Assura Plc · OTC:ARSSF
Assura — H1 FY2021 Earnings Presentation
62 slides from Assura's earnings presentation, Nov 17, 2020
Slide 1: Assura plc results for the six months ended 30 September 2020
assura Assura plc results for the six months ended 30 September 2020 17 November 2020
Slide 2: Overview
. b. t - > , Overview Jonathan Murphy
Slide 3: Strong progress made in first half of year
Results for the six months ended 30 September 2020 Strong progress made first half of year Aa assura Secure, long- Resilient, stable y . term cash business model fie flows Commitment to positive social impact
Slide 4: First six months highlights
Results for the six months ended 30 September 2020 omc assura Deployment of Equity placing First six months Current equity proceeds ahead of 6 developments expectations 15 developments aanmalivee 15 developments Developments (£81m) (£77m) on site 6 developments ‘ on site moved on site woe £67m immed
Slide 5: Our initial response to COVID-19
Results for the six months ended 30 September 2020 of assura Our initial Our actions response to - Supporting the evolving needs of the GP and NHS professionals using our buildings COVID-19 - Skills, vacant space and temporary reconfigurations being used by NHS response - Building a picture of what
Slide 6: SixBySix strategy progressing well
Results for the six months ended 30 September 2020 omc assura SixBySix strat progressing wall Ambition to be number 1 listed property business for social impact — Assura Community Fund: launched with £2.5m donation & first tranche of funds being deployed — Committed funding to projects in the first
Slide 7: Financial update
Results for the six months ended 30 September 2020 bt oro ™ assura ~ Financial update Jayne Cottam CFO =
Slide 8: Financial summary
Results for the six months ended 30 September 2020 Financial summary Earnin9s growth driven by acquisitions and developments Income statement Sep2020 Sep2019 Change Net rental income (£m) 54.4 50.6 8% � Adjusted EPRA earnings1 (£m) 35.8 32.9 9% � Adjusted EPRA EPS1 (p) 1.4 1.4 - ➔ Dividend paid duri
Slide 9: Portfolio growth flows through to earnings
Results for the six months ended 30 September 2020 oA assura Portfolio growth flows through to earnings 4% growth in annualised rent roll Rent roll flows through to net rental income (£m) £m £m ns s2 120 18 100 me Ss — 80 105 (1.6) 60 100 40 95 20 Mar-20 Disposals Rent reviews & Development Acquisit
Slide 10: Strong long-term cash flows
Results for the six months ended 30 September 2020 assura Strong long-term cash flows Asset enhancement and portfolio additions have positive impact on metrics Total contracted rental income WAULT history £m m Additions and asset enhancement m Passage of time £m 1,500 14.0 1,250 13.0 1,000 12.0 750
Slide 11: Strong financial position
Results for the six months ended 30 September 2020 omc assura Strong financial position LTV & interest rate history LTV Interest rate 60% 6% All facilities now on unsecured basis - £300m Social Bond issued September 2020 50% - 10 year tenor — 1.5% fixed rate 40% ~ RCF extended to November 2024 & red
Slide 12: Social Bond launched
Results for the six months ended 30 September 2020 cifia assura Social Bond £300m Bond launched ’ ’ ’ - Strong demand from debt markets, issue heavily over-subscribed Sti port from debt < markets for social France - Fixed 1.5% coupon, 10 year term framework Financing approach linked to our Social Im
Slide 13: Development pipeline
Results for the six months ended 30 September 2020 cifia assura £m 350 Development 300 Extended pipeline pipeline nstgandpipgings e07m broadly maintained in 200 Extended pipeline Appointed exciusive being delivered NHS approval me Immediate 100 Tmesi:topindine pipeline £65m Expected to be on site wi
