Primary Health Properties Plc · LSE:PHP
Primary Health Properties — Debt Investor Presentation (June 2019)
31 slides from Primary Health Properties's debt investor presentation, June 2019
Slide 1: £150m Convertible Bond Investor Presentation
£150m Convertible Bond Investor Presentation Primary Health Properties PLC Leading the way in modern primary health properties. June 2019
Slide 2: Contents
Contents Investment highlights Merger with MedicX Primary care property sector Property portfolio overview Financial performance Appendices
Slide 3: Investment highlights
Investment highlights ✓ Created one of the UK’s largest listed primary health property investor with over 480 properties valued at £2.3 billion ✓ FTSE 250 REIT with market capitalisation of £1.5bn and improved share liquidity Successful all-share ✓ Highly complementary portfolios of flexible, modern
Slide 4: Merger with MedicX
Merger with MedicX Compelling strategic, operational and financial rationale ✓ Enlarged Group portfolio: more than 480 properties, combined value of £2.3bn, annual rental income of over £125m ✓ Strengthened investment case from greater scale and improved rental growth prospects from asset management
Slide 5: UK primary care property sector
UK primary care property sector ✓ Positive and supportive political backdrop with cross-party support • NHS Long Term Plan, published January 2019, outlined how £20.5bn of government funding will be spent • Continued shift in growth of primary care workforce, access to and need for improved premises
Slide 6: Ireland primary care property sector
Ireland primary care property sector ✓ The population in Ireland, currently around 5m, is expected to grow by 20% to c.6m by 2051 with the proportion aged over 65 and 80 expected to grow by 150% and 270% respectively over the same period ✓ Like most western economies the Irish population has a preva
Slide 7: Property Portfolio Overview
Property Portfolio Overview
Slide 8: Property portfolio overview
Property portfolio overview Key Figures PHP MedicX Combined Total number of properties 317 167 484 Including properties in Ireland 10 5 15 Investment portfolio value (£bn) 1.5 0.8 2.3 Contracted rent roll (£m) 81 44 125 Net initial yield (NIY)(1) 4.85% 4.85% 4.85% Average lot size (£m) 4.8 4.8 4.8 A
Slide 9: Property portfolio overview
Property portfolio overview Geographical spread by valuation Ireland South West 6% 5% Midlands and London East Anglia 7% 23% Wales 8% Scotland North East 8% 16% North West South East 13% 14% Covenant exposure by rent roll Other Pharmacy 1% 9% Government backed income (UK GPs/NHS/HSE) 90% All data as
Slide 10: High quality recurring income
High quality recurring income Key characteristics of the portfolio Strong tenant 32% of portfolio covenant – 90% of The majority of on fixed or Average lease Occupancy rent roll paid leases have indexed uplifts. length of rate of directly/indirectly effectively upward 68% OMV review, 13.4 years 99.5
Slide 11: Long leases with growth potential
Long leases with growth potential Effectively upward only rent roll Income expiry profile – WAULT of 13.4 years Total weighted average rental growth • 6.7% on fixed uplift <3 years 4-5 years 20+ years 1.6% 5.3% • 25.2% index linked 13.9% • 68.1% reviewed to open market 5-10 years 24.3% Drivers of re
Slide 12: Investment, development and asset management
Investment, development and asset management Investment Acquisition Development Project Celbridge Primary Care Centre, Co. Kildare Ireland Bray Primary Care Centre, Ireland Tenants Tenants • Health Service Executive (HSE) • Health Service Executive (HSE) • Centric Health Primary Care (5 GP’s) • GP p
Slide 13: Financial Performance
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Slide 14: Strong track record of relative performance
Strong track record of relative performance ✓ IRR over period since inception of 13.3%1 (Average annual inflation (RPI) over period: 2.8%) ✓ Winner of the “Highest 10 Year Risk Adjusted Absolute Return” award by MSCI Investment Property Forum in March 2018 PHP 5 year relative TSR performance PHP TSR
Slide 15: Historic income statements
Historic income statements PHP PHP MedicX MedicX £m Y/E 31-Dec-18 Y/E 31-Dec-17 Y/E 30-Sep-18 Y/E 30-Sep-17 Net rental income 76.4 71.3 39.3 35.9 Administrative expenses (8.6) (8.2) (6.0) (6.1) Performance incentive fee (1.3) (0.5) - - Operating profit before financing costs 66.5 62.6 33.3 29.8 Net
Slide 16: Delivering financial management
Delivering financial management Cost of debt (%) Interest cover ratio 31-Mar-19 4.0 2018 2.6 2018 3.9 2017 2.25 2017 4.1 2016 2.05 2016 4.7 2015 1.9 2015 4.7 Loan to value ratio (%) Debt maturity (years) 31-Mar-19 48.1 31-Mar-19 7.2 2018 44.8 2018 5.4 2017 52.9 2017 6.3 2016 53.7 2016 5.1 2015 62.7
