IPD UK Healthcare index 2013 results

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1 IPD UK Healthcare index 2013 results 6th March Investment Property Databank Ltd. All rights reserved. ipd.com 1

2 IPD healthcare index sponsor 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 2

3 Agenda Market size and structure Healthcare property performance in 2013 and the longer term Its drivers Comparison by region and building value Primary healthcare as an investment sector Healthcare enters the IPD all property index Performance comparison Income and rental growth analysis 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 3

4 IPD UK Healthcare Index Profile 2013 The IPD Healthcare dataset now covers the performance of 1028 healthcare properties across the whole of the UK, with an aggregate value of 3.43bn. This compares to a total value of 2.66bn across 786 assets at the end of Data from 8 specialist healthcare funds: Assura Group Aviva Quercus Blackrock GPG Kames Target Healthcare fund MedicX Fund MedicX Healthfund Primary Health Properties Target Healthcare REIT Plus other healthcare properties held within IPD UK databank 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 4

5 IPD UK Healthcare Index 2013 IPD UK Healthcare index results for the year to December 2013 Benchmark Total Return 5.43% Total Return 5.6% Year end: 1028 properties valued at 3.43 billion Total return of 5.6% compares to 2.9% in 2012 Income continues to be driving force rising to an annual return of 7% from 6.4% in Income Return +7.0% Capital Growth -1.3% Cross Product * -0.1% Values fall further following -3.3% movement in 2012 Rental Value Growth 1.2% Benchmark total return 19 basis points lower at 5.43% indicating a negative impact of active management Source: IPD all Property Index 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 5

6 Healthcare investment performance in month Total return, Income return, capital growth and rental value growth % 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 6

7 Components and Drivers of Returns, 2013 Primary healthcare within the wider property market Primary Healthcare property performance in 2012 was driven by a steady income return, with prices appreciating slightly on the back of 0.9% rental growth. Commercial property performance driven by yield contraction, causing prices to rise at a much faster rate than rents Investment Property Databank Ltd. All rights reserved. ipd.com 7

8 Primary Healthcare investment performance comparison: 2013 Annualised Total return, Income return, capital growth and rental value growth % Source: IPD, RPI inflation 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 8

9 Primary Healthcare investment performance comparison: 7 years to end 2013 Annualised Total return, Income return, capital growth and rental value growth % Source: IPD, RPI inflation 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 9

10 Primary Healthcare investment performance comparison by investment value: 2013 Annualised Total return, Income return, capital growth and rental value growth % Source: IPD, RPI inflation 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 10

11 Primary Healthcare investment performance comparison by investment value: 7 years to end 2013 Annualised Total return, Income return, capital growth and rental value growth % Source: IPD, RPI inflation 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 11

12 Healthcare in the IPD all property index Income and rental growth sector comparison 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 12

13 IPD all property index structure 2013 Capital Value in billions % of capital value at Dec Retail 46.8% Office 26.5% 71.5 Industrial 15.4% Residential 3.8% 40.4 Healthcare 2.2% Other 5.3% Source: IPD all property index 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 13

14 Property sector investment performance comparison: 7 years to end 2013 Annualised Total return, Income return, capital growth and rental value growth % Source: IPD all property index, OFNS 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 14

15 Primary healthcare rent, wage growth and inflation over time Rental growth and prices indices, December 2006 = 100 Primary healthcare rents rental growth significantly outpaces commercial property but hasn t kept pace with prices or residential rents Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Primary healthcare Residential market lets RPI inflation UK wage growth All property Source: IPD all property index, OFNS 2013 Source: Investment IPD, Nationwide Property HPI Databank Ltd. All rights reserved. ipd.com 15 95

16 Primary healthcare rent and other property sectors Rental growth indices, December 2006 = 100 Source: IPD all property index, OFNS 2013 Source: Investment IPD, Nationwide Property HPI Databank Ltd. All rights reserved. ipd.com 16

17 Ranges of rental value growth by property sector Annualised 5 year returns to the end year annualised % net income growth All Property 0.1 Primary Healthcare 2.2 Residential market lets All Property Primary Healthcare Residential market lets All Property Primary Healthcare Residential market lets 0 Source: IPD all property index 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 17

18 Yield and value growth over time Primary healthcare 7 yr annualised return Capital growth 0.18 Rental value growth 2.50 All property 7 yr annualised return Capital growth Rental value growth Source: IPD all property index 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 18

19 Net income growth against rental growth Primary healthcare 7 yr annualised return Income return 6.3 Rental value growth 2.5 Net income growth 2.6 All property 7 yr annualised return Income return 5.9 Rental value growth Net income growth 1.2 Source: IPD all property index 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 19

20 Risk reward spectrum 7 year total return vs standard deviation Source: IPD all property annual index, MSCI, J.P. Morgan 7-10yr 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 20

21 Thank you Mark Weedon IPD 2013 Investment Property Databank Ltd. All rights reserved. ipd.com 21

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