Slide 14: Additions and disposals
Results for the six months ended 30 September 2020 orc assura Additions and disposals 106 S disposals _ £23m . proceeds
Slide 15: Strong pipeline
Results for the six months ended 30 September 2020 oro assura Strong pipeline Developments Acquisitions Asset Enhancements Continyed succes SS ae conversion of pipeline into portfolio additions | No. | Completed 20/21 | No. | Completed 20/21 Completed 20/21 | 6 | Developments | £38m_| Acquisitions Y
Slide 16: Proforma rent roll demonstrates positive impact of pipeline
Results for the six months ended 30 September 2020 oA assura Proforma rent roll sm demonstrates vas positive impact of wo pipeline ss Development and asset enhancement strategy 130 key contributor to future growth 125 120 - Opportunities in development pipeline 1s expected to flow through rent roll
Slide 17: Outlook
Results for the six months ended 30 September 2020 Outlook Jonathan Murphy CEO
Slide 18: Growing asset enhancement activity
Results for the six months ended 30 September 2020 Growing asset enhancement activity Maintaining and growing lease lengths is the priority - 13 lease regears completed in 2020/21 YTD - covering £1.1m of existing rent - 32 completed FY19/20, 6 FY 18/19 — Pipeline of 42 lease regears (£5.5m existing
Slide 19: Prospective growth driven by developments
Results for the six months ended 30 September 2020 omc assura Prospective growth Rent review settlements driven by developments 6% Rent reviews settled during period 5% A - Annualised uplifts ia \ 4% - Average 1.7% — RPI/fixed/other 2.0% _[. \ 3% - Open market 1.2% KS — Linkage to cost inflation on
Slide 20: Market overview
Results for the six months ended 30 September 2020 omc assura Market overview Yield progression 8% Strong underlying demand and robust fundamentals 7% in 6% /— 5% . ‘ aN 468% « ~ Net Initial Yield 0% re) yr" we wo’ yore os wos 4.88% —15 year Gilt | ——Assura Net Initial Yield © ——MSCI monthly UK inde
Slide 21: COVID has accelerated existing trends
Results for the six months ended 30 September 2020 of assura COVID has A growing backlog accelerated — Pressures in diagnosis and treatment are acute existing trends -— The number of people waiting more than a year for consultant-led treatment increased 90-fold in the The need for quality spaces yea
Slide 22: Expanding our offering
Results for the six months ended 30 September 2020 oro assura — Expanding our offering to work more closely with scale primary care providers, local authorities and NHS Trusts nding our . . . fo) ring - Follows our successful 2018 delivery of Durham Diagnostics and Working with a wid of Treatment Ce
Slide 23: Conclusion
Results for the six months ended 30 September 2020 om assura Conclusion sustainable platform for Resilient, stable business model long-term growth Pipelines for growth delivered & replenished Commitment to positive social impact 23
Slide 24: Additional information
Results for the six months ended 30 September 2020 Add I itional ion ths
Slide 25: Additional information contents
Results for the six months ended 30 September 2020 Additional information 1.1 Our market 1.2 Our position 1.3 Assura's position and strengths 1.4 Business model & strategy 1.5. Primary care model 1.6 GP funding structure 1.7 Rent reimbursement mechanism 1.8 Risk reward spectrum 2.1 Social impact str
Slide 26: 1.1 Our market
Results for the six months ended 30 September 2020 ofa assura 1.1 Our market . Strong leases . . Long-term income with 21+ year leases Highly attractive sector NHS backed tenant covenant and no rent-free periods Low default risk 3 yearly rent review cycle with linkage to cost of new developments . S
