Slide 1: Positioned for growth: Preliminary results 2022
Positioned for growth Preliminary results For the year ended 31 December 2022 28 February 2023
Slide 2: Contents
Contents 1. Performance highlights 2. Financial review 3. Operations review 4. Property review 5. Outlook 6. Q&A 7. Appendices 2
Slide 3: Performance highlights
1 Performance highlights Richard Smith, Chief Executive
Slide 4: Delivering against our strategy
PERFORMANCE HIGHLIGHTS Delivering against our strategy HOME FOR SUCCESS Delivering for our Attractive returns A responsible and customers and universities for shareholders resilient business Record customer NPS1 Record earnings Significant improvement in EPC ratings Move to new operating model 8% to
Slide 5: Strong performance
PERFORMANCE HIGHLIGHTS Strong performance 31 Dec 31 Dec % 2022 2021 Change • Record earnings in 2022, ahead of pre-pandemic peak • Adjusted EPS +48% Adjusted Earnings £163.4m £110.1m +48% • EPRA NTA +5%, driving 8.1% total accounting return • 99% occupancy and 3.5% rental growth for 2022/23 Adjusted
Slide 6: Growing demand for Higher Education
PERFORMANCE HIGHLIGHTS Growing demand for Higher Education 000s UK 18-year-old population • Positive long-term outlook for UK student numbers 1,000 893 • 19% growth in UK 18-year-olds by 2030 900 • Rising participation at under/postgraduate levels 800 753 • Applications 5% above pre-pandemic levels
Slide 7: Growing need for student accommodation
PERFORMANCE HIGHLIGHTS Growing need for student accommodation • Growing demand for Higher Education, driven by demographics and international growth • Many UK university cities already facing housing shortages • Private housing supply unable to keep pace with demand, exacerbated by landlords leaving
Slide 8: Opportunities to grow our platform
PERFORMANCE HIGHLIGHTS Opportunities to grow our platform Core growth Leveraging our platform High-quality Asset Targeted University Young developments Management acquisitions partnerships professional initiatives renters £0.9bn secured Value-enhancing Focus on On- and off- Potential growth pipeline
Slide 9: Financial review
2 Financial review Joe Lister, Chief Financial Officer
Slide 10: Strong financial performance
FINANCIAL REVIEW Strong financial performance 31 Dec 2022 31 Dec 2021 % Change Income statement Adjusted earnings £163.4m £110.1m +48% Adjusted EPS 40.9p 27.6p +48% Dividend per share 32.7p 22.1p +48% Balance sheet EPRA NTA per share 927p 882p +5% Loan to value 31% 29% Other financial KPIs Total acc
Slide 11: Operating margins improving
FINANCIAL REVIEW Operating margins improving • Return to full occupancy and summer programme for 2022/23 with total income +20% • Cost increases driven by higher occupancy and inflation • EBIT margin improved to 67.9% (2021: 62.3%), targeting ~70% for 2023 Net operating income bridge1 £270m £250m 6.
Slide 12: Earnings growth
FINANCIAL REVIEW Earnings growth • Strong growth in NOI from occupancy and rental growth • Benefit of growing fee income and overhead reduction • New openings and acquisitions offsetting disposal activity in the year • Lower average borrowings offset cost of debt increases in the year £180m 6.8 5.2
Slide 13: Growth outlook for 2023 earnings
FINANCIAL REVIEW Growth outlook for 2023 earnings • Guidance for 5-8% of adjusted EPRA EPS growth to 43-44p for FY2023 • Maintain dividend payout of 80% for 2023 AY2022/23 AY2023/24 FY2023 Comment Rental growth 3.5% 6-7% One term of 2023/24 income in FY2023 Occupancy 99% ~98% Property activity: Addi
Slide 14: NAV growth
FINANCIAL REVIEW NAV growth • 5% increase in EPRA NTA in 2022, supporting 8.1% total accounting return • Rental growth more than offsetting yield expansion • Development profit driven by 2022 completions and Jubilee House planning approval • £20m additional provision for fire safety capex, covering
Slide 15: Disciplined approach to capital allocation
FINANCIAL REVIEW Disciplined approach to capital allocation • Disposal programme largely completed • Managing LTV within target range of 30-35% with focus on ICR and Net debt:EBITDA • Increased return requirements for new investment, reflecting rising cost of capital • Growing range of capital deplo
Slide 16: Robust balance sheet
FINANCIAL REVIEW Robust balance sheet Weighted average cost of debt 4.7% portfolio yield 5% 3.8% • Significant investment capacity 4% 3.4% 3.6% 3.0% • £397m of cash and debt headroom 3% • LTV of 31% (2021: 29%) 2% • ICR of 3.7x (2021: 2.8x) 1% • Expect gradual increase in borrowing costs 0% 2021 202
Slide 17: Strong performance by co-investment vehicles
