UNITE Group plc · LSE:UTG
UNITE — Investor Day (April 2015)
44 slides from UNITE's investor day presentation, Apr 17, 2015
Slide 1: Capital Markets Day
CAPITAL MARKETS DAY Aberdeen 17 April 2015
Slide 2: Agenda
AGENDA 09:30 Welcome Mark Allan 09:35 Operations in Aberdeen Richard Smith 09:50 Developing in Aberdeen Richard Simpson 10:00 Student accommodation and the new market Mark Corver in HE: some evidence from UCAS 10:15 UK student housing market overview Philip Hillman 10:30 City tour introduction Ashle
Slide 3: Operations in Aberdeen
OPERATIONS IN ABERDEEN Richard Smith, Managing Director of Operations
Slide 4: Operations in Aberdeen
OPERATIONS IN ABERDEEN Two strong and popular Higher Education Institutions (HEIs): the University of Aberdeen (UoA) and Robert Gordon University (RGU) UoA is ranked 44th and RGU 64th in the Times Higher Education UK ranking Total number of full-time students across both HEIs is 20,489 Both
Slide 5: Maintaining our estate
MAINTAINING OUR ESTATE With an average age of 15 years, Aberdeen is 8 years older than the Unite Students estate average Our proactive approach to maintenance and lifecycle investment – Ageless Asset – ensures we are able to offer a quality product and a great level of service and satisfaction
Slide 6: Our approach to maintenance – Ageless Assets
OUR APPROACH TO MAINTENANCE – AGELESS ASSETS 5
Slide 7: Investing in the estate – the benefits
INVESTING IN THE ESTATE – THE BENEFITS Since 2013 we have seen an 18% reduction in Age does not impact rental growth maintenance jobs. On average, jobs cost £48 and Property 5 year Compound Rental take 45 minutes to complete Growth Our proactive approach ensures that building age King Street 4.8
Slide 8: Maintenance – a critical service factor
MAINTENANCE – A CRITICAL SERVICE FACTOR Maintenance is a key factor influencing customer satisfaction. Customers rightly want a clean, safe and well-maintained building - 70% of our customers rate our maintenance standard as excellent, up 17% in three years - Ease of logging and communicating faul
Slide 9: Total maintenance spend
TOTAL MAINTENANCE SPEND Maintenance comprises P+L and capitalised (lifecycle) elements: - P+L – replacement - Capitalised – improvements, upgrading specification P+L maintenance spend is c.20% of total operating costs £m £ per bed Reactive 7.3 167 Planned 2.8 64 Lifecycle 1.3 30 11.4 261 % of re
Slide 10: Home for Success
HOME FOR SUCCESS Digital c.667,000 unique visitors year on year, up 88% mostly driven by organic SEO 27% of visitors using mobile devices, up 58% 76% increase in visits to our new site from China, driven by organic rather than paid searches Almost a 100% increase on bookings completed via mo
Slide 11: Significant economies of scale available
SIGNIFICANT ECONOMIES OF SCALE AVAILABLE Unite gross overheads per bed1 Scalable operating platform can support substantial growth in beds under management £550 100 bps Current overhead per bed £439 90 bps £525 Overheads per bed Efficiency measure Marginal overhead per bed £82 80 bps Marginal bene
Slide 12: Developing in Aberdeen
Mealmarket Exchange, Aberdeen DEVELOPING IN ABERDEEN Richard Simpson, Managing Director of Property
Slide 13: The market and property trends
THE MARKET AND PROPERTY TRENDS The student accommodation market in Aberdeen: Where students live in Aberdeen Shortage of good quality, affordable, well- located accommodation for students in 14% Private Residential Sector Aberdeen University Purpose Built 15% Student Accommodation 49% UoA and RG
Slide 14: The market and property trends
THE MARKET AND PROPERTY TRENDS Aberdeen Real Estate NIY movement PBSA yields in the city have tracked the wider UK PBSA market Other commercial real estate sectors broadly tracked the national NIY average too Source: Knight Frank 13
Slide 15: The market and property trends