Slide 17: Debt summary
Debt summary ✓ Broad range of lending partners with 97% of debt fixed or hedged ✓ Total debt facilities in excess of £1.3bn(1) ✓ Drawn net debt £1.1bn(1) ✓ Group LTV 48.1%(1) ✓ Average cost of debt 4.0%(1) ✓ Long weighted average debt maturity of 7.2 years Debt maturity profile £'m 300 276.0 250 197
Slide 18: Appendices
Appendices
Slide 19: Spread of funding sources
Spread of funding sources Secured facilities Barclays/ Santander – Bank of Secured Aviva – One Provider RBS HSBC Santander Lloyds RBS Aviva AIB One Medical Ireland € bond Medical Tenor Bullet Bullet Bullet Bullet Amortising Bullet Bullet Bullet Bullet Bullet Amortising Expiry Jul-2019 Jul-2020 Jan-2
Slide 20: Spread of funding sources (continued)
Spread of funding sources (continued) Secured facilities (continued) Unsecured facilities 1 Secured Standard Euro Retail HSBC Provider Aviva Ignis Aviva Aviva Aviva bond Life PP (€) bond Standby Tenor Bullet Bullet Bullet Bullet Bullet Bullet Amort’n Amortising Bullet Bullet Aug-2024 Dec-2028 Jul- E
Slide 21: Positive yield gap
Positive yield gap Illustrative yield gap on property investment UK Acquisitions Ireland 6% 7% 4.85% 6% 5.8% 5% 0.275% 0.275% 5% 4% 0.3% 1.0% 4% 3% 3.5% 1.7% 3% 2% 1.9% 1.7% 2% 1% 1% 0% 0% Valuation Incremental 10 yr Libor Average debt Income return Valuation Incremental 10 year Euribor Average debt
Slide 22: The GMS contract & NHS property services
The GMS contract & NHS property services ✓ The General Medical Services (GMS) contract is an individual contract between the general medical practice (not an individual GP) and the local NHS Local NHS management body under which the contractor (i.e. the GPs) agree to provide management primary medic
Slide 23: GMS Premises Costs Directions 2013
GMS Premises Costs Directions 2013 The GMS Premises Cost Directions are a Direction from the Secretary of State on the National Health Service Act 2006(a) and was published in 2013. Relevant summaries of the Directions follow below, using the NHS England structure as an example2: Citation, commencem
Slide 24: Irish Primary Care Centres – the opportunity
Irish Primary Care Centres – the opportunity PHP believes that the Primary Care Centres Sector in Ireland presents an excellent investment opportunity given the following: Stable cash flows from long term leases. No voids due to benefits of Other tenants include Rent reviews linked to Irish CPI co-l
Slide 25: The Irish Government's continued focus on Primary Care
The Irish Government’s continued focus on Primary Care • The Irish government has developed a clear programme to support the healthcare system with a primary care focus that has evolved in a clear way since 2012. We would highlight the following government reviews, policy statements and established
Slide 26: Management and revised fee structure
Management and revised fee structure Board of directors and management Principal amendments to existing advisory agreement with Nexus (1) ✓ Helen Mahy and Laure Duhot of the MedicX Board joined the board of ✓ Combined asset portfolio will benefit from lower external management the enlarged group at
Slide 27: Nexus's revised fee base
Nexus’s revised fee base • MedicX portfolio at acquisition (£808m(1)) charged at a flat rate of 0.225% p.a. or £1.8m p.a. • This equates to a total management fee saving of £3.0m p.a. in the first full year of operation as compared to the current combined standalone fees payable by each company • No
Slide 28: Contact details
Contact details Harry Hyman Richard Howell Managing Director Finance Director harry.hyman@nexusgroup.co.uk richard.howell@nexusgroup.co.uk Primary Health Properties PLC 28
Slide 29: Disclaimer
Disclaimer IMPORTANT NOTICE This presentation, being all the information contained within this presentation and communicated during any delivery of the presentation, whether orally or in writing, including the talks given by the presenters, any question and answer session and any document or materia
Slide 30: Disclaimer
Disclaimer This Presentation does not constitute, or form part of, nor is it intended to communicate, any offer, invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company or the Issuer, nor shall it (or any part of it) or
Slide 31: Disclaimer
Disclaimer This Presentation may contain forward-looking statements, particularly those regarding the possible or assumed future financial or other performance of the Company and the Issuer (including any current or future subsidiaries (together, the "Group")), industry growth or other trend project
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