FINANCIAL REVIEW Strong performance by co-investment vehicles Summary financials • Delivering attractive total returns USAF LSAV £m £m • Return to full occupancy and rental growth GAV 2,888 1,921 • Robust performance in LSAV Net debt (725) (639) • Strong rental growth for London portfolio Other asse
Slide 18: Operations review
3 Operations review Karan Khanna, Chief Customer Officer
Slide 19: Strong demand outlook
OPERATIONS REVIEW Strong demand outlook Occupancy and rental growth ~98% 7% 98% 99% 100% • Improved operating performance 88% 94% 80% 5% • 99% of beds let for 2022/23 60% • Rental growth strengthened over the cycle 3% 6-7% 40% 3.4% 3.5% 1% 2.3% 20% • Strong progress with reservations for 2023/24 -1%
Slide 20: Valuable university partnerships
OPERATIONS REVIEW Valuable university partnerships Nomination agreements (by unexpired term) • 37,000 beds now let to universities Beds % Income Length • 52% of total beds for 2022/23 2022/23 2022/23 • Delivered 4.0% rental growth for 2022/23 1 year 14,210 39% 2-5 years 9,107 27% • Significant incom
Slide 21: Delivering for our customers
OPERATIONS REVIEW Delivering for our customers Check-in net promoter scores • Ongoing investment in product and service, increasing 40 +38 customer advocacy +35 • New 24/7 operating model 35 +33 • Peer support from Resident Ambassadors 30 • Flagship Support to Stay programme enhances best-in- 25 cla
Slide 22: Increasing customer segmentation
OPERATIONS REVIEW Increasing customer segmentation • Three major refurbishments in Manchester tailored to different customer groups • All fully-let on completion, achieving 7% yield on cost and >50 point net promoter score improvement • Postgraduate Plus trials continuing at six properties for conci
Slide 23: Property review
4 Property review Mike Burt, Group Investment Director
Slide 24: Rental growth driving valuations
PROPERTY REVIEW Rental growth driving valuations £bn UK PBSA investment volumes • A record year for PBSA investment activity 8 Student Liberty iQ Roost • £3.3bn sale of Student Roost completed in 6 Living November 4 • Notable slowdown in transaction activity in Q4 • New and recent entrants seeking t
Slide 25: Value-enhancing investment activity
PROPERTY REVIEW Value-enhancing investment activity • Continued focus on portfolio quality and ability to deliver sustainable rental growth • Portfolio 94% aligned to Russell Group cities by value (2021: 90%) • Recycling capital into stronger assets and development and refurbishment pipeline Develop
Slide 26: University-backed developments
PROPERTY REVIEW University-backed developments Hayloft Point, London Campbell House, Bristol • 920 beds, fully let for 2022/23 • 431 beds, fully let for 2022/23 • 5-year nomination agreement with King’s for c.600 beds • Fully nominated by University of Bristol for 15 years • £120m (65%) profit on co
Slide 27: Development activity increasing
PROPERTY REVIEW Development activity increasing Lower Parliament St. Nottingham Committed pipeline TDC: £36m YoC 7.3% 2,123 beds £339m total cost Derby Road Abbey Lane Jubilee House Nottingham Edinburgh Stratford £200m costs to go TDC: £60m TDC: £51m TDC: £192m YoC 8.2% YoC 7.0% YoC 6.1% 2023/24 202
Slide 28: Protecting our portfolio
PROPERTY REVIEW Protecting our portfolio • Increasing investment into energy efficient projects • £13m invested during 2022 (2021: £3m) • Strong business case through utility cost savings • 80% of portfolio now EPC A-C rated (2021: 57%) • 1,600 beds upgraded to B through refurbishments • Completed 1
Slide 29: Outlook
5 Outlook Richard Smith, Chief Executive
Slide 30: New supply slowing, HMO sector shrinking
OUTLOOK New supply slowing, HMO sector shrinking New supply of PBSA beds • PBSA provides homes to 750,000 students out of 40,000 1.8 million addressable market 30,000 • HMO sector still houses 1 million students 20,000 • Supply failing to keep pace with student demand 10,000 • 19k new beds delivered
Slide 31: Enhancing our portfolio
OUTLOOK Enhancing our portfolio • Returns improving for new development Change in residential land values 4.0% • Already signs of 10-15% softening in land pricing 2.7% 2.0% 2.0% • Moderating build cost inflation - • Expect to add further 1-2 new schemes in 2023 (2.0%) (1.6%) • Yields on cost of 6.5%
Slide 32: Leveraging our platform: University partnerships
OUTLOOK Leveraging our platform University partnerships • Many cities facing shortages of student housing University housing Core housing • Key constraint to universities’ growth supply demand • Unite has a unique capability to develop, co- 550k invest and operate alongside universities Shortfall vs
