Primary Health Properties PLC · LSE:PHP

Primary Health Properties — Debt Investor Presentation (June 2012)

26 slides from Primary Health Properties's debt investor presentation, June 2012

  1. Slide 1: Primary Health Properties PLC: A Dedicated Healthcare REIT

    PRIMARY HEALTH PROPERTIES PLC “A Dedicated Healthcare REIT” “The objective of the Group is to generate rental income and capital growth through investment in primary health property in the United Kingdom leased principally to GPs, NHS organisations and other associated health users.” Harry A Hyman P

  2. Slide 2: Important Notice

    Important Notice The information contained in this Presentation in respect of Primary Health Properties PLC and its group (the “Company”) and communicated during any delivery of the presentation, including the talks given by the presenters, any question and answer session and any document or materia

  3. Slide 3: Important Notice

    Important Notice The Presentation is confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by its recipients to any other person for any purpose, other than with the consent of the Company. By accepting receipt of, attending any presentation or delive

  4. Slide 4: Business Overview

    Business Overview  Investment solely focused on primary healthcare property across the UK  Company acts as a landlord to the NHS and is not involved in service delivery  Low risk business model - 90% of rental income1 underpinned by Government funding  Strong pipeline of acquisition opportunitie

  5. Slide 5: Why invest in Primary Care Assets

    Why invest in Primary Care Assets  High quality modern buildings  Strong underlying tenant covenant  Less volatile compared to other property sectors  Rental yields attractive relative to risk profile  Consistent rental growth  Majority of rent reviews effectively upward only every three years

  6. Slide 6: PHP's History

    PHP’s History Founded Listed on Moved to Conversion Acquisition of Retail by Harry AIM Main to REIT Health bond Hyman market Investments issue? portfolio 1994 1996 1998 2007 2010 2012 600 35 500 30 25 Closing portfolio (£m) Annual rent roll Closing portfolio including 400 development loans & 20 fina

  7. Slide 7: 5 Year share price performance (Jan-07 to date)

    Rebased to 100 30 60 90 10 20 40 50 70 80 0 120 100 110 130 2-Jan-07 2-Mar-07 2-May-07 2-Jul-07 2-Sep-07 2-Nov-07 Bond Presentation June 2012 2-Jan-08 2-Mar-08 2-May-08 2-Jul-08 2-Sep-08 2-Nov-08 2-Jan-09 2-Mar-09 2-May-09 2-Jul-09 2-Sep-09 2-Nov-09 2-Jan-10 2-Mar-10 2-May-10 2-Jul-10 2-Sep-10 2-Nov

  8. Slide 8: Relative Performance

    Relative Performance  PHP annualised total return out performs equities benchmark over 1, 3 and 5 years 1 1 year 3 years 5 years Primary Health Properties 9.39% 16.73% 1.02% FTSE All-Share Real Estate Index -10.06% 11.96% -13.03% FTSE Data Source: Datastream  Total return on recent PHP share issue

  9. Slide 9: 5 year performance summary

    5 year performance summary 2007* 2008 2009 2010 2011 £m £m £m £m £m Revenue 22.2 19.7 21.3 26.9 30.7 Operating expenses (7.6) (4.6) (3.3) (5.0) (5.6) Net Financing Costs (10.8) (10.5) (10.2) (12.7) (15.4) Other income 0.4 - - - 0.3 Operating Profit 4.2 4.6 7.8 9.2 10.0 Gross assets 288.5 319.9 344.9

  10. Slide 10: Recent Highlights

    Recent Highlights  Share Placing raised £19 million for continued growth in May 2012  Group refinancing of bi-lateral loans completed 16 March 2012  Total of £300 million of debt facilities secured since July 2011  Weighted average term of Group debt facilities now 5.4 years  EPRA NAV at 31 Dec

  11. Slide 11: Major shareholders

    Major shareholders Number of Shareholder % Shares1 Nexus Group Holdings 3,989,680 5.35% Blackrock 3,035,591 4.07% BT Pension Scheme 1,946,298 2.61% Investec Wealth & Investment 1,860,711 2.49% Aberdeen Asset Management 1,121,312 1.50% Issued share capital at 22 June 2012 - 74,609,071 ordinary shares

  12. Slide 12: Stable Borrowing Facilities

    Stable Borrowing Facilities Average maturity of 5.4 years  £300m of banking facilities secured since July 2011, Provider Maturity Amount including RBS Mar 2013 5.0  £175m, 4 year, interest only Club facility AIB Jan 2013 27.0 commenced March 2012 Clydesdale Bank July 2014 50.0  Maximum LTV covena

