Primary Health Properties Plc · LSE:PHP
Primary Health Properties — H1 2020 Earnings Presentation
34 slides from Primary Health Properties's earnings presentation, Jul 29, 2020
Slide 1: Interim Results 2020
Primary Health Properties PLC Primary Health Properties PLC Interim Results 2020 Annual Results Presentation 2018 Modernising Primary Care infrastructure in a sustainable way for the 21st Century
Slide 2: Agenda
Our growing portfolio Agenda PHP at a glance Continued progress in 2020 Key financial highlights and results Property Portfolio overview Debt summary Dividend track record and investment highlights Appendices
Slide 3: PHP at a glance
PHP at a glance • Leading investor in flexible, modern primary healthcare accommodation across UK and Ireland • Leading portfolio of 510 properties valued at £2.5 billion • FTSE 250 UK Real Estate Investment Trust (“REIT”) with c.£2.0 billion market capitalisation • 90% of income funded by governmen
Slide 4: Continued progress in 2020
Continued progress in 2020 • £100m proceeds from September 2019 equity raise successfully deployed across 23 standing investments, 6 forward funded developments and 12 asset management projects totalling c. £107m • Acquisitions in Q4 2019 and H1 2020 ✓ Portfolio of 22 purpose built medical centres f
Slide 5: Key financial highlights
Key financial highlights Performance 30 June 2020 30 June 2019 Change Net rental income (£m) 64.8 53.8 +20.4% Adjusted EPRA earnings (£m) 36.0 27.9 +29.0% Adjusted EPRA earnings per share (pence) 3.0p 2.8p +7.1% Dividends paid (£m) 35.9 26.7 +34.5% Dividend cover 100% 104% - Dividend per share (penc
Slide 6: Income Statement
Income Statement 30 June 30 June Change 2020 2019 % £m £m Net rental income 64.8 53.8 +20.4% Administrative expenses (5.7) (5.0) Performance incentive fee (0.8) (0.9) Operating profit before financing costs 58.3 47.9 +21.7% Net financing costs (22.3) (20.0) Adjusted EPRA earnings 36.0 27.9 +29.0% Re
Slide 7: Balance Sheet strengthened
Balance Sheet strengthened Adjusted EPRA NTA per share (pence) 115.0 3.0 (2.95) 110.0 107.9 0.9 0.2 109.1 105.0 100.0 95.0 90.0 85.0 Opening Adjusted Dividends Portfolio Shares Closing NTA per EPRA paid revaluation issued NTA per share earnings share 30 June 2020 31 December 2019 Change Adjusted EPR
Slide 8: Property portfolio overview
Property portfolio overview Key Figures1 30 June 2020 Total number of properties 510 Including properties in Ireland 17 Investment portfolio value (£bn) 2.51 Floor area (000’s sqm) 674 Capital value (£ per sqm) 3,725 Contracted rent roll (£m) 133.3 Net initial yield (NIY) 4.86% Average lot size (£m)
Slide 9: Development pipeline
Development pipeline ✓ Six schemes currently on site with a net development cost of £41.5m Eastbourne Primary Care Centre, East Sussex Arklow Primary Care Centre, Co. Wicklow, Ireland Tenants Tenants ✓ GP Practices x 2 ✓ Health Service Executive (HSE) ✓ Pharmacy ✓ GP Practice ✓ Pharmacy Purchase dat
Slide 10: Investment
Investment ✓ 23 assets acquired for £62m with good asset management opportunities ✓ Strong active pipeline in UK and Ireland totalling £92m including £44m under offer Lagan & Saltscar Surgery, Redcar Newmarket Medical Practice, Lincolnshire Tenants Tenants ✓ GP Practices x 2 ✓ GP Practice x 1 Purcha
Slide 11: Asset Management – enhancing existing portfolio
Asset Management – enhancing existing portfolio ✓ 12 projects completed or on-site investing £4.1m, £0.12m additional rent and WAULT extended back to 21 years ✓ Strong pipeline of over 80 projects either Board approved or advanced negotiations investing c. £36m, £1.1m of additional rent and WAULT ex
Slide 12: High quality recurring income
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 reviews indexed uplifts. rate of length of directly/indirectly 69% OMV
Slide 13: Long leases with rental growth potential
Long leases with rental growth potential • Effectively upward only rent roll in UK • Total weighted average rental growth 2.2% p.a. ✓ 69% reviewed to open market (ave. 1.6% p.a.) ✓ 25% index linked (ave. 2.7% p.a.) ✓ 6% on fixed uplift (ave 2.9% p.a.) Drivers of rental growth • Increased development
Slide 14: Debt summary
Debt summary Euro private placements £109m/€121m (8%) • Broad and diverse range of lending partners • Long weighted average debt maturity of 6.7 years Convertible bond £150m (10%) • 99.5% of debt fixed or hedged for a weighted average maturity of 7.7 years Aviva £519m (36%) • Total debt facilities o
Slide 15: Strong track record of dividend growth
Strong track record of dividend growth 7.0 Implied PHP 2020 dividend yield2 5.90p 6.0 Share Price3 Yield 5.60p 5.125p 5.25p 5.40p 150p 3.9% 4.88p 5.00p Q4 5.0 4.50p 4.63p 4.75p 4.13p 4.25p 4.38p 4.0 3.75p 3.38p 3.00p 3.0 2.75p 2.50p 2.25p Q1-Q3 2.00p 2.0 1.75p 1.40p 1.50p 1.0 0.80p 0.0 1997 1998 199
Slide 16: Investment highlights
Investment highlights • One of the UK’s largest listed primary health property investors with 510 properties valued at £2.5 billion One of the UK’s largest primary • FTSE 250 UK REIT with market capitalisation of c. £2.0 billion and improved share liquidity health property investors • Underlying inv
