Results for the year ended 31 March 2014 Investing in the future of primary care property
Introduction Graham Roberts Investing in the future of primary care property
A year of significant achievement • Major transaction completed – Trinity adding 10% to rents and profit Sale of LIFT assets, crystallising 5% gain to NAV • • 8 successful development completions – adding £1.5m of rent, 6.7% yield on cost, 21 years lease length Investing in the future of primary care property 3
Delivering strong financial results • 24% uplift in underlying EPS 30.0% to 2.1 pence per share 24.2% 25.0% 12% uplift in adjusted NAV • per share to 43.4 pence 20.0% 18.6% £10.5m gain on LIFT disposal • 15.9% 15.0% • Portfolio valuation uplift £12.4m 10.0% 8.7% – 2.2% on a like ‐ for ‐ like basis on core investments 5.0% – £2.3m from developments 0.0% Accounting Return Total Shareholder Return 2012/13 2013/14 Investing in the future of primary care property 4
In a sector with outstanding investment characteristics • Low default risk Long leases – new leases typically > 21 years • – no tenant breaks – no rent ‐ free periods – minimal vacancy • Linkage to cost inflation Substantial ongoing development need • – bespoke development does not create rental cycles • High social impact 5 Investing in the future of primary care property
In a sector with outstanding investment characteristics Seven ‐ year total returns vs standard deviation 2007 ‐ 2013 (since the inception of the healthcare index) Higher Return 8 Residential market lets Primary healthcare Gilts 6 7 year Total Return (%) All healthcare Equities 4 Office 2 All Property Industrial Low Return Retail 0 20 16 12 8 4 Standard deviation (risk) High Risk Lower Risk Source: IPD 6 Investing in the future of primary care property
Assura: a compelling investment case • 4.1% dividend yield on adjusted net assets – up 49% on previous rate, paid quarterly – fully covered and progressive Long ‐ term cash flows underpin balance sheet • – annualised rent of 6.4% on £657m of property – 95% of today’s rent roll still receivable in 2024 – 14.4 years weighted average unexpired lease length – debt of 11 years average maturity, fixed at 5.28% Positioned well • – strong brand and track record – development capability – scalable, fully internal management model Investing in the future of primary care property 7
Financial Results Jonathan Murphy Investing in the future of primary care property
Financial highlights for the year • 7.9% Total Property Return – 6.0% income return 15.9% Total Accounting Return 1 • – 3.5% dividend paid – 12.4% increase in adjusted net asset value • 24% increase in underlying profit from continuing operations to £10.9m 1 Increase in EPRA NAV and dividends Investing in the future of primary care property 9
16.4% growth in annualised rent roll £m 45.0 £4.0m 40.0 £1.7m £0.4m 35.0 (£0.2m) £41.8m 30.0 £35.9m 25.0 20.0 Mar ‐ 13 Disposals Lease events Completed Trinity acquisition Mar ‐ 14 developments & extensions Investing in the future of primary care property 10
24% growth in underlying profit £m 12.0 £4.1m 11.0 10.0 9.0 8.0 £10.9m 7.0 £8.8m (£1.9m) (£0.1m) 6.0 5.0 Mar 13 Net finance costs Admin expenses Net rental income Mar 14 Investing in the future of primary care property 11
19.7% increase in core investment portfolio £m 640 £63.5m 620 600 580 £24.5m 560 £12.0m 540 £3.2m 520 £626.8m 500 480 Mar ‐ 14 Mar ‐ 13 £523.6m 460 Net Initial Yield 5.88% 5.95% 440 Equivalent Yield 6.04% 6.15% 420 400 Mar ‐ 13 Capex, disposals & Revaluation gain Completed Additions Mar ‐ 14 transfers developments Investing in the future of primary care property 12
Contracted rental income £m 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 .0 Mar ‐ 15 Mar ‐ 16 Mar ‐ 17 Mar ‐ 18 Mar ‐ 19 Mar ‐ 20 Mar ‐ 21 Mar ‐ 22 Mar ‐ 23 Mar ‐ 24 Mar ‐ 25 Mar ‐ 26 Mar ‐ 27 Mar ‐ 28 Mar ‐ 29 12 months ended Trinity Existing £663m of contracted rental cash flow • • 95% of current rent roll still contracted in 2024 Investing in the future of primary care property 13
Well spread repayment profiles £m Mar ‐ 14 Mar ‐ 13 140.0 Gross debt £451.9m £395.7m Weighted average maturity 10.9 years 11.3 years 120.0 Weighted average cost of debt 5.28% 5.25% 100.0 80.0 60.0 40.0 20.0 .0 12 months ended Aviva Santander Bond Investing in the future of primary care property 14
