Primary Health Properties Plc · LSE:PHP
Primary Health Properties — FY2020 Earnings Presentation
32 slides from Primary Health Properties's earnings presentation, February 2021
Slide 1: Resilience Through Uncertainty
RESILIENCE THROUGH UNCERTAINTY Primary Health Properties PLC Annual Results Presentation 2020
Slide 2: Agenda
1 Primary Health Properties PLC Annual Results Presentation 2020 AGENDA • PHP at a glance • Continued progress in 2020 • Nexus internalisation • Key financial highlights and results 25 years of dividend growth • Investment and developments • Property portfolio overview and ESG • Debt summary • Divid
Slide 3: PHP at a Glance
2 Primary Health Properties PLC Annual Results Presentation 2020 PHP AT A GLANCE • Leading investor in flexible, modern primary healthcare accommodation across UK and Ireland • Leading portfolio of 513 properties valued at £2.6 billion • FTSE 250 UK Real Estate Investment Trust (“REIT”) with c.£2.0
Slide 4: Continued Progress in 2020
3 Primary Health Properties PLC Annual Results Presentation 2020 CONTINUED PROGRESS IN 2020 • Successful completion of the internalisation of the Group’s management structure delivering annual cost savings of approximately £4m • Acquisitions in 2020 ✓ Portfolio of 22 purpose built medical centres fo
Slide 5: Nexus Internalisation - Strategic and Financial Benefits
4 Primary Health Properties PLC Annual Results Presentation 2020 NEXUS INTERNALISATION - STRATEGIC AND FINANCIAL BENEFITS ✓ Acquisition by the Group of a fully operational management platform with the transfer of the systems, know-how and proprietary market knowledge that Nexus has developed since 1
Slide 6: Key Financial Highlights
5 Primary Health Properties PLC Annual Results Presentation 2020 KEY FINANCIAL HIGHLIGHTS Performance 31 December 2020 31 December 2019 Change Net rental income (£m) 131.2 115.7 +13.4% Adjusted earnings (£m) 73.1 59.7 +22.4% Adjusted earnings per share (pence) 5.8p 5.5p +5.5% Dividends paid (£m) 73.
Slide 7: Income Statement
6 Primary Health Properties PLC Annual Results Presentation 2020 INCOME STATEMENT 31 December 2020 31 December 2019 Change £m £m Net rental income 131.2 115.7 +13.4% Administrative expenses (11.6) (10.5) Performance incentive fee (1.6) (1.8) Operating profit before financing costs 118.0 103.4 +14.1%
Slide 8: Balance Sheet Strengthened
7 Primary Health Properties PLC Annual Results Presentation 2020 BALANCE SHEET STRENGTHENED Adjusted NAV per share (pence) 120.0 115.0 5.8 (5.9) 2.7 112.9 3.9 (1.5) 110.0 107.9 105.0 100.0 95.0 90.0 85.0 Opening Adjusted Dividends Portfolio Interest derivatives Shares Closing NAV per earnings paid r
Slide 9: Investment
8 Primary Health Properties PLC Annual Results Presentation 2020 INVESTMENT ✓ 23 assets acquired in 2020 for £59m with good asset management opportunities ✓ Strong active pipeline in UK and Ireland totalling £129m including £59m under offer Lagan & Saltscar Surgery, Redcar Newmarket Medical Practice
Slide 10: Forward Funded Development Pipeline
9 Primary Health Properties PLC Annual Results Presentation 2020 FORWARD FUNDED DEVELOPMENT PIPELINE ✓ Six schemes currently on site with a net development cost of £47.4m Arklow Primary Care Centre, Co. Wicklow, Enniscorthy, County Wexford, Ireland Eastbourne Primary Care Centre, Epsom, Surrey Irela
Slide 11: Direct Developments
10 Primary Health Properties PLC Annual Results Presentation 2020 DIRECT DEVELOPMENTS ✓ Acquired as part of internalisation of management structure ✓ Strong pipeline of opportunities totalling £80m at varying stages of progression, including two advanced schemes totalling £10m due to be on site in 1
Slide 12: Strong Pipeline of Acquisitions, Developments and Asset Management Projects
11 Primary Health Properties PLC Annual Results Presentation 2020 STRONG PIPELINE OF ACQUISITIONS, DEVELOPMENTS AND ASSET MANAGEMENT PROJECTS • £100m proceeds from September 2019 equity raise successfully deployed 1 Funds deployed Region Number Acq’n/dev’t cost across 23 standing £100m proceeds inve
Slide 13: Property Portfolio Overview
12 Primary Health Properties PLC Annual Results Presentation 2020 PROPERTY PORTFOLIO OVERVIEW Key Figures1 31 December 2020 Total number of properties 513 Including properties in Ireland 18 Investment portfolio value (£bn) 2.58 Floor area (000’s sqm) 680 Capital value (£ per sqm) 3,781 Contracted re
Slide 14: High Quality Recurring Income
13 Primary Health Properties PLC Annual Results Presentation 2020 HIGH QUALITY RECURRING INCOME Key characteristics of the portfolio Strong tenant UK leases have 31% of portfolio Weighted average covenant – 90% of effectively upward on fixed or Occupancy unexpired lease rent roll paid only rent revi
Slide 15: Long Leases with Rental Growth Potential
14 Primary Health Properties PLC Annual Results Presentation 2020 LONG LEASES WITH RENTAL GROWTH POTENTIAL • Effectively upward only rent roll in UK Drivers of rental growth • Total weighted average rental growth 1.8% p.a. • Completion of historic rent reviews – increased momentum ✓ 69% reviewed to
Slide 16: Asset Management – Enhancing Existing Portfolio