THE MARKET AND PROPERTY TRENDS Buoyant residential market - Long standing supply / demand imbalance - Annual shortfall of 350-800 homes per annum for the last five years - 2,300 new homes required annually for the next 25 years - Current annualised supply ratios equate to 18% to 53% shortfall of n
Slide 16: Causewayend: the development story
CAUSEWAYEND: THE DEVELOPMENT STORY Exchange Planning Completion Jan 14 Nov 14 Summer 16 Customer Acquired 399 student bed site from Aberdeen City Council Longstanding operational presence in the city helped the selection process Site forms a derelict listed school building in city centre close
Slide 17: Constitution Street: the development story
CONSTITUTION STREET: THE DEVELOPMENT STORY Exchange Planning Completion Sep 14 Oct 15 Summer 17 Customer Site secured off-market and unconditionally in a market where barriers to entry are high Subject to planning, the scheme will provide a home for c.650 students Opportunity A well-located de
Slide 18: Build cost inflation
BUILD COST INFLATION Strength of Aberdeen economy is driving YoY construction cost inflation higher than average build cost inflation 2015 2016 2017 2018 Total Land price a small proportion of TDC London 5.0% 5.0% 5.0% 4.5% 19.5% (typically 15%-20%) so land inflation and planning related land cost
Slide 19: UCAS
UCAS Presentation link:
Slide 20: UK Student Housing Market Overview
UK Student Housing Market Overview Philip Hillman 20 19
Slide 21: 2015 Market Overview
2015 Market Overview Unprecedented investment activity • Q1 has seen record investment volumes and has been dominated by large portfolio transactions in the market with overseas investors accounting for the majority of purchasers. • 2015 will see unprecedented transaction volumes, ruled by the tradi
Slide 22: Significant Increase In Transactions
Significant Increase In Transactions Record transaction levels with Q1 having a higher volume of transactions than the whole of 2014 JLL predict over £5bn of student housing to transact in 2015 21
Slide 23: Transactions Overview
Transactions Overview Portfolios have dominated the investment landscape in Q1 2015 Size Operational/ Price Per Date Property Town/ City Sale Price NIY Vendor Purchaser (beds) Development Bed Jan-15 Mansion Hive London 203 Operational £37.75m £185,961 5.50% Frogmore LaSalle IM Stonebridge Private So
Slide 24: Transactions Overview
Transactions Overview Opportunities under offer or coming to market Size Operational Sale Price/ Status Property Town/ City Vendor Purchaser (beds) Development Marketing Price Under Offer Nido Portfolio London 2,526 Operational Confidential Round Hill Capital Confidential Westbourne OCM Luxembourg U
Slide 25: Regional Yield Curve
Regional Yield Curve The past 12 months has seen yields hardening, and further expected upon completion of other portfolios 7.50% 7.00% 6.50% 6.00% 5.50% 5.00% 4.50% 4.00% Jan-14 Mar-14 May-14 Jul-14 Aug-15 Oct-14 Oct-14 Mar-15 Opal 3, Opal/PWC Tramworks, Cordea Savills Printworks, King Square IPG P
Slide 26: London Yield Curve
London Yield Curve In London, the curve has been much more aggressive 6.50% 6.00% 5.50% 5.00% 4.50% 4.00% Mar-14 May-14 May-14 May-14 Jan-15 Feb-15 Mar-15 Mar-15 The Curve, Canto Court, OCB Portfolio, Scape, Three Colts ISL, London Pure Portfolio, Paris Gardens, Whitechapel Old Street Central London
Slide 27: Investor Demand vs Supply
Investor Demand vs Supply Increasing demand, limited supply • Significant weight of capital continuing to look to deploy in the sector • Still unsatisfied demand from unsuccessful bidders on recent portfolios who are looking for scale • Continued demand from successful purchasers who are looking to
Slide 28: Investors in UK PBSA
Investors in UK PBSA The below outlines the breakdown of investors in Q1 2015 Types of Investors in UK PBSA in Q1 2015 (£2bn) 5% 9% 34% Pension Funds Russian Investors Established Other New Entrant 61% 91% 27
