Primary Health Properties Plc · LSE:PHP
Primary Health Properties — FY2015 Earnings Presentation
43 slides from Primary Health Properties's earnings presentation, 2016
Slide 1: Full Year Results – year ended 31 December 2015
Full Year Results – year ended 31 December 2015 Investing in the future of integrated healthcare Primary Health Properties PLC (PHP.L) A dedicated healthcare REIT www.phpgroup.co.uk
Slide 2: Agenda
2015 Annual Results Presentation AGENDA - Introduction - Financial Results - UK supply/demand imbalance - Opportunity in Ireland - Strong pipeline - Outlook - Appendices | 2
Slide 3: Introduction
2015 Annual Results Presentation INTRODUCTION | 3
Slide 4: Overview of Primary Health Properties PLC (“PHP”)
2015 Annual Results Presentation Overview of Primary Health Properties PLC (“PHP”) UK Real Estate Investment Trust (“REIT”) Leading investor in flexible, modern primary healthcare accommodation 273 properties located across the UK; 91% of income from UK government Tenants include GPs, NHS &
Slide 5: Highlights
2015 Annual Results Presentation Highlights Return to full dividend cover Supply and demand in UK EPRA earnings per share 4.9p (+19.5%) Ageing, inadequate supply of premises 2015 dividend per share 5.0p (+2.6%) Current stock limits services expansion 2015 full year cover 98% Government a
Slide 6: Financial Results
2015 Annual Results Presentation FINANCIAL RESULTS | 6
Slide 7: Key performance indicators
2015 Annual Results Presentation Key performance indicators Performance 2015 2014 Growth Net rental income (£’m) 62.3 59.3 5.1% EPRA earnings (£’m) 21.7 18.2 19.2% EPRA earnings per share (pence) 4.9 4.1 19.5% Position 2015 2014 Growth Investment property (£’bn) 1.1 1.0 7.3% EPRA NAV per share (penc
Slide 8: Efficient management and funding
2015 Annual Results Presentation Efficient management and funding EPRA cost ratio External management structure 25.00% 21.40% demonstrates efficiency 20.00% EPRA cost ratio reduced to 11.5% 15.00% 12.00% 11.50% (2014: 12.0%) 10.00% Lowest cost ratio in UK listed 5.00% property sector 0.00% 201
Slide 9: Dividend cover restored
2015 Annual Results Presentation Dividend cover restored 19th successive year of dividend growth 5.0p per share paid in 2015, a 2.6% increase over total paid in 2014 (4.875p1) Aggregate 2015 dividend cover increased to 98% (2014: 84%) 2015 second half dividend covered 107% by second half ear
Slide 10: Continued growth in shareholder returns
2015 Annual Results Presentation Continued growth in shareholder returns Return 2015 2014 Growth Total property return 9.7% 8.9% 0.8% Total NAV return 16.3% 12.8% 3.5% Total shareholder return 23.5% 12.0% 11.5% Total property return of 9.7% (IPD All Property Index: 13.8%) Property portfolio incr
Slide 11: UK Supply/Demand Imbalance
2015 Annual Results Presentation UK SUPPLY/ DEMAND IMBALANCE | 11
Slide 12: Demand for healthcare services increasing
2015 Annual Results Presentation Demand for healthcare services increasing Ageing population, declining health 11.4 million currently aged over 65, projected to increase by 10% over next 15 years Increasing incidence of chronic disease, projected to affect 2.9 million by 2018 1) Source: ONS |
Slide 13: GP services underpin NHS development
2015 Annual Results Presentation GP services underpin NHS development NHS strategy Government commitment NHS England Five Year Forward View Government targets 24/7 access to GP reaffirms list based primary care as being the services by 2020 bedrock of the NHS More than 1.3 million GP visits pe
Slide 14: Primary Care Property demand drivers
2015 Annual Results Presentation Primary Care Property demand drivers Inadequate, ageing supply 2014 BMA survey of GPs 70% stated their premises are too small to deliver extra/additional services 60% stated their premises are too small to provide vital training and education 52% said that thei
Slide 15: Development commitment
