Primary Health Properties Plc · LSE:PHP
Primary Health Properties — H1 2015 Earnings Presentation
33 slides from Primary Health Properties's earnings presentation, Jun 30, 2015
Slide 1: Interim Results – 30 June 2015
Interim Results – 30 June 2015 Investing in the future of integrated healthcare Helping to deliver a 24/7 NHS Primary Health Properties PLC (PHP.L) A dedicated healthcare REIT www.phpgroup.co.uk
Slide 2: Agenda
2015 Interim Results Presentation AGENDA Highlights Financial Results Investment Rationale Portfolio Review Funding Outlook | 2
Slide 3: Highlights
2015 Interim Results Presentation HIGHLIGHTS | 3
Slide 4: Continued momentum
2015 Interim Results Presentation Continued momentum Net rental income increased by 5.2% to £30.6m (30 June 2014: £29.1m) EPRA earnings increased by 20.7% to £9.9m (30 June 2014: £8.2m) EPRA cost ratio reduced to 11.6% (30 June 2014: 12.7%) – lowest in sector Property portfolio reaches £1.1b
Slide 5: Financial highlights
2015 Interim Results Presentation Financial highlights Performance Six months ended Six months ended 30 June 2015 30 June 2014 EPRA earnings per share 8.9 pence 7.4 pence Dividends paid 10.0 pence 9.75 pence Dividend cover 89% 76% Portfolio As at As at 30 June 2015 31 December 2014 Investment portof
Slide 6: Delivering on strategic objectives
2015 Interim Results Presentation Delivering on strategic objectives Increased shareholder returns Dividend increased for 19th consecutive year – 10.0p per share paid April 2015 Dividend cover increased to 89% (30 June 2014: 76%) Total shareholder return for six month period - 9.4% (30 June
Slide 7: Relative performance
2015 Interim Results Presentation Relative performance PHP total FTSE shareholder return(1) for 1, 3 and 5 years compared to indices 1 year 3 years 5 years Primary Health Properties 20.4% 14.9% 15.5% FTSE All-Share Real Estate Index 19.5% 26.0% 26.3% FTSE All-Share Index 2.6% 12.3% 13.3% Source: B
Slide 8: Financial Results
2015 Interim Results Presentation FINANCIAL RESULTS | 8
Slide 9: Operating performance
2015 Interim Results Presentation Operating performance £m (30 June) 2015 2014 Net rental income increased by 5.2% to Net rental income 30.6 29.1 £30.6m (30 June 2014: £29.1m) Administrative expenses (3.4) (3.7) Operating profit before tax increased by Operating profit before revaluation gain an
Slide 10: Balance Sheet
2015 Interim Results Presentation Balance Sheet 30 June 31 December Gross assets increased by 5% to 2015 2014 £1.1bn (31 Dec 2014: £1.0bn) Investment portfolio1 £1.1bn £1.0bn Future minimum lease payments Valuation surplus of £23.9, like-for- £912m £885m receivable1 like growth of 2.3% Net Debt
Slide 11: Funding overview
2015 Interim Results Presentation Funding overview 30 June 31 December Refinance activity in 2014 reduces average 2014 2014 cost of debt by 50bps to 4.9% Total debt facilities £’m £’m Secured 630.6 628.4 £50m debt facility with HSBC extended for a new 5 year term from July 2015 to July 2020 Unse
Slide 12: Borrowing facilities
2015 Interim Results Presentation Borrowing facilities Total facilities available to PHP - £788.1m1 Available headroom - £86.7m (after commitments)2 24% 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% 80.0% 70.0% 7
Slide 13: Investment Rationale
2015 Interim Results Presentation INVESTMENT RATIONALE | 13
Slide 14: Growing commitment to primary care
2015 Interim Results Presentation Growing commitment to primary care NHS England Five Year Plan reaffirms list based primary care as the bedrock of the NHS NHS must deliver savings of £22bn per annum Reconfiguring primary care estate to contribute significantly with service delivery savings
Slide 15: Primary Care Property Demand Drivers
2015 Interim Results Presentation Primary Care Property Demand Drivers Inadequate, ageing supply In recent 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 tha
Slide 16: Government covenant underpins PHP income
2015 Interim Results Presentation Government covenant underpins PHP income 264 completed assets spread across the UK 91% of rental income directly or indirectly from UK Government Strong rental covenant1 Wide geographical spread1 London Wales 4% South West 9% 4% NHS 22% Scotland South East GPs 6