Slide 29: Investors in UK PBSA
Investors in UK PBSA Recent investors in the sectors 28
Slide 30: Strategic Objectives of Investors
Strategic Objectives of Investors Investors in the market are currently doing so for a variety of reasons • Creation of an operational platform to benefit from management efficiencies and to build more scale • Placement of capital in a stable economic environment with robust legal rules and strong c
Slide 31: Reasons for Investing in PBSA
Reasons for Investing in PBSA Good demand/supply Increased competition dynamics Increasing capital in conventional real estate Higher returns, sectors flows with diverse drivers of income growth Maturing, becoming more institutionally Diversification – Stable, long term Changing acceptable Counter c
Slide 32: Threats
Threats Investors in the market are currently doing so for a variety of reasons • Effects of unstable States on the world economy • University funding uncertainty • Election outcome • Investment Horizon (some of these portfolios/assets being bought are unlikely to come back to market in the short te
Slide 33: Alternative Investments
Alternative Investments Investment volumes and key transactions Increased capital flows • Key transactions and mandates in alternatives – from £691m - Hotels – 144 Travelodge portfolio sold to US in 2009 to £8.3bn in 2013 consortium made up for private equity groups and an investment bank for £520m
Slide 34: Alternative Investments
Alternative Investments Alternative commercial property investment volumes in the UK 29 % 30 a < S ne) R Percentage of all property investment in the UK Percentage of all property investment in the UK Alternative 2019 (Projected) @ JLL 33
Slide 35: Why Student Housing and Healthcare are 'in vogue'?
Why Student Housing and Healthcare are ‘in vogue’? 34
Slide 36: Thank You
Thank You 36 35
Slide 37: City Tour Introduction
CITY TOUR INTRODUCTION Ashley Gibbons, Area Manager – Scotland
Slide 38: Operations in Aberdeen
OPERATIONS IN ABERDEEN Ashley Gibbons, Area Manager – Scotland
Slide 39: Home for Success
HOME FOR SUCCESS A £40 million investment over two years to strengthen our brand 16 signature commitments channelled into four key areas: physical, digital, service and people New visual identity £21 million investment in LED lighting across the estates 31 properties complete Showing 22%
Slide 40: Home for Success roll out complete in Aberdeen
HOME FOR SUCCESS ROLL OUT COMPLETE IN ABERDEEN Physical Digital Service People LEDs – latest lighting Information the way Services available when A brilliant place to work technology to help students want it students need them students sleep, relax and have fun Vibrant, multi-functional Digital comm
Slide 41: University Partnerships
UNIVERSITY PARTNERSHIPS The University of Aberdeen Robert Gordon University 44 in the Times Higher Education ranking 64 in the Times Higher Education ranking 11,699 full-time students 9,207 full-time students Nearly one third of students are Scottish and The top University for graduate j
Slide 42: Strong sales performance
STRONG SALES PERFORMANCE Aberdeen Occupancy at 98-100% for the last seven years Sold out for 2015/16 academic year Strong forecast growth Revenue management Strong sales growth in 2015/16 We use revenue management techniques to driver pricing, working through pricing tiers dependent on the
Slide 43: Spring Gardens refurbishment
SPRING GARDENS REBURBISHMENT Spring Gardens Built in 1992 Purchased in 2002 from the University of Aberdeen Located opposite Aberdeen College in the city centre Refurbishment 9 week delivery programme Refurbishment of 410 bedrooms over the summer Total project cost of £3.3 million (£8K p
Slide 44: Spring Gardens pre- and post-refurbishment
SPRING GARDENS PRE-REFURBISHMENT Shared kitchen Bedroom Shared living area SPRING GARDENS POST-REFURBISHMENT Shared kitchen En-suite bedroom Shared living area 43