Slide 27: 1.2 Our position
Results for the six months ended 30 September 2020 as assura 1. Diversified portfolio of scale 1.2 Our position itioning | 576 assets across the UK with value of £2.3bn Palace to respond Resilient income with 84% of leases NHS funded to the needs of the WAULT of 11.9 years and 98% let market £1.47bn
Slide 28: 1.3 Assura's position and strengths
Results for the six months ended 30 September 2020 assura More GP-led Significant services in the investment community required Supported by demographics 1.3 Assura's Position and strengths Secure long- term income {Barriers to entry streams Our market No speculative development Assura
Slide 29: 1.4 Business model & strategy
Results for the six months ended 30 September 2020 of assura 1.4 Business Develop model & strategy Providing bespoke, community-led property solutions for each of our healthcare partners Designed to deliver 100% prelet with no speculative development resilient and predictable Innovation along with d
Slide 30: 1.5 The primary care model
Results for the six months ended 30 September 2020 1.5 The primary care model is key to meeting growing UK healthcare demand Care which i recognised $s critical to NHS delivery and faces growing demand “General practice is undeniably the bedrock of NHS care... so if general practice fails, the NHS f
Slide 31: 1.6 GP funding structure
Results for the six months ended 30 September 2020 omc assura 1.6 GP funding structure How the fundi Lease Agreement _GMS Contract mechanism wot (typically 20-25 years) (lifetime contract) ~ () —— — assura @ _________ NHS England Rental income GMS Payments (4.75-5% NIY) GP (Partnership) _ (inc. Prem
Slide 32: 1.7 Rent reimbursement mechanism
Results for the six months ended 30 September 2020 orc assura 1. There is significant historical precedent for this arrangement - The rent reimbursement mechanism has been in place for 70 years since the NHS was founded in 1948 1.7 Rent reimbursement 2. A removal of rent reimbursement could impact p
Slide 33: 1.8 Risk reward spectrum
Results for the six months ended 30 September 2020 1.8 Risk reward 7 spectrum Residential index Total return vs standard i deviation - 13 years z Primary Healthcare {since inception of ® Industrial . 2019 (source: MSC) All Healthcare a Office a ® Bonds ® Equities © All property Retail 2 16 4 12 10 8
Slide 34: 2.1 Social impact strategy
Results for the six months ended 30 September 2020 2.1 Social impact strategy Ambition to positively impact 6 million people by 2026 Actions that count toward our target to impact six million: - Built a new sustainable development — Extended or refurbished an existing building sustainably — Improved
Slide 35: 2.2 Six pledges to achieve by 2026
Results for the six months ended 30 September 2020 cifia assura Create the Assura Community Fund, targeting one million people benefiting from 2.2 Six pledges to its work achieve by 2026 Include community space for sessional use in all developments Develop our sustainable supply chain to only work w
Slide 36: 2.3 Social impact KPIs
Results for the six months ended 30 September 2020 2.3 Social impact KPls Additional targets and KPIs beyond our pledges, plan to be reported from March 2021 From 2021/22 : contractor locality (i.e. the proportion of jobs completed by people based within 25 miles of the property) and carbon offsetti
Slide 37: 3.1 Portfolio statistics
Results for the six months ended 30 September 2020 orc assura 3.1 Portfolio statistics Number Rent AVL Total Yalug <fim = £t5m = £5-10m = >£10m ove i £) North East Bl 268 125 127,583 499.0 87 239.6 122 1386 = 3,912 Midlands 90 20.4 13.3 106,801 409.8 77-85 1333—«*120.2—S 3,837 South East 102 18.5 9.
