Unite Group Plc · LSE:UTG
Unite — H1 2011 Earnings Presentation
28 slides from Unite's earnings presentation, August 2011
Slide 1: Interim Results: Six months ended 30 June 2011
The UK’s leading developer and manager of student accommodation Interim Results Six months ended 30 June 2011
Slide 2: Highlights
Highlights Adjusted NAV up 5% to 310pps 30 Jun 30 Jun 31 Dec - Stabilised portfolio values up 2.1% 2011 2010 2010 - £6m of development profit recognised Adjusted NAV 310p 286p 295p Net Portfolio Contribution increased to £7.2m - Rental and occupancy growth NPC £7.2m £4.3m £4.1m Good developmen
Slide 3: Strategy and market
The heart of student living Strategy and market
Slide 4: Market view
Market view Full time student number growth 1,800,000 Demand for purpose built accommodation 1,700,000 will remain strong for foreseeable future 1,600,000 1,500,000 Full Time Students 1,400,000 - >200,000 more applicants than places 1,300,000 2011 1,200,000 1,100,000 - Capital and planning constra
Slide 5: Strategy
Strategy Target low double-digit total returns, with modest risk Development Capital growth Income growth London focus – 4,000 beds London focus Rental growth 2012-14 Quality portfolio and universities Operating efficiencies Mix of product, price point Asset management Completion of
Slide 6: Financial review
The heart of student living Financial review
Slide 7: Financial highlights
Financial highlights 6 months 6 months 12 months to Jun 2011 to Jun 2010 to Dec 2010 Income Statement Net portfolio contribution £7.2m £4.3m £4.1m Adjusted profit /(loss) £4.6m (£4.0m) £2.4m Profit / (loss) before tax £15.3m £9.8m £19.6m Balance Sheet NAV (adjusted, fully diluted per share) 310pps 2
Slide 8: Adjusted NAV bridge
Adjusted NAV bridge Pence per share 315 (1) 4 3 9 305 310 295 295 285 275 31 Dec 2010 Rental Growth Development NPC UMS Loss 30 Jun 2011 7
Slide 9: Net Portfolio Contribution
Net Portfolio Contribution Jun Jun Dec % 2011 2010 2010 change £’m £’m £’m Rental growth and additional beds driving top line growth Total income 112.5 96.0 188.9 17% UNITE share of rental 48.8 46.2 89.0 6% Lower finance costs reflect USAF sales, income lower cost of debt and use of cash to pay
Slide 10: Income Statement
Income Statement Jun Jun Dec 2011 2010 2010 £’m £’m £’m Net Portfolio Contribution 7.2 4.3 4.1 Development pre-contract costs (1.5) (1.2) (3.2) Development trading profits/write- 2.0 (2.9) 6.9 downs UMS loss due to surplus capacity (2.3) (4.6) (4.8) Other (0.8) 0.4 (0.6) Adjusted profit/(loss) 4.6 (
Slide 11: See-through Balance Sheet and Income Statement
See-through Balance Sheet and Income Statement Wholly owned USAF Joint Ventures Total £’m £’m £’m £’m Balance sheet Rental Properties 519 204 191 914 Properties under development 203 - - 203 Net debt (391) (92) (119) (602) Other assets/(liabilities) (9) (3) (3) (15) Adjusted net assets 322 109 69 50
Slide 12: Investment portfolio
Investment portfolio Valuation factors Rental growth of 2.1% in H1 on stabilised portfolio (£730m) Average yields: 6.6% - Stable for last 18 months £154m of stabilising assets - Half to stabilise by December 2011 London focus 38% of capital invested in London Doubled since December 2007
Slide 13: Capital structure
Capital structure Key debt statistics Financing position remains robust Jun 11 Jun 10 Dec 10 - Reduced average cost of debt Net debt £391m £409m £335m - Net debt and gearing at sustainable Net gearing 78% 89% 71% levels See through gearing 120% 128% 115% New bank facilities extending debt maturi
Slide 14: Built-out Balance Sheet
Built-out Balance Sheet Balance sheet headroom to complete 30 Jun Development Built out 2011 pipeline development plan £’m £’m £’m Significantly accretive to NAV and earnings Property 722 258 980 - £62m NAV (39pps) Share of JVs NAV 178 - 178 - £15m NPC Cash headroom 74 (27) 47 Borrowings (465) (
Slide 15: Co-investment vehicles
