Primary Health Properties Plc · LSE:PHP
Primary Health Properties — FY2016 Earnings Presentation
38 slides from Primary Health Properties's earnings presentation, 2017
Slide 1: Primary Health Properties
eP) Primary Health Properties
Slide 2: Introduction
Gr primary Heath Properties Introduction Delivering progressive returns Growing property portfolio Funding diversity and longevity Supportive market Outlook Appendix
Slide 3: Gr —_—
Gr —_—
Slide 4: 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 296 properties valued at over £1.2 billion > Properties located across the UK and in the Republic of Ireland > 90% of income fun
Slide 5: Delivering on strategic objectives
Delivering on strategic objectives Objective To create progressive shareholder returns through investing in healthcare real estate let on long term leases, backed by secure underlying covenants, majority funded directly or indirectly by a government body. Grow property portfolio Deliver progressive
Slide 6: Key financial highlights
Key financial highlights DELIVER 2016 2015 Change Progressive returns EPRA earnings per share 4.8p 4.9p -2.0% Dividend cover 100% 98% +2.0% EPRA NAV per share 91.1p 87.7p +3.9% EPRA Net assets £545.0m £391.6m +39.2% Property portfolio Total property assets £1.22bn £1.12bn +10.9% Contracted annual re
Slide 7: Key financial highlights
Key financial highlights MANAGE 2016 2015 Change Effectively & efficiently EPRA Cost Ratio 11.5% 11.5% Rental growth on review (p.a.) 0.9% 0.9% - Capital projects £1.8m invested £0.2m additional rent Ave. 12 years added WAULT FUND 2016 2015 Change Diversified and long term Loan to Value 53.7% 62.7%
Slide 8: Delivering progressive returns
eP) Primary Health Properties
Slide 9: Income Statement
Income Statement 2016 2015 £m £m Net rental income 66.6 62.3 Administrative expenses (7.3) (6.8) Operating profit before revaluation gain and financing 59.3 55.5 Net financing costs (32.2) (33.8) EPRA earnings 26.8 21.7 Net result on property portfolio 20.7 39.8 Fair value (loss)/gain on interest ra
Slide 10: Dividend per share history
6.0 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 2.00p 2.0 1.75p 1.40p 1.50p 1.0 0.80p 0.0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 11: Shareholder returns outperform benchmarks
Shareholder returns outperform benchmarks 2016 returns Outperformance Total property return 7.9% 3.6% +4.3% Total shareholder return 8.2% -7.0% +15.2% > PHP achieved a total property return of 7.9%, outperforming IPD All Property total returns by 4.3% (IPD Quarterly Property Index) > Portfolio avera
Slide 12: EPRA NAV per share (pence)
EPRA NAV per share (pence) 99.0 2.2 (2.3) 97.0 3.5 (4.8) 95.0 93.0 4.8 91.1 91.0 89.0 87.7 87.0 85.0 Opening NAV per share Operating Profit Net result on property Equity issue Swap re-coupon Dividends paid Closing NAV per share portfolio
Slide 13: Growing property portfolio
eP) Primary Health Properties
Slide 14: Property Portfolio
Property Portfolio > 24 properties acquired in 2016 for a total consideration of £74.2 million (excl. purchase costs) > Portfolio of 296 healthcare centres — 295 completed, 1 under development > Portfolio value (incl. development): £1.22bn - average net initial yield 5.17% > Average lot size: £4.1m;
Slide 15: Investment Acquisition
Investment Acquisition New Alderley House, Macclesfield > Tenants: East Cheshire NHS Trust & NHS Property Services > Date acquired: December 2016 > WAULT: 15.8 years Size: 3,187 m? (NIA) Acquisition Cost: £10.7m 15 Gr brimary Heath Properties soisavs
Slide 16: Development delivery
Development delivery Two Rivers Medical Centre, Ipswich > > > Tenants: 16 GP practice and pharmacy Date completed: July 2016 WAULT: 25 years Size: 1,990 m? (NIA) Acquisition Cost: £6.6m Patient list size: 25,000 Gr mrimory Heat Properties 2016 Annual Results Presentation 16
Slide 17: Investment Acquisition
Investment Acquisition Tipperary Primary Care Centre, Tipperary, Republic of Ireland > Tenants: Health Services Executive (HSE), 3 GPs, pharmacy > Date built: August 2016 > WAULT: 25 years > Size: 2,800m*? (NIA) >» Acquisition Cost: €6.6m Gr Primary Health Properties 2016 Annual Results Presentation
Slide 18: eP) Primary Health Properties
eP) Primary Health Properties
Slide 19: Strong management contributes to income growth