Slide 38: 3.2 Security of tenant and lease length
Results for the six months ended 30 September 2020 omc assura 3.2 Security of Rengrol Value(%) Property value by WAULT sm onan ane lease GPs 7666800 NHS Body 18.6 6 900 Pharmacy 9.0 8 800 700 Other 91 8 600 113.3 100 500 RemainingLease Value(£m) Value (%) 400 Up to 5 years 185 8 $00 ro) 200 (e) 5-10
Slide 39: 3.3 Contracted rent
Results for the six months ended 30 September 2020 3.3 Contracted rent im Contracted rent at September 2020 100 75 50 assura Lease expiry profile 25 245 leases mGMS/NHS ™ Pharmacy/other 20 162 ~ 159 leases a leases rs 6 184 95 105 2 leases g leases leases =z 10 rs oy Z 5 99 leases | 0-2 3-5 6-8 9-11
Slide 40: 3.4 Property and net debt
Results for the six months ended 30 September 2020 am assura Sep 2020 Mar 2020 (£m) (€m) Completed investment property 2,201.2 2,073.3 3.4 Property and Investment property under construction 50.5 57.5 net debt Pharmacy lease premium / rent adjustments 21 2.6 Head lease obligations 56 5.6 Property as
Slide 41: 3.5 Sensitivity analysis
Results for the six months ended 30 September 2020 3.5 Sensitivity analysis - A 25bps movement would result in a valuation movement of approximately £119m or 4.5 pence per share - A100bps movement would result in a valuation movement of approximately £375m or 17.9 pence per share Equivalent it yield
Slide 42: 4.1 Acquisition process
Results for the six months ended 30 September 2020 4.1 Acquisition process - Database provides crucial market information — Referrals, direct marketing, conferences and events key to sourcing opportunities — Flexible and engaged approach to addressing tenant requirements - Brand and reputation c. 9,
Slide 43: 4.2 Development process
Results for the six months ended 30 September 2020 4.2 Development process 1. How we source new developments New opportunities are secured by: - Direct approach from the GPs and referral - Approach from smaller sector developer requiring funding - Approach from one of our “partner” developers mailin
Slide 44: 4.3 Our typical range of medical centres
Results for the six months ended 30 September 2020 omc assura 4.3 Our typical range of medical centres Large . = Central ‘hub’ serving wide community Medium - 1800rr?—-3,000rr? Small - Serves small town or district - Upto 50,000 patients = 800m?-1,800m? - 18 consulting rooms and 6 treatment rooms -
Slide 45: 4.4 Conversion of opportunities to live schemes
Results for the six months ended 30 September 2020 4.4 Conversion of opportunities to live schemes Immediate and extended pipelines reflect the positive impact of GPI acquisition Completed On site immedi p ate Extended Number of schemes 6 15 15 38 Cost incurred £42m Cost to complete £35m Total cost
Slide 46: 4.5 On site developments
Results for the six months ended 30 September 2020 assura 4.5 On site developments Increase in number of live | development schemes; delivery from immediate pipeline to on site — Geographically spread across country — Increasing data points for district valuers - GPl acquisition has strengthened our
Slide 47: 4.6 Innovations in development
Results for the six months ended 30 September 2020 orc assura 4.6 Innovations in development Netherfield Innovative interior design includes interactive child ming centre, fagnosic pod, and space for local socia prescribing groups” use Stow-onthe- . Wold Tonbridge BREEAM Excellent | Allelectric ener
Slide 48: 4.7 On site development Bournville, West Midlands
Results for the six months ended 30 September 2020 oro assura 4,7 On site development Bournville, West Midlands — £4.5m new building delivered as a project with the Bournville Village Trust brings together 3 surgeries into a new building, along with clinical pharmacists, social prescribers, physioth
Slide 49: 4.8 Capital projects at Eastfield and Threeways
Results for the six months ended 30 September 2020 fic oA assura 4.8 Capital projects at Eastfield and Threeways — Eastfield Medical Centre, Scarborough — Completed July 2020 - Part ETTF funded fit out of previous dental space and reconfiguration of GP space to create capacity to double the patients
Slide 50: 4.9 Lease regears at properties in Swindon