Robust cash flow £m • Government backs 80.0 £27.7m 88.8% core portfolio leases 70.0 • 14.7 years weighted 60.0 average unexpired (£22.7m) 50.0 £4.1m Undrawn lease term (core facility £7.6m (£6.6m) £2.6m 40.0 only) (£7.2m) 30.0 10.9 years average • maturity of debt Cash 20.0 £38.6m Cash £35.7m 10.0 0.0 Mar ‐ 13 Operations Net Disposal Property Trinity Dividend Mar ‐ 14 financing proceeds investment acquisition Investing in the future of primary care property 15
Flexible funding secured £m • £30m five ‐ year RCF from 80.0 Barclays and RBS £71.2m 70.0 Initial all ‐ in cost of just • 60.0 over 3.5% £30.0m 50.0 Flexible facilities • £41.2m 40.0 • Capacity to fund future £2.6m £2.6m growth 30.0 20.0 £38.6m £38.6m 10.0 0.0 Mar ‐ 14 Mar ‐ 14 + RCF Mar ‐ 14 cash Undrawn committed facilities RCF Investing in the future of primary care property 16
Strong and growing balance sheet £m Gross assets • Over last 12 months 750 – non ‐ core assets £713.7m 700 successfully recycled £57.0m and no longer 650 £627.0m significant £596.4m 600 £69.7m – £99m added to £58.6m investment properties 550 £656.7m – 62% LTV with 500 £557.3m longevity and security £537.8m 450 of income 400 31/03/2012 31/03/2013 31/03/2014 EPRA NAV: 36.3p 38.6p 43.4p Investment properties Other Investing in the future of primary care property 17
Dividends • Dividend capacity enhanced by Trinity acquisition and LIFT disposal 49% increase in quarterly dividend to 0.45 pence per share • • Fully covered • Progressive policy Investing in the future of primary care property 18
Property update Andrew Darke Investing in the future of primary care property
Trinity acquisition – 32 medical centres, £63m, 6.4% yield Preston Lytham St Annes Leyburn Investing in the future of primary care property 20
Freckleton Trinity – initiatives since acquisition • Rapidly integrated No additional head ‐ count to manage enlarged portfolio • Housekeeping completed regarding tenants and leases – built • personal relationship with all tenants Asset enhancement of newly acquired portfolio • – pharmacy extension and lease at Bishop Auckland adding £0.6m value, £0.2m revaluation “profit” and £35,000 rent completed – GP development at Lanchester – on site to add £1.5m value, £0.1m revaluation “profit” and £94,000 rent Further opportunities to capitalise on • Investing in the future of primary care property 21
Completed developments – 8 medical centres, £25m value Y Felinheli Maidstone Harlech Willington Investing in the future of primary care property 22
Asset enhancements – 3 extensions, £3m value Queens Park Medical Centre, Stockton Investing in the future of primary care property 23
Freckleton Continuous capital recycling • Sold – LIFT assets for £22.4m – non ‐ core retail parade £1.2m – 4 ex growth smaller surgeries £1.7m – vacant site £0.5m • Exchanged − 3 vacant sites £0.7m Leyburn Under offer • – non ‐ core retail parade £2.0m Being reviewed and marketed • – final £13.7m of non ‐ core assets and sites Investing in the future of primary care property 24
Specialist team • In ‐ house experienced team of chartered surveyors Clearly defined roles to deliver objectives and strategy • Alignment of skills meeting needs of GPs and NHS • • Results outcome – tenant satisfaction – maximising returns for shareholders and value adding – increased brand strength and recognition Investing in the future of primary care property 25
The people • Head of Property 5 Portfolio Managers – National coverage • – sole personal responsibility for a part of the portfolio – day to day aspects and relationship building, tenant and occupier satisfaction • 2 Investment Managers – East & West – asset enhancement and extensions and lease re ‐ gearing – identification and delivery of sale and leasebacks 3 Development Managers – North, South and National • – identification and delivery of development schemes – relationship building with NHS Area Teams and GPs – forward funding and procurement 2 support staff • Investing in the future of primary care property 26
Before and after Investing in the future of primary care property 27
Market and Outlook Graham Roberts Investing in the future of primary care property
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