15 Primary Health Properties PLC Annual Results Presentation 2020 ASSET MANAGEMENT – ENHANCING EXISTING PORTFOLIO ✓ 24 projects either completed or on-site in year investing £8m, £0.3m additional rent and WAULT extended back to 20 years ✓ Strong pipeline of over 80 projects either Board approved or
Slide 17: ESG: Premises, Health and People
16 Primary Health Properties PLC Annual Results Presentation 2020 ESG: PREMISES, HEALTH AND PEOPLE Built Environment • Supporting the NHS target to be Carbon Net Zero by 2045 and interim reduction of 80% by 2036-2039 • All acquisitions to have an EPC rating of C or better • In the UK, all new develo
Slide 18: Debt Summary
17 Primary Health Properties PLC Annual Results Presentation 2020 DEBT SUMMARY • Broad and diverse range of lending partners Euro private placements £110m/€121m (7%) • Long weighted average debt maturity of 7.6 years Convertible bond • 100% of debt fixed or hedged for a weighted average maturity of
Slide 19: 25 Year Track Record of Dividend Growth
18 Primary Health Properties PLC Annual Results Presentation 2020 25 YEAR TRACK RECORD OF DIVIDEND GROWTH 7.0 Implied PHP 2021 dividend yield2 Historic dividend progression CAGR 8.9% 6.20p 5.90p 6.0 Share Price3 Yield 5.40p 5.60p 5.25p 5.00p 5.125p 5.0 147p 4.2% 4.63p 4.75p 4.88p 4.38p 4.50p 4.13p 4
Slide 20: Conclusion - Investment Highlights
19 Primary Health Properties PLC Annual Results Presentation 2020 CONCLUSION - INVESTMENT HIGHLIGHTS • One of the UK’s largest listed primary health property investors with 513 properties valued at £2.6 billion One of the UK’s largest primary health • FTSE 250 UK REIT with market capitalisation of c
Slide 21: Further Background on PHP
20 Primary Health Properties PLC Annual Results Presentation 2020 Further background on PHP
Slide 22: Positive Yield Gap
21 Primary Health Properties PLC Annual Results Presentation 2020 POSITIVE YIELD GAP Illustrative yield gap on property investment UK acquisitions Ireland acquisitions 6.0% 6.0% 0.30% 1.6% 5.0% 4.8% 5.1% 1.6% 5.0% 4.0% 0.30% 4.0% 3.8% 2.9% 3.0% 3.0% 2.0% 2.0% 1.0% 1.0% 0.0% 0.0% Valuation 10 year Li
Slide 23: Primary Health Care Opportunity in the UK
22 Primary Health Properties PLC Annual Results Presentation 2020 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 y
Slide 24: Primary Health Care Opportunity in the UK
23 Primary Health Properties PLC Annual Results Presentation 2020 PRIMARY HEALTH CARE OPPORTUNITY IN THE UK • Common challenges include lack of space in waiting rooms and consultation rooms, growing list sizes and lack of disabled access. • The Covid-19 crisis undoubtedly accelerated the intended tr
Slide 25: Strong Track Record of Relative Performance
24 Primary Health Properties PLC Annual Results Presentation 2020 STRONG TRACK RECORD OF RELATIVE PERFORMANCE • IRR over period since inception of 13.3%1 (Average annual inflation (RPI) over period: 2.7%) CAGR total shareholder returns PHP TSR PHP (absolute change) TSR (absolute – 6–mths change) / 1
Slide 26: Balance Sheet
25 Primary Health Properties PLC Annual Results Presentation 2020 BALANCE SHEET £m 31 Dec. 20 31 Dec.19 Investment properties 2,576.1 2,413.1 Cash 103.6 143.1 Debt (1,159.3) (1,210.4) Net debt (1,055.7) (1,067.3) Other net current liabilities (35.1) (33.0) Adjusted net tangible assets (NAV) 1,485.3
Slide 27: Spread of Funding Sources
26 Primary Health Properties PLC Annual Results Presentation 2020 SPREAD OF FUNDING SOURCES Secured facilities 3 Secured Aviva Secured Provider Santander RBS1 HSBC Lloyds Barclays Aviva bond One Medical bond Tenor Bullet Bullet Bullet Bullet Bullet Bullet Bullet Amortising Bullet Expiry Jul-2021 Mar
Slide 28: Spread of Funding Sources (Continued)
27 Primary Health Properties PLC Annual Results Presentation 2020 SPREAD OF FUNDING SOURCES (CONTINUED) Secured facilities 3 Unsecured Cash/ Total Unfettered facilities 1 assets Standard Convertible Provider Aviva Ignis Aviva Euro PP (€) Euro PP (€) Aviva Aviva Life bond Tenor Bullet Bullet Bullet B
Slide 29: EPRA Cost Ratio
28 Primary Health Properties PLC Annual Results Presentation 2020 EPRA COST RATIO Year ended Year ended 31 December 2020 31 December 2019 £m £m Gross rent less ground rent and service charge income 134.6 118.3 Direct property expense 7.8 5.6 Administrative expenses 11.6 10.5 Performance incentive fe
Slide 30: Rent Review Results
29 Primary Health Properties PLC Annual Results Presentation 2020 RENT REVIEW RESULTS • £1.7m (1.8% p.a.) increase from 309 rent reviews completed OMV Number of outstanding 12 months to 31 December 2020 Rent reviews • 1.3% p.a. achieved on 159 open market value reviews reviews (current rent) complet
Slide 31: Contact Details
30 Primary Health Properties PLC Annual Results Presentation 2020 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 phpgro
Slide 32: Disclaimer
31 Primary Health Properties PLC Annual Results Presentation 2020 DISCLAIMER This document comprises the slides for a presentation in respect of Primary Health Properties PLC (the “Company”) and its 2020 annual results presentation (the “Presentation”). No reliance may be placed for any purposes wha
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