Results for the six months ended 30 September 2020 4.9 Lease regears at 2 properties in Swindon - 2sites, part of same super practice - Sand 13 years remaining on current leases — Agreed lease regear, taking both properties onto 30 year leases — £0.3m building improvement works, including £0.1m on s
Slide 51: 4.10 Developments drive rental growth
Results for the six months ended 30 September 2020 4.10 Developments drive rental growth - New developments capture increased land and construction costs resulting in increased rent — Higher rental tone linked to increasing construction costs — Recent schemes support this trend with a rising trend l
Slide 52: 5.1 Open market review results
Results for the six months ended 30 September 2020 5.1 Open market review results - 17% annualised increase from rent reviews settled in period - 1.2% from open market rent reviews - 2.0% from RPI and fixed uplift reviews — Table shows those reviews settled in the current financial year — ERV £115.7
Slide 53: 5.2 Basis of rent reviews and timing
Results for the six months ended 30 September 2020 omc assura 5.2 Basis of rent . 80% mUpward/downward review basis. _Split of current rent roll by rent review basis and reviews and timing - tenant can instigate (4%) frequency of review: ™ Upward/downward review basis 70% - landlord only trigger (18
Slide 54: 6.1 Strong track record in key metrics
Results for the six months ended 30 September 2020 6.1 Strong track record in key metrics Investment property (£m) £m 2,500 2,000 CAGR: 18% 1,500 1,000 * Gf C) Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 EPRA cost ratio maintained at low level! % including development team m Excluding development team
Slide 55: 6.2 Strong track record in key metrics
Results for the six months ended 30 September 2020 oA assura 6.2 Strong track record in key metrics Number of properties Rent roll (£m) Average annual rental growth sie 503526 yo27 108-9 2.2% in 398 ws 7h ae Lv 16% 17% pa 265 55.6 “ - | | | 2015 2016 «2017, 2018» 2019-2020 2015 2016-2017, 2018» 2019
Slide 56: 6.3 EPRA NTA
Results for the six months ended 30 September 2020 6.3 EPRA NTA EPRA NTA EPRA NTA Sep 2020 Mar 2020 £m £m Net assets 1,496.9 1,302.4 Deferred tax (0.5) (0.5) EPRA NTA 1,496.4 1,301.9 Number of shares in issue 2,662,174,038 2,413,241,827 EPRA NTA per share - basic 56.2p 54.0p Diluted number of shares
Slide 57: 6.4 New EPRA net asset measures
Results for the six months ended 30 September 2020 6.4 New EPRA net asset measures — New EPRA measures for net assets, provided for indicative purposes — Two of the measures closely align to existing NAV and NNNAV for Assura — NRVis Net Reinstatement Value (assuming entities never sell assets, repre
Slide 58: 6.5 EPRA EPS & cash flow
Results for the six months ended 30 September 2020 6.5 EPRA EPS & cash flow Sep 2020 Mar 2020 Sep 2020 Mar 2020 EPRA EPS £m £m £m £m Profit for the period 43.8 78.9 Opening cash 18.5 18.3 , Net cash from operations 28.0 66.3 EPRA earnings 33.3 67.5 Cash flows from investing activities: Adjusted EPRA
Slide 59: 7.1 Facilities and maturity profile
Results for the six months ended 30 September 2020 7.1 Facilities and Grossdebt Weighted Weighted maturity profile £1,067m — averagematurity average interest LTV33% 77years 2.68% Facility description ixed/ Matu! Effective Secured/ Outstandi ty oan id interestrate___ unsecured 50 Sep 2020 veanted ri
Slide 60: 7.2 Covenants
oA assura Results for the six months ended 30 September 2020 7.2 Covenants Allcoy fenant conditions RCF / PPs Unsecured bonds Secured bond 20211 Covenant Sep-20 Covenant Sep-20 Covenant Sep-20 Interest cover 21.75 4.42 2150% 406% >1.5 2.16 LTV / leverage <60% 34% <65% 33% >1.35 1.82 NHS - - - - >75%
Slide 61: 8.1 REIT overview & Dividend calendar
Results for the six months ended 30 September 2020 8.1 REIT overview & Dividend calendar — REIT status is a tax election available to listed real estate companies — REITs are tax exempt on property rental income and capital gains — Profits are passed through to investors through minimum Property Inc
Slide 62: Disclaimer
Results for the six months ended 30 September 2020 ofin assura Disclaimer This presentation contains certain statements that are neither financial results nor other historical information. These statements are forward- looking in nature and are subject to risks and uncertainties. Actual future resul