Unite Group Plc · LSE:UTG
Unite — H1 2014 Earnings Presentation
25 slides from Unite's earnings presentation, September 2014
Slide 1: Continued Strong Performance on All Fronts
Continued Strong Performance on All Fronts Interim Results Half year to 30 June 2014
Slide 2: Highlights
HIGHLIGHTS Strong financial performance - EPRA earnings up 34% 30 Jun 30 Jun 31 Dec - EPRA EPS up 17% 2014 2013 2013 - EPRA NAV per share up 5.2% EPRA Earnings £20.4m £15.2m £30.6m - Total return of 6.1% on opening NAV EPRA EPS 10.9p 9.3p 18.0p Accelerating 4.5% EPS yield target to 2014 EPRA NAV
Slide 3: Strategy and Market
~ UNITE STUDENTS STRATEGY AND MARKET
Slide 4: Market Outlook Remains Strong
MARKET OUTLOOK REMAINS STRONG Positive rent and occupancy Prospect of yields Development market outlook strengthening still supportive 2014/15 intake likely to be Spread to IPD All Property Limited signs of inflation in up c.30,000 year-on-year yield continues to widen strong regional markets
Slide 5: Implications for Unite Strategy
IMPLICATIONS FOR UNITE STRATEGY Positive reservations and rental growth outlook - 92% reserved for 2014/15 (2013: 90%) - Supportive of rental growth of at least 3% for full year - Portfolio focused on strong university locations Continue to favour development in strong regional locations over Lo
Slide 6: Financial Review
New picture FINANCIAL REVIEW
Slide 7: Financial Highlights
FINANCIAL HIGHLIGHTS 30 Jun 2014 30 Jun 2013 31 Dec 2013 Income EPRA Earnings £20.4m £15.2m £30.6m EPRA EPS 10.9p 9.3p 18.0p EPS yield 2.9% 2.7% 3.9% Dividend per share (interim / full year) 2.2p 1.6p 4.8p Balance Sheet EPRA NAVps 402p 361p 382p Total return on opening NAV 6.1% 4.0% 10.5% See throug
Slide 8: EPRA Earnings
EPRA EARNINGS Continuing improved performance 30 June 30 Jun 31 Dec 2014 2013 2013 - High occupancy, rental growth and £m £m £m interest savings Total income 129.5 122.6 240.7 - EPRA earnings up to £20.4 million Unite’s share of rental income 64.0 58.3 113.4 4.5% EPS yield target brought forward
Slide 9: Illustrative Earnings Progression
ILLUSTRATIVE EARNINGS PROGRESSION Rental USAF/UCC Secured Secured Funded growth / Illustrative £ million 2013 Disposals stake pipeline sub-total pipeline investment 2018 in brand NOI 81 7 36 124 12-19 8-18 (11-13) 132-147 Overheads less (8) (1) (9) - (2-3) (11-12) fees Interest (47) (1) (11) (59) (3
Slide 10: Adjusted NAV Bridge
ADJUSTED NAV BRIDGE Pence per share 420 410 (3) 400 10 (2) 6 390 9 380 402 370 382 360 31-Dec-13 Investment Portfolio Development Financing Retained Profits Dividend 30-Jun-14 Portfolio Investment portfolio growth driven primarily by rental growth, 3% like-for-like expected for full year Portfol
Slide 11: See Through Balance Sheet and Income Statement
SEE THROUGH BALANCE SHEET AND INCOME STATEMENT Wholly owned USAF / JVs Unite Unite (Unite share) see through see through £m Jun 2014 Dec 2013 £m £m £m Balance sheet Rental Properties 783 492 1,275 1,175 Properties under development 210 48 258 195 Total property portfolio / GAV 993 540 1,533 1,370 Ne
Slide 12: Capital Structure
CAPITAL STRUCTURE Strong debt position Key debt statistics (see through) - Improved maturity profile and diversity of 30 Jun 30 Jun 31 Dec 2014 2013 2013 sources Net debt £670m £619m £666m - Limited refinancing requirements before LTV 44% 48% 49% 2020 Cost of debt 4.7% 5.3% 4.7% Further reductio
Slide 13: Co-investment Vehicles