  13. Slide 13: Examples of Properties

    Examples of Properties Caerphilly, South Wales Tenants: 4 GPs, PCT & Pharmacy Date of Completion: May 2012 NIA*: 1,932 m2 Value: £3.8 million** Patient numbers: 6,000 Conan Doyle Medical Centre, Edinburgh Tenants: 8 GPs Date of Purchase: March 2012 NIA*: 1,144 m2 Value: £3.6 million** Patient number

  14. Slide 14: Examples of Properties

    Examples of Properties Port Talbot Resource Centre, Port Talbot Tenants: 14 GPs, Health Board & Pharmacy Date of Purchase: September 2009 NIA*: 3,900 m2 Value: £15.5 million Patient numbers: 27,000 Prospect House, Kettering Tenants: 16 GPs, PCT & Pharmacy Date of Purchase: March 2007 NIA*: 3,700 m2

  15. Slide 15: Asset Management Projects

    Asset Management Projects Blenheim Crescent, Luton – Completed April 2012 Construction of a pharmacy unit adjoining a modern medical centre. Pharmacy let on a 17 year lease. Return on capital > 50%. Cost £213,000 Consett Pharmacy, Consett – Completed August 2011 Extension to existing pharmacy premis

  16. Slide 16: Portfolio Highlights

    Portfolio Highlights  164 healthcare centres – 160 completed and owned, 4 committed to acquire  Portfolio (incl. commitments) valued at £546.9 million – an initial yield of 5.74%1, yield on cost of 7.1%  Key characteristics  Average lease length of 16 years  Strong tenant covenant – 90% of rent

  17. Slide 17: Portfolio analysis

    Portfolio analysis  66% of assets are greater than £3 million in value  Average lot size in portfolio - £3.36 million (2010: £3.14 million) No. of Value Cumulative Capital value assets %’age (£’m) %’age £9 million + 5 46.42 8.5% 8.5% £3 - £9 million 70 314.15 57.4% 65.9% £1 - £3 million 88 182.61

  18. Slide 18: Wide Geographical Spread

    Wide Geographical Spread Wales London South West Scotland 10% 4% 3% North 7% South East 4% 28% Yorkshire & Humberside 7% North West 10% East Anglia 1% West Midlands East Midlands 12% 13% Bond Presentation June 2012 18

  19. Slide 19: Long Leases

    Long Leases  Average lease length 16 years Analysis of rent unexpired  New leases typically 20 - 25 years  Maintenance of lease length 15-20 years More than through active asset management 50% 20 years and lease renewals 13% Less than 5  95% of leases subject to triennial years rent reviews 2% 

  20. Slide 20: PHP portfolio analysis by tenant type

    PHP portfolio analysis by tenant type  PHP owns and leases freehold Tenancy split by contracted rent or long leasehold modern purpose-built primary Pharmacy Other healthcare facilities 9% 1% NHS 16%  164 primary care facilities, 160 completed and 4 committed  Primary tenants  GP surgeries GPs 

  21. Slide 21: Key features of PHP's rental contracts

    Key features of PHP’s rental contracts  99.4% let – nil void costs  Annual rent roll of £ 32.2m - 90% from NHS  Rent mostly paid quarterly in advance by GP (or PCT directly), PCT and Pharmacy  Average rental growth ca 3% per annum over the past 3 years  Approx. 75% of rent roll of PHP’s leases

  22. Slide 22: Rental Increases Achieved

    Rental Increases Achieved  2012 to date average increase on review1 2.4% per annum (2011: 3.0%)  % of rent roll on fixed uplift – 1.9%  % of rent roll index linked – 11.8%  Balance open market effectively upwards only  Historically rental increases have broadly tracked RPI increases – see below

  23. Slide 23: Security of Income by Lease Expiry

    Security of Income by Lease Expiry Receiving over 90% of current passing rent in 10 years time assuming no review increases and no lease extensions 100% Percentage total income as at 31 December 2011 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-1

  24. Slide 24: Dividend policy

    Dividend policy  REIT status drives pay out of substantially all available profits as dividends  15 year track record of progressive dividend growth  Total dividend paid in 2011 of 18 pence per share  First 2012 dividend of 9.25p paid on 5 April 2012  Brokers forecast total dividend of 18.5p fo

  25. Slide 25: Progressive Annual Dividend

    Progressive Annual Dividend Pence 20 18.0 18.5 17.0 17.5 18 16.5 16 15.0 13.5 14 12.0 12 11.0 10.0 10 9.0 8.0 8 7.0 5.6 6.0 6 3.2 4 2 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Brokers estimate Total dividend paid - 169.3p to 28/10/11 + 9.25p April 2012 = 178.5

  26. Slide 26: Conclusion

    Conclusion  Low risk business model with 90% of rental income underpinned by Government funding  Proven business model – nearly 100% occupancy  Positive yield gap between acquisition yield and funding costs  Strong growing operating income surplus  Substantial number of acquisition opportunitie

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