Strong management contributes to income growth > Seven asset management projects completed in 2016 > Invested £1.8m, generated £0.2m of additional rent, added average 12 years WAULT > Eight projects receive ETTF funding > Investment to total £5.3m, securing £0.3m additional rent and average 13 years
Slide 20: Asset Management Project
Asset Management Project Winchcombe, Gloucestershire - Completed June 2016 Extension and refurbishment of a purpose built rural medical centre for a 6 GP practice. Providing a new 235 square metre extension to improve patient access due to significant local population growth, whilst maintaining the
Slide 21: Asset Management Project
Asset Management Project Llandaff North, Cardiff - Completed December 2016 Internal refurbishment of an existing medical centre, creating an additional 2 consulting rooms and clinical storage, allowing the GPs to provide expanded services for the local community. New 20 year lease entered into upon
Slide 22: Lease length profile
Less than 5 years More than 20 years 2% 10% 5-10 years 18% 15-20 years 26% 10-15 years 44%
Slide 23: Transparent, efficient administration structure
Transparent, efficient administration structure > Nexus provide all advisory and administration services > Enhances service quality and information management > Average fee rate for services of advisers reduced to 50 bps (2015: 50 bps) > Notwithstanding portfolio growth in excess of 10%, EPRA Cost R
Slide 24: Funding diversity and longevity
eP) Primary Health Properties
Slide 25: Secure Long Term Funding
Secure Long Term Funding ee 2016 2015 Total debt facilities Secured £592.0m £645.2m Unsecured £157.5m £157.5m £749.5m £802.7m Average maturity of debt facilities 5.1 years 5.8 years Net debt Drawn debt £660.8m £692.7m Cash on deposit (£5.1m) (£2.9m) £655.7m £689.8M Total collateral £1.22bn £1.10bn G
Slide 26: Debt maturity profile
£'m Debt maturity profile 180.0 157.5 160.0 140.0 120.0 115.0 115.0 100.0 80.0 75.0 70.0 63.0 60.0 50.0 51.2 40.0 25.5 20.0 4.4 7.2 0.0 1.6 2.0 3.2 1.8 0.0 2.1 0.0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Slide 27: Prudent debt management to benefit 2017 onwards
Prudent debt management to benefit 2017 onwards > Debt facility management > Balance of proceeds used to pay down revolving credit facilities > Group Loan to Value initially reduced LTV to 49% > Group LTV at 31 December 2016 stood at 53.7% (2015: 62.7%) > Interest rate management > Interest rate swa
Slide 28: Supportive market
eP) Primary Health Properties
Slide 29: Population age profile
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 30: 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 commitment to GP services the UK > GP budget to increase by 25% in five years to 202
Slide 31: Outlook
eP) Primary Health Properties
Slide 32: Valuation yield and income return after costs
6.000% 5.17% 5.000% (0.325%) 4.000% (1.250%) 3.000% 1.895% 2.000% (1.700%) 1.000% 0.000% Valuation yield* Incremental 10 year Libor Average debt Income return management Swap Rate *** margin **** after costs fee** 7.00% 8.000% 7.000% 6.00% 7.000% 6.000% (0.325%) 5.00% Assumed market (0
Slide 33: Strong pipeline of opportunities
Strong pipeline of opportunities > UK market >» Two properties acquired in January 2017 for a total of £7.2 million > ETTF sanctions 200 new build schemes as development activity increases slowly > Well established links to GP owner occupiers leading to opportunities > Pipeline agreements with devel
Slide 34: Positive Outlook
Positive Outlook term, no Development opportunities emerging in UK New pool of opportunity in Republic of 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 upw
Slide 35: Appendix
eP) Primary Health Properties
Slide 36: Spread of Funding Sources
Spread of Funding Sources RBS/ Santander TV actual 38% ICR 5.6x HSBC Bullet Jul-20 £50m £6m £434m £3m 55% 12% 14x 8.3x Barclays/ AIB Bullet Jan-21 £110m £75m £202m £1lm 60% 37% 15x 3.1K Secured Facilities Aviva Bullet Nov-18 £75m £75m £125m £7m 60% 60% 14x 2.3x Aviva Bullet Dec-22 £25m £25m £39m £2m
Slide 37: Contact Details
Contact Details Harry Hyman Managing Director harry.hyman@nexusgroup.co.uk Phil Holland Finance Director phil.holland@nexusgroup.co.uk Gr brimary Heath Properties 2016 Annual Results Presentation 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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