CO-INVESTMENT VEHICLES Simplification of co-investment structure Summary financials USAF1 LSAV / UCC OCB sale completed £m £m - £174 million proceeds in line with book GAV 1,375 511 value Net debt (466) (204) - Unite share of proceeds reinvested into UCC Other assets / liabilities (26) (49) UC
Slide 14: Asset Disposals
ASSET DISPOSALS Proceeds Book value £m £m Completed / exchanged - Wholly owned 36 36 - UCC 32 33 - OCB 174 174 Total 242 243 Unite share 91 91 Ongoing improvement to portfolio quality Disposals broadly in line with book value OCB sale significantly increases total in 2014 Keeping future asse
Slide 15: Operational Review
OPERATIONAL REVIEW
Slide 16: Home for Success Update
HOME FOR SUCCESS UPDATE Brand investment programme launched in April - £40 million total investment, £20 million Unite share - Launched from a position of strength - Designed to strengthen competitive advantage further - ROI tested thoroughly through various pilots Programme on track - All prope
Slide 17: Development Pipeline
DEVELOPMENT PIPELINE Secured Total Total Capex in Capex Forecast Forecast beds completed development period remaining NAV yield on value costs remaining cost £m £m £m £m £m % London (wholly owned) 1,572 187 123 19 2 2 10.5% London (LSAV-Unite share) 2,317¹ 128 94 25 59 21 9.0% Total London (Unite sh
Slide 18: Summary and Outlook
SUMMARY AND OUTLOOK Strong performance on all fronts Solid growth in earnings and NAV Now targeting 4.5% EPS yield in 2014 – a year ahead of plan Well positioned for continued growth - Strong student numbers for 2014/15 with further growth likely in 2015/16 - 92% reservations supportive of r
Slide 19: Appendices
"7 UNITE STUDENTS APPENDICES
Slide 20: UK Student Accommodation Market
UK STUDENT ACCOMMODATION MARKET Full time student numbers growth Full time student numbers growth Student numbers have doubled since 1991 - Driven by government policy, demographics, global mobility - 180,000 more applicants than places in 2013/14 and similar level forecast in 2014/15 - Variations
Slide 21: Product and Service Offering
PRODUCT AND SERVICE OFFERING All-inclusive pricing - All utilities and services - High-speed (20Mb) Wi-Fi throughout our portfolio - 24/7 customer service - Transparency and certainty - Free cleaning City centre locations - Close to university campuses - Flat shares and studios - Range of produc
Slide 22: Our Top 10 Markets
OUR TOP 10 MARKETS FT Student Projected 2014 2013 Completed Completed City Numbers Market Rank Rank Beds (14/15) Beds (13/14) (12/13) Share 1 1 London 7,892 7,612 281,747 2.8% 2 2 Sheffield 3,731 3,731 46,889 8.0% 3 3 Liverpool 3,398 3,398 37,613 9.0% 4 4 Leeds 3,215 3,138 49,779 6.5% 5 5 Bristol 2,
Slide 23: Secured Development Pipeline
SECURED DEVELOPMENT PIPELINE Total Total development Capex Capex Forecast NAV Target Secured completed Forecast yield cost s remaining remaining remaining delivery beds value on cost (£m) (£m) (£’m) (£m) (£m) London wholly owned Stratford 2014 1,001 102 64 11 1 0 11.2% St Pancras Way 2014 571 85 59
Slide 24: Debt Facilities
DEBT FACILITIES On-balance sheet Co-investment vehicles Facility Drawn Maturity USAF Facility Drawn Maturity £m £m £m £m Investment Secured bond 565 565 2023/25 Lloyds RCF 1 92 67 2016 RBS 28 - 2015 Lloyds RCF 2 25 - 2018 BNP Paribas 33 33 2015 682 632 Legal + General 119 119 2024 UCC Mass Mutual 12
Slide 25: NNNAV
NNNAV Jun 2014 Jun 2013 Dec 2013 £’m £’m £’m Net assets 789 601 653 Valuation gains not recognised on properties held at 25 23 23 cost Mark to market of fixed rate debt (12) (1) (11) Deferred tax - - - EPRA NNNAV 802 623 665 EPRA NNNAV per share 395pps 349pps 373pps 24