Slide 17: High quality recurring rental income
2015 Interim Results Presentation High quality recurring rental income Key characteristics of PHPs portfolio Substantially all 10% of leases Strong tenant covenant – 91% of Average lease length leases have subject review on rent roll paid directly/indirectly by of over 15 years effectively upward an
Slide 18: Yield on Cost and Value
2015 Interim Results Presentation Yield on Cost and Value 7.00% 6.00% Assumed market yield – 5.4% 5.00% Surplus to bottom line – 1.7% 4.00% Management fee – 0.325% 3.00% Margin on debt – 185 bps 2.00% 1.00% 0.00% 5 Year Gilt Valuation Yield GBP 5 year swap rate | 18
Slide 19: Portfolio Review
2015 Interim Results Presentation PORTFOLIO REVIEW | 19
Slide 20: Property portfolio
2015 Interim Results Presentation Property portfolio 272 healthcare centres – 264 completed, 8 under development Portfolio value1 – £1.1bn – net initial yield 5.39% (31 Dec 2014: 5.52%) Average lot size - £4.0m; average age of buildings – 10.5 years (31 Dec 2014: £3.9m) Annual contracted ren
Slide 21: Investment acquisition
2015 Interim Results Presentation Investment acquisition White Horse Medical Centre, Westbury Tenants: GP 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 size: 19,500 | 21
Slide 22: Investment acquisition
2015 Interim 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 P
Slide 23: Development commitment
2015 Interim Results Presentation Development commitment Two Rivers Medical Centre, Ipswich A forward funding agreement for a new health centre to be let to a newly merged Practice of 16 GPs and a pharmacy. The site is adjacent to Ipswich Hospital and will provide a wide range of services for patien
Slide 24: Asset Management Project
2015 Interim Results Presentation Asset Management Project Willesden, London – completion April 2015 Refurbishment and reconfiguration of a purpose built 1980s urban medical centre for a 10 GP practice. The project improves NHS service delivery and patient access and maintains the property as fit fo
Slide 25: Asset Management Project
2015 Interim Results Presentation Asset Management Project Cowbridge, Cardiff – Completed May 2015 A development project at the Cowbridge Medical Centre, near Cardiff in South Wales to construct a 120 sqm pharmacy unit pre-let to Lloyds Pharmacy for a 17 year term from completion. The project requir
Slide 26: Funding
2015 Interim Results Presentation FUNDING | 26
Slide 27: Spread of Funding Sources
2015 Interim Results Presentation Spread of Funding Sources Secured Unsecured facilities(1) Facilities Provider RBS/ HSBC Barclays Aviva Aviva Secured Aviva Aviva RBS Retail Convertible Santander Bond (Willams Bond Bond & Glyn) Tenor Bullet Bullet Bullet Bullet Bullet Bullet Amortising Amortising Bu
Slide 28: Maturity of Debt
2015 Interim Results Presentation Maturity of Debt Weighted maturity period at 30 June 2015 – 6.1 years (2014: 6.2 years) HSBC £50m facility extended for new five year term from July 2015; maturity July 2020 Barclays facility to be extended by £15m with AIB providing additional funds; new five
Slide 29: Interest rate protection
2015 Interim 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 now f
Slide 30: Outlook
2015 Interim Results Presentation OUTLOOK | 30
Slide 31: Positive outlook
2015 Interim Results Presentation Positive outlook No speculative development, but commissioning tightly controlled by NHS Low risk, long term, non- cyclical market High occupancy rates; Long initial lease durations Majority of rents funded by UK Government Positive yield gap between acquisi
Slide 32: Contact details
2015 Interim Results Presentation Contact details Harry Hyman Phil Holland Managing Director Finance Director harry.hyman@nexusgroup.co.uk phil.holland@nexusgroup.co.uk Tel: 020 7451 7050 Tel: 020 7104 5599 | 32
Slide 33: Disclaimer
Disclaimer 2015 Interim 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 PHP. The information contained in this presentation has been e
Primary Health Properties — H1 2015 Earnings Presentation on 6ix