Slide 33: Leveraging our platform: Build to Rent pilot
OUTLOOK Leveraging our platform Build to Rent pilot • £71m pilot BTR acquisition in Stratford, East London • Provides test of product extension into young professional market • Complementary to 1,700 student beds in Stratford • Positive early progress • Lettings and renewals 11% ahead of prior rents
Slide 34: Positive outlook
OUTLOOK Positive outlook Strong market and business fundamentals • Growing student demand • Alignment to high-quality universities • Best-in-class operating platform Value drivers as strong as ever • 6-7% rental growth for 2023/24 • EPS growth of 5-8% to 43-44p • Total accounting return of 8-10%1 Si
Slide 35: Q&A
6 Q&A
Slide 36: Appendices
7 Appendices
Slide 37: Home for Success
APPENDIX Home for Success 84% of customers using MyUnite app City-centre locations with range of price points • Close to university campuses • Shared living and studios • Good transport links 83% of customers used Help when it’s needed online check-in • 24/7 customer support centre • Customer servic
Slide 38: Making a positive impact
APPENDIX Making a positive impact Progress made through 2022 Making a positive impact through People Making a positive impact through Places • Commitment to invest 1% of profits in social initiatives • Completed asset transition plans, identifying capital with £2m invested in 2022 investment require
Slide 39: Net zero carbon
APPENDIX Net zero carbon GHG emissions by source (2019 baseline) Scope 1, Gas 7% Scope 3, other • 2030 net zero commitment for operations 17% Scope 2, Heat and development 2% • Net zero pathway published in late 2021 including targets validated by the SBTi Scope 2, • Unite emissions include students
Slide 40: EPC ratings
APPENDIX EPC ratings • 80% of portfolio is A-C rated by floorspace EPC ratings (total portfolio) (2021: 57%) 80% • Fully compliant with current regulations 71% • Developments targeting ‘A’ rating 61% 60% • EPCs addressed as part of £100 million (c.£10m p.a.1) investment programme to drive environmen
Slide 41: Making our buildings net zero carbon
APPENDIX Making our buildings net zero carbon 41
Slide 42: Leading in fire safety
APPENDIX Leading in fire safety • Fire safety is a critical part of our strategy Fire safety capex • Linked to our Home for Success purpose • One of the first companies to remove ACM cladding Spent to date £40m1 • Replacement of HPL is fully provided for and now Provision, Dec-2022 £59m1 underway •
Slide 43: High quality, affordable accommodation
APPENDIX High quality, affordable accommodation • Value-for-money is the most important factor influencing students’ decisions on where to live • Our accommodation is comparable in cost to HMO, we provide valued product and service features not found in HMO • Higher mortgage costs and new EPC standa
Slide 44: Portfolio overview
APPENDIX Portfolio overview Geographical breakdown of portfolio Aberdeen 2022 Completed beds Full-time student City rank (22/23) numbers (21/22) Edinburgh 1 London 12,574 382,635 Glasgow 2 Liverpool 5,975 55,325 7 Newcastle 3 Manchester 5,639 97,785 Durham 4 Birmingham 5,582 85,215 5 Leeds 5,533 69,
Slide 45: Portfolio and customer breakdown
APPENDIX Portfolio and customer breakdown Customers by domicile Customers by year of study Distribution of beds by weekly price Postgraduate, 30% 2022/23 2021/22 2020/21 17% 20% UK 72% 70% 66% 10% 1st year 0% Non-EU 25% 25% 25% Returning Undergrad., Undergrad, 55% Other EU 3% 5% 9% 28% London UK Boo
Slide 46: Rental portfolio analysis December 2022
APPENDIX Rental portfolio analysis 31 December 2022 Wholly owned USAF LSAV Lease Total Unite share London Value (£m) 1,212 439 1,652 15 3,318 2,177 Beds 3,802 1,883 6,649 260 12,574 40% Properties 11 6 14 1 32 Prime regional Value (£m) 1,106 741 - 22 1,869 1,336 Beds 7,982 5,351 - 618 13,951 24% Pro
Slide 47: Operations result
APPENDIX Operations result 2022 2021 Change Wholly Share of Wholly Share of £m Total Total £m % owned Fund/JV owned Fund/JV Rental income Like-for-like properties 223.6 87.3 310.9 184.7 68.1 252.8 58.1 23.0% Non Like-for-like properties 18.1 10.7 28.8 24.1 5.8 29.9 (1.1) Total rental income 241.7 98
Slide 48: Operating costs
APPENDIX Operating costs Utility costs and hedging 1000 100% 100% 85% • Utility costs hedged in advance of selling rooms 800 ~710 80% Cost per bed (£) ~660 • Electricity fully hedged for 2023 and 70% for 2024 600 60% 60% ~490 ~470 • Gas (<1% of rent) fully hedged through 2023 ~380 400 