,081 66.0 Adjusted NAV plus debt benefit** 131,048 68.0 DCF 169,838 88.2 As at 30 Sep 2011 Restr
Slide 12: Debt funding
Debt funding Deutsche Postbank Aviva facility New Aviva facility facility Facility size £100 million £37.2 million £50 million Committed December 2006 December 2009 December 2011 Drawn £100 million £7.5 million £50 million Expiry December 2036 April 2015 December 2031 Margin 0.9% 2.0% 1.85% Interest
Slide 13: Portfolio review
Portfolio review 13
Slide 14: Portfolio review
Portfolio geographical spread Portfolio review* Completed projects 63 assets Contractual certainty Under construction / committed projects 55 Projects of income 87% 100% 8 Projects 13% 0% Demand risk Under construction / Availability risk Operational committed projects Security of tenure 100% 100% F
Slide 15: Portfolio review
Portfolio review* Security of income Security of income by tenant type by lease expiry Modernity of assets Value per property Average unexpired lease term 18.1 years Average age 4.1 years Average value £3.8 million *As at 30 September 2011; includes completed value of properties under construction a
Slide 16: Rental uplifts
Rental uplifts* • Total rent roll £15.4 million − £13.1 million completed − £2.3 million under construction • £4.5 million passing rents currently under negotiation • £3.3 million rent reviews agreed during the period • Equivalent to 2.3% per annum increase achieved Increasing inflation link − 1.9%
Slide 17: Rent reviews by period
Rent reviews by period* Year to Year to Year to Year to Year to Sept 07 Sept 08 Sept 09 Sept 10 Sept 11 Number 20 12 33 15 15 Passing rent £1,814,809 £969,757 £2,917,782 £853,208 £1,187,212 Number 0 1 2 14 14 Outstanding reviews £0 £164,600 £155,633 £1,845,424 £1,650,204 Annualised increase 3.1% 2.8
Slide 18: Property valuation yields
Property valuation yields* *MedicX Fund property valuation as at 30 September 2011, IPD data as at 31 October 2011 and Gilt rate data as at 5 December 2011 18
Slide 19: Acquisitions in year
Acquisitions in year* Raynes Park Woolwich Immingham West Wirral Rochdale Hirwaun Grangetown Corby Glen East Cowes Total committed investment of £39 million in nine properties Total approved investment of £35 million in nine properties *As at 30 September 2011 19
Slide 20: Property valuation comparison
Property valuation comparison Woolwich West Wycombe Initial yield: 6.0% Initial yield: 4.25% (reversion 5.22%) Lease term: 25 years (break option year 20) Lease term: 17 years Tenant: Doctors (rent paid by PCT) Tenant: Marks & Spencer Rent review: 3 year RPI Rent review: Open market 5 years 20
Slide 21: Disposals in the year
Disposals in the year* Gorseinon medical centre sold April 2011 for £0.6 million at a cash yield of 6.04% Gorseinon Three further assets targeted for disposal *As at 5 December 2011 21
Slide 22: Investment opportunity
Investment opportunity 22
Slide 23: Pace of investment increasing
Pace of investment increasing* *12 month rolling actual 23
Slide 24: Attractive yield differential
Attractive yield differential* *MedicX Fund cash yield, as at 30 September 2011 , 2028 Gilt rate and margin as at 5 December 2011 24
Slide 25: Revised Adviser fee structure enhances earnings
Revised Adviser fee structure enhances earnings Gross assets MXF current fee case First £300 million (min £2.25 million) 0.75% Greater than £300 million 0.75% Gross assets MXF reduced fee case Saving First £300 million (min £2.25 million) 0.75% 0.00% Between £300 million and £500 million 0.65% 0.10%
Slide 26: Adjusted NAV sensitivities
Adjusted NAV sensitivities* Adjusted NAV pps 80 74 68 62 6.00 5.75 5.50 5.25 Valuation yield % *As at 30 September 2011 26
Slide 27: Investment opportunity
Investment opportunity • Opportunity to buy assets at attractive prices • Lowly geared and fixed borrowing costs below asset yields • Earnings and dividend cover enhanced as the fund grows • Strong pipeline and market access • Management well placed to take advantage of opportunities • Attractive to
Slide 28: Appendix
Appendix 28
Slide 29: Adjusted NAV plus debt benefit
Adjusted NAV plus debt benefit 29
Slide 30: DCF NAV sensitivity
DCF NAV sensitivity* DCF Share price Pence per share 88.2p 75.0p Weighted discount rate 7.2% 9.2% Risk premium to 20 year gilt rate 3.7% n/a Rental growth per annum 2.5% (0.1)% Capital appreciation per annum 1.0% (1.2)% DCF reconciliation Adjusted NAV plus debt benefit 68.0p Purchasers costs at 5.80
Slide 31: DCF NAV sensitivities
DCF NAV sensitivities* Discount rate Rental and capital value increases per annum NAV NAV pence per Completed pence per Rental share share % 6.0 6.5 7.0 7.5 8.0 % 0.5 1.5 2.5 3.5 4.5 Under construction 6.0 98 95 92 89 86 -1.0 65 70 76 82 89 Capital 7.0 97 93 90 87 84 0.0 71 76 82 88 94 8.0 95 91 88
Slide 32: Pressure on primary care estate
Pressure on primary care estate The current UK estate Service transfer to primary care 75% of GPs unhappy with their premises* Ageing and _ + NHS budget £8.1 billion of primary care estate*** constraints growing 60% of GPs work from unsuitable premises** population 72% GP owned*** *NHS The Informati
Slide 33: General medical statistics in England
General medical statistics in England* 2010 1995 Change • Number of practices 8,230 9,188 -9% • Single-handed practices 1,203 2,919 -59% • Number of GPs 35,120 27,465 +28% • Number of part-time GPs 31%** 14% +17% • GPs aged 60 and over 10% 6% +4% • Contracted GPs (GMS) 50% 98% -48% • Salaried GPs (P
Slide 34: Sector comparison
Share price total return Sector comparison* Dividend yield *As at 5 December 2011 - Collins Stewart / DataStream 34
Slide 35: Infrastructure comparison
Share price total return Infrastructure comparison* Dividend yield *As at 5 December 2011 – Collins Stewart / DataStream 35
Slide 36: MedicX Fund Board of Directors
MedicX Fund Board of Directors • David Staples, Chairman Guernsey based quoted Fund Director (FCA, CTA) • John Hearle, Director Chairman and Head of Healthcare Division of Aitchison Raffety (FRICS) • Shelagh Mason, Director Guernsey based Commercial Property Lawyer and quoted Fund Director • Christo
Slide 37: Important notice
Important notice These presentation materials (the “Presentation Materials”) are being solely issued to and directed at persons having professional experience in matters relating to investments and who are investment professionals as specified in Article 19(5) of the Financial Services and Markets A