Co-investment vehicles USAF: established track record, size, 30 Jun 2011 diversification USAF UCC USV OCB £’m £’m £’m £’m - Portfolio valued £1.25bn GAV (£’m) 1,250 390 58 180 - £57m units traded at premium to NAV Borrowing / others (£’m) (584) (251) (43) (102) Agreeing longer term strategies fo
Slide 16: Operational review
Operational review The heart of student living 15
Slide 17: Operations
Operations Strong demand for 2011/12 - 89% reservations vs 87% last year (2,000 additional rooms sold year to date) - 35% increase in contact centre volumes and web traffic year on year (August) - London particularly strong Range of service and efficiency improvements made in H1 - Upgrades to sy
Slide 18: Development pipeline
Development pipeline Total Total Capex Secured completed development in Capex NAV Stabilised beds value cost period remaining remaining yield on cost London £’m £’m £’m £’m £’m 2011 149 20 19 6 1 - 7.2% 2012 1,341 172 127 32 57 21 9.3% 2013 563 73 58 - 58 15 8.7% 2014 902 79 60 - 60 19 9.1% 2,955 34
Slide 19: UNITE Modular Solutions
UNITE Modular Solutions £2.3 million loss in H1 due to surplus capacity Pipeline of third party opportunities enhanced - Four contracts secured (£21m value) - Healthy pipeline of other opportunities - Student accommodation, budget hotel and residential sectors Improved outlook for full year -
Slide 20: Summary and outlook
Summary and outlook Good progress against all strategic objectives - Growth in NAV and NPC - Development pipeline progressed - Effective capital management Outlook for remainder of 2011 is positive Re-instatement of dividend Business and strategy well positioned for future - London focus - U
Slide 21: Pioneers of Student Living
PIONEERS OF STUDENT LIVING
Slide 22: The London student market
The London student market London has three important characteristics Proportion of International Students that distinguish it from the wider UK market HESA 09/10 – All Students - A full time student population (284,000) that is larger than the next five largest student 16 24 markets combined UK Ov
Slide 23: Differentiating the student experience
Differentiating the student experience UNITE’s accommodation and offer - Prime student locations - Online booking and payment - Multi-lingual telephone booking line - Flat shares for up to 8 people - Single & double occupancy studios - Group booking facility - Dedicated management teams - No hidden
Slide 24: Our top 10 markets
Our top 10 markets 2011 2010 City Completed Completed FT Projected Rank Rank Beds Beds Student Market (11/12) (10/11) Numbers Share (09/10) 1 1 London 6,729 6,586 283,531 2.4% 2 2 Sheffield 3,731 3,731 46,325 8.1% 3 3 Liverpool 3,372 3,372 40,920 8.2% 4 4 Leeds 3,138 3,138 52,371 6.0% 5 5 Bristol 2,
Slide 25: See-through Balance Sheet and Income Statement
See-through Balance Sheet and Income Statement Wholly owned USAF UCC USV OCB Total £’m £’m £’m £’m £’m £’m Balance sheet Rental Properties 519 204 117 29 45 914 Properties under development 203 - - - - 203 Net debt (391) (92) (74) (20) (25) (602) Other assets/(liabilities) (9) (3) (1) (1) (1) (15) A
Slide 26: Debt facilities
Debt facilities On-balance sheet Co-investment vehicles USAF Facility £’m Drawn £’m Maturity LTV Facility Drawn Maturity LTV Amount @ 30 Lloyds* 115 115 2012 50% Jun HSH / Abbey 106 106 2013 48% Investment £’m £’m CMBS 280 280 2014 51% Bank of Ireland 100 100 2013 56% Santander 63 50 2015 49% HSBC 7
Slide 27: Co-investment vehicles – key terms
Co-investment vehicles – key terms USAF UCC OCB JV History: Multi investor fund formed JV with GIC formed March 05 JV with OCB formed August 09 Dec 06 Strategy: UK direct let student London & Edinburgh focus Build and operate 3 London accommodation Build a £350m+ portfolio assets Exclusivi
Slide 28: NNNAV
NNNAV Jun 2011 Jun 2010 Dec 2010 £m £m £m Net assets 404 372 387 Valuation gains not recognised on properties held 48 30 37 at cost Fair value of fixed rate debt (5) (8) (6) Deferred tax - - - NNNAssets 447 394 418 NNNAV per share 279pps 246pps 261pps 27