2015 Annual Results Presentation Development commitment Kimmerfields Health Centre, Swindon A forward funding agreement for a new health centre to be let to NHS Property Services. The total proposed floor area extends to 2,458 sqm and the property will be let on a 20 year term on completion. The dev
Slide 16: Asset Management Projects
2015 Annual Results Presentation Asset Management Projects Winchcombe, Gloucestershire – Completion due May 2016 Extension and refurbishment of a purpose built rural medical centre for a 6 GP practice. The project provides a new 235 sqm extension to improve patient access due to significant local po
Slide 17: Asset Management Project
2015 Annual Results Presentation Asset Management Project Lenton, Nottinghamshire – Completed November 2015 Extension of a purpose built medical centre on the outskirts of Nottingham City Centre. The project provided a new, 3 Consulting Room extension for the practice in return for a new 25 year lea
Slide 18: Opportunity in Ireland
2015 Annual Results Presentation OPPORTUNITY IN IRELAND | 18
Slide 19: Republic of Ireland - overview
2015 Annual Results Presentation Republic of Ireland - overview Background Population of 4.6 million, projected to rise to 5.2 million by 20311 Population ageing and increasing incidence of chronic disease2 Department of Health in Ireland (“DoHI”) to widen access to primary care; free for ov
Slide 20: Republic of Ireland - opportunity
2015 Annual Results Presentation Republic of Ireland - opportunity Characteristics Large, modern, integrated primary care centres built or being constructed HSE typically represent 60% to 75% of income for 20 - 25 year lease terms Remaining space let to GPs, pharmacy operators and associated
Slide 21: Republic of Ireland – risk mitigating
2015 Annual Results Presentation Republic of Ireland – risk mitigating Risk Mitigating factor Underlying rental covenant HSE, government agency typically represents 60% to 75% of rent roll Leases linked to CPI – upwards/downwards Irish economy currently fastest growth rate in Europe (7% y-o-y Q3 201
Slide 22: Strong Pipeline
2015 Annual Results Presentation STRONG PIPELINE | 22
Slide 23: Strong and growing pipeline of opportunities
2015 Annual Results Presentation Strong and growing pipeline of opportunities UK market NHS starting to approve new developments, slowly but to increase Well established links to GP owner occupiers leading to opportunities Pipeline agreements with developers delivering forward funding transa
Slide 24: Pipeline advanced and expanding
2015 Annual Results Presentation Pipeline advanced and expanding Transactions agreed and in solicitors hands UK – totalling £28 million Republic of Ireland – totalling €14 million Transactions under offer and progressing UK – totalling £70 million Republic of Ireland – totalling €40 mill
Slide 25: Outlook
2015 Annual Results Presentation OUTLOOK | 25
Slide 26: Positive outlook
2015 Annual Results Presentation Positive outlook Development opportunities emerging in UK Low risk, long term, non- cyclical market New pool of opportunity in Republic of Ireland, priced very attractively Majority of rents in both jurisdictions funded by government for long lease terms Posi
Slide 27: Appendices
2015 Annual Results Presentation APPENDICES | 27
Slide 28: Income Statement
2015 Annual Results Presentation Income Statement 2015 2014 £m £m Net rental income 62.3 59.3 Administrative expenses (6.8) (6.8) Operating profit before revaluation gain and financing 55.5 52.5 Net financing costs (33.8) (34.3) EPRA earnings 21.7 18.2 Net result on property portfolio 39.8 29.2 Earl
Slide 29: Balance Sheet
2015 Annual Results Presentation Balance Sheet 31 December 2015 31 December 2014 EPRA Net Assets £391.6m £354.6m EPRA net asset value per share 87.7p 79.7p1 Property portfolio2 £1,100.6m £1,026.3m Net Debt £689.8m £658.1m LTV 62.7% 64.1% Future minimum lease payments receivable3 £899m £885m EPRA NAV
Slide 30: Property portfolio
2015 Annual Results Presentation Property portfolio 273 healthcare centres – 267 completed and owned, 6 under development Portfolio value (incl. commitments): £1.12bn – net initial yield 5.32% Average lot size: £4.1m; average age of buildings – 9 years Annual contracted rent roll: £63.7m(1);