Slide 17: Further background on PHP
Our growing portfolio Further background on PHP
Slide 18: Positive yield gap
Positive yield gap Illustrative yield gap on property investment UK acquisitions Ireland acquisitions 6.0% 6.0% +0.26% 5.1% 5.0% 4.8% 5.0% 0.275% 0.275% 4.0% 0.25% 4.0% 3.5% 3.0% 3.0% 1.6% 2.6% 1.7% 2.0% 2.0% 1.0% 1.0% 0.0% 0.0% Valuation Incremental 10 year Euribor Average debt Income return Valuat
Slide 19: 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 20: Primary health care opportunity in the UK
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 transition away from face to face GP consultations, with various est
Slide 21: £140m Equity raise - use of proceeds
£140m Equity raise - use of proceeds • £100m proceeds from September 2019 equity raise successfully deployed 1 Region Number Acq’n/dev’t cost Funds deployed across 23 standing UK 27 £82m £100m proceeds investments, 6 Total funds deployed since September 2019 successfully forward funded £21m c. £107m
Slide 22: Strong track record of relative performance
Strong track record of relative performance • IRR over period since inception of 13.4%1 (Average annual inflation (RPI) over period: 2.7%) CAGR total shareholder returns PHP TSR (absolute change) – 1yr / 3yr/ 5yr PHP Assura EPRA UK 1 year 20.2% 26.4% (10.1%) 3 years 16.1% 12.0% (2.3%) 5 years 15.1%
Slide 23: Balance sheet
Balance sheet £m 30 Jun. 20 31 Dec.19 Investment properties 2,514.3 2,413.1 Cash 64.0 143.1 Debt (1,214.3) (1,210.4) Net debt (1,150.3) (1,067.3) Other net current liabilities (35.5) (33.0) Adjusted EPRA net tangible assets (NAV) 1,328.5 1,312.8 Convertible bond fair value adjustment (23.0) (22.7) F
Slide 24: Spread of funding sources
Spread of funding sources Secured facilities 3 Barclays/ Secured Aviva Secured Provider Santander Lloyds RBS HSBC Aviva AIB bond One Medical bond Tenor Bullet Bullet Bullet Bullet Bullet Bullet Bullet Amortising Bullet Expiry Jan-2021 Jul-2021 Dec-2021 Mar-2022 Dec-2022 Dec-2022 Dec-2025 Nov-2028 Ma
Slide 25: Spread of funding sources (continued)
Spread of funding sources (continued) Secured facilities 3 Unsecured Cash4/ Total Unfettered facilities 1 assets Standard Convertible Provider Aviva Ignis Aviva Euro PP (€) Euro PP (€) Aviva Aviva Life bond Tenor Bullet Bullet Bullet Bullet Bullet Bullet Amortising Amortising Bullet Aug-2024 Dec-202
Slide 26: EPRA cost ratio
EPRA cost ratio Six months ended Year ended 30 June 2020 31 December 2019 £m £m Gross rent less ground rent and service charge income 66.2 118.3 Direct property expense 3.2 5.6 Administrative expenses 5.7 10.5 Performance incentive fee (“PIF”) 0.8 1.8 Less: service charge costs (1.7) (2.8) Less: gro
Slide 27: Rent review results
Rent review results • £0.8m (2.2% p.a) increase from 127 rent reviews completed OMV Number of outstanding 6 months to 30 June 2020 Rent reviews reviews (current rent) • 1.6% p.a. achieved on 44 open market value reviews completed • 2.7% p.a. achieved on 74 indexed linked reviews No % No £m • 2.9% ac
Slide 28: ESG 2020 Targets and Actions
ESG 2020 Targets and Actions • Joined GRESb, a leading ESG benchmark for real assets, and undertaken major exercise collecting baseline data ahead of submission this year • In the UK, all new developments to have a BREEAM rating of ‘Very good’ or ‘Excellent’ • In Ireland, all new developments to hav
Slide 29: Contact details
Contact details Harry Hyman Richard Howell Chris Santer Managing Director Finance Director Chief Investment Officer harry.hyman@ richard.howell@ chris.santer@ nexusgroup.co.uk nexusgroup.co.uk nexusgroup.co.uk www.phpgroup.co.uk Primary Health Properties Interim Results Presentation 2020 29
Slide 30: Disclaimer
Disclaimer Disclaimer The information contained in this presentation in respect of Primary Health Properties PLC (the “Company”) and communicated during any delivery of the presentation, including the talks given by the presenters, any question and answer session and any document or material distrib
Slide 31: Disclaimer (continued)
Disclaimer (continued) Past performance cannot be relied on as a guide for future performance. Certain statements, beliefs and opinions contained in this Presentation, particularly those regarding the possible or assumed future financial or other performance of the Company, industry growth or other
Slide 32: Disclaimer (continued)
Disclaimer (continued) United States This document is for information purposes only. This document may not be, in whole or in part, by any medium or any form, distributed, copied, reproduced, published, disclosed or passed in any way to any other person without the consent of the Company. Any securi
Slide 33: Disclaimer (continued)
Disclaimer (continued) Before acting on the information contained in this documentation, or making a decision to participate in the offer, you should read the documentation in full and consider seeking professional financial product advice from an independent person licensed by the Australian Securi
Slide 34: Disclaimer (continued)
Disclaimer (continued) Information to Distributors Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 suppleme
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