RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017 OVERVIEW - PowerPoint PPT Presentation

RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

OVERVIEW Jonathan Murphy – CEO Results for the six months ended 30 September 2017 2

OPERATIONAL HIGHLIGHTS Accelerated growth Strong valuation gains Investment property up 16% EPRA NAV up 8% EPRA EPS up 8% Strong and refreshed Scalable model pipeline Cost of debt down by 28 bps Acquisitions £126m EPRA Cost Ratio reduced to 12% Developments £83m Results for the six months ended 30 September 2017 3

12% GROWTH IN ANNUALISED RENT ROLL Acquisitions driving rental growth £m 85 7.7 80 0.5 0.3 0.2 75 70 83.1 65 74.4 60 55 50 Mar-17 Asset Rent reviews Development Acquisitions Sep-17 management completions Results for the six months ended 30 September 2017 4

18% GROWTH IN EPRA EARNINGS Continued growth through acquisitions and positive rent reviews £m 25 5.4 20 (0.2) (0.2) (1.5) 15 23.3 10 19.8 5 0 Six months to Sep-16 Admin expenses Tax and other Net finance costs Net rental income Six months to Sep-17 Results for the six months ended 30 September 2017 5

8% GROWTH IN DILUTED EPRA NAV PER SHARE Strong income growth and valuation uplift 54p 2.9p 53p 52p 51p 1.3p 50p 0.8p 53.1p 49p 48p (1.2p) 49.3p 47p 46p 45p Mar-17 Dividends Share issue Income Capital Sep-17 (EPRA EPS) (revaluations) Results for the six months ended 30 September 2017 6

16% INCREASE IN INVESTMENT PROPERTY Portfolio opportunities accelerate expansion £m 1,600 153 1,500 50 1,400 15 (3) 1,300 1,560 1,200 1,345 1,100 1,000 Mar-17 Other Development costs Revaluation gain Acquisitions Sep-17 Results for the six months ended 30 September 2017 7

DIVERSIFIED FUNDING STRUCTURE Strong financial position delivering better terms and pricing  £96m of funds raised in June through a Sep Mar placing at 60p per share 2017 2017  28 basis point reduction in weighted average Investment property 1,560 1,345 cost of debt, 71% of borrowings are fixed rate Net debt (£m) 569 500 and weighted maturity 7.9 years Loan to Value 36% 37%  RCF increased to £250m in May 2017 and to Cash/undrawn facilities (£m) 102 124 £300m in October 2017 at initial margin of 150 bps  £150m of notes issued under UK private Weighted average interest rate 3.78% 4.06% placement, in October 2017  maturity split between eight and ten year notes at an average rate of 3.04%  RCF and notes on unsecured basis Results for the six months ended 30 September 2017 8

EPRA COST RATIO REDUCED TO 12% Scale driving cost efficiencies EPRA Cost Ratio 24% 22% 20% 20% 18% 18% 17% 16% 14% 14% 12% 12% 10% Mar-14 Mar-15 Mar-16 Mar-17 Sep-17 Results for the six months ended 30 September 2017 9

PROPERTY & MARKET UPDATE Andrew Darke – Property Director Results for the six months ended 30 September 2017 10

MODEST YIELD COMPRESSION Strong valuation gains  Asset enhancement and yield Yield progression compression result in strong 8% valuation gains 7%  Period end initial yield of 4.93%  Fundamentals remain strong with 6% prospect of rental growth 5% 4% 3% 2% 1% 0% IPD monthly UK index initial yield Assura Net Initial Yield 15 year Gilt Results for the six months ended 30 September 2017 11

CONTINUED STRONG GROWTH Portfolio acquisitions contributed to accelerated growth  £215m increase in portfolio value Sep Mar  £153m acquisitions, of which £77m 2017 2017 were portfolio deals Investment property £1,560m £1,345m  5.0% average yield on cost Rent roll £83.1m £74.4m  Solicitors instructed on a further £126m of WAULT 12.8 years 13.2 years acquisitions  pipeline replenished with acquisition Acquisitions £153m £156m opportunities that meet our criteria, which includes a portfolio  Additional investment surveyor recruited Results for the six months ended 30 September 2017 12

INVESTMENT PROCESS Disciplined approach to acquisitions  Database provides crucial c.9,000 GP buildings in the market market information  Referrals, direct marketing, conferences and events key to Focus on core due For example: sourcing opportunities • Patient list diligence • Service provision  Flexible and engaged approach • Practice finances • Desktop review of key statistics Local economy to addressing tenant • Competition requirements Conversations with GPs  Brand and reputation Explaining the process Flexible approach to sale and leaseback In depth due For example: • Rental tone and growth diligence and • Enhancement opportunities • Life span of building assessment • Lease renewal prospects • Lease terms Offer £153m acquisitions in last 6 months Results for the six months ended 30 September 2017 13