Slide 31: Portfolio analysis by rent
2015 Annual Results Presentation Portfolio analysis by rent 267 completed assets spread across the UK 91% of rental income directly or indirectly from UK Government Wide geographical spread Strong rental covenant London Wales 4% South West 9% 4% Scotland NHS 22% South East 13% 19% GPs 68% HM Gov
Slide 32: Long leases with growth potential
2015 Annual Results Presentation Long leases with growth potential(1) 40% of rent with more than 15 years remaining Analysis of leases unexpired by rent roll 153 reviews completed in 2015 generated Less than 5 years additional rent of £0.4m per annum More than 20 years 11% 1% Average increase
Slide 33: Investment acquisition
2015 Annual Results Presentation Investment acquisition White Horse Medical Centre, Westbury Tenants: GP Practice, Dental Practice, NHS Foundation and Pharmacy Date acquired: February 2015; WAULT 27.5 years Date built: September 2012 Size: 1,900 m² Acquisition Cost: £7.75m Patient list s
Slide 34: Investment acquisition
2015 Annual Results Presentation Investment acquisition Thornaby Medical Centre, North Yorkshire Tenants: 2 GP Practices, Optician, NHS Property Services, NHS Trust and Pharmacy Date acquired: June 2015; WAULT 13.5 years Date built: November 2003 Size: 2,637m² Acquisition Cost: £7.45m Pa
Slide 35: Secure Long Term Funding
2015 Annual Results Presentation Secure Long Term Funding 2015 2014 £m £m Total debt facilities Secured 645.2 628.9 Unsecured 157.5 157.5 802.7 786.4 Average maturity of debt facilities 5.8 years 6.2 years Net debt Drawn debt 692.7 670.1 Cash on deposit (2.9) (12.0) 689.8 658.1 Total collateral 1,10
Slide 36: Maturity of Debt
2015 Annual Results Presentation Maturity of Debt Weighted maturity period at 30 June 2015: 5.9 years (2014: 6.2 years) HSBC £50m facility extended for new five year term from July 2015; maturity July 2020 Barclays facility extended by £15m with AIB providing additional funds; new five year te
Slide 37: Interest rate protection
2015 Annual Results Presentation Interest rate protection Long term interest rate protection £80m notional contract to July 2016 terminated; reduces average debt cost by 43bps Additional swap contracts lengthen interest rate protection More than 80% of debt protected to 2020 Efforts focuss
Slide 38: Spread of Funding Sources
2015 Annual Results Presentation Spread of Funding Sources Secured Unsecured Facilities facilities(1) Provider RBS/ HSBC Barclays/ Aviva Aviva Secured Aviva Aviva RBS Retail Convertible Santander AIB Bond (Willams Bond Bond & Glyn) Tenor Bullet Bullet Bullet Bullet Bullet Bullet Amortising Amortisin
Slide 39: Borrowing Facilities
2015 Annual Results Presentation Borrowing Facilities Total facilities available to PHP: £802.7m(1) Available headroom: £91.6m (after development commitments) 23% of net debt on an unsecured basis – Retail Bond and Convertible Bond PHP Debt Profile 100.0% 100.0% 90.0% 90.0% Unsecured 80.0% 80.
Slide 40: Advisers and fee base
2015 Annual Results Presentation Advisers and fee base Nexus provide all advisory services from 1 May 2014 Enhances service quality and information management Reduced Group’s overhead costs Average fee rate for services of advisers reduced to 50 bps (2014: 55 bps) Including overheads, EPRA
Slide 41: Acquisitions contribute due to yield gap
2015 Annual Results Presentation Acquisitions contribute due to yield gap 7.00% 6.00% Assumed market yield – 5.3% 5.00% Surplus to bottom line – 2.0% 4.00% 3.00% Management fee – 0.325% 2.00% Margin on debt – 185 bps 1.00% 0.00% 5 Year Gilt Valuation Yield GBP 5 year swap rate | 41
Slide 42: Contact details
2015 Annual Results Presentation Contact details Harry Hyman Phil Holland Managing Director Finance Director harry.hyman@nexusgroup.co.uk phil.holland@nexusgroup.co.uk | 42
Slide 43: Disclaimer
Disclaimer 2015 Annual Results Presentation 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 containe
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