INVESTMENT CASE STUDY Portfolio success  One of three portfolios – predominantly in Wales c£25m – 12 assets  sellers interviewed 4 parties  continuation of proactive and responsive management was key consideration Padarn Surgery, Aberystwyth  trusted reliable purchaser important to seller  relationship with investment surveyor  future partnering opportunities Llwynhendy Health Centre, Llanelli Results for the six months ended 30 September 2017 14

DEVELOPMENTS AND PIPELINE Marked increase in secured schemes  3 forward funded schemes Immediate Completed On site completed pipeline  5 forward funding schemes Number of schemes 3 5 12 currently on site Development cost £9.5m £34.3m £49.0m  Appointed on 12 schemes with an approximate end Cost to complete £12.6m cost of £49m Completion timing 2017/18 2018/19  Additional development surveyor recruited to deliver pipeline Before After Results for the six months ended 30 September 2017 15

RENT REVIEWS Prospective growth driven by developments  Annualised uplifts Rent review settlements  average 1.81% RPI/fixed/other c.27% OMR c.73% 6.0%  RPI/fixed/other 2.84%  open market 0.83% 5.0%  Linkage to cost inflation on new 4.0% developments creates evidence for rental growth 3.0% 2.0% 1.0% 0.0% Results for the six months ended 30 September 2017 16

ENHANCING EXISTING PORTFOLIO Pro-active portfolio management team  Asset enhancement initiatives contributed No. Rent to half year uplift in value New leases signed 9 £0.2m  New leases, lease re-gears and extensions remain a priority Lease re-gears 4 £0.2m  Portfolio 98% let Physical extensions 3 £0.3m  Dedicated proactive portfolio managers add value through initiatives – team increased by 3 “We’re delighted to have moved into the new-look building – we need space to keep developing our offer to patients and this gives us the premises to do that.” Dr Jabbar from Albion Street Surgery, Heckmondwike Results for the six months ended 30 September 2017 17

PROPERTY OUTLOOK Three high performing teams  Increased rate and value of acquisitions and pipeline  Asset enhancement contributes to valuation gain  Increased number of live and pipeline developments  Continued ability to deliver growing returns to shareholders  Provide primary care estate of the future to the benefit of patients Results for the six months ended 30 September 2017 18

OUTLOOK Jonathan Murphy – CEO Results for the six months ended 30 September 2017 19

PRIMARY CARE AT HEART OF NHS AGENDA  Rising to Naylor’s challenge  £3bn Primary Care Buildings Pledge by leading investors  Demand for NHS capital into buildings remains high  £325m capital “down payment” to the most advanced STPs  Focus on value for money across the political spectrum is welcome  3PD delivers value for taxpayer and excellent space utilisation  Quality buildings underpin GP-led solutions  Nuffield Trust survey highlights growing trend for primary care at scale  Growing communities need healthcare infrastructure  Brixworth Surgery development as part of housing scheme Results for the six months ended 30 September 2017 20

ASSURA OVERVIEW Delivering the UK’s primary healthcare estate of the future Strong and A growth market Market leader replenished pipeline Delivering growth & Financial strength Scalable model income Delivering superior risk adjusted returns – proposed 9% 1 increase in dividend from January 2018 1 Subject to the completion of the proposed equity raise announced today Results for the six months ended 30 September 2017 21

Q&A Ashby Frome Guildford Donnington Results for the six months ended 30 September 2017 22

SUPPLEMENTARY INFORMATION 1. Market 1.1 Growing demand / inadequate supply 5. Financials 5.1 Financial highlights 1.2 Positive political backdrop 5.2 Five year track record 1.3 Policy statements 5.3 Balance sheet at 30 September 2017 1.4 Ageing population 5.4 EPRA NAV 1.5 Risk reward spectrum 5.5 Diluted EPRA NAV movement 1.6 Assura well placed to outperform 5.6 EPRA EPS 2. Portfolio 2.1 Total property assets 6. Borrowings 6.1 Bank and bond facilities 2.2 Completed investment property 6.2 Covenants 2.3 Sensitivity analysis 7. REITs 7.1 REITs 3. Cash flows 3.1 Cash flow summary 3.2 Contracted rental income 8. Dividends 8.1 Calendar 3.3 Lease lengths 3.4 Debt repayment profile 4. Rents 4.1 ERV evolution and reversion 4.2 Open market rents results 4.3 Basis of rent reviews 4.4 Developments drive rental growth 4.5 Rent review timing Results for the six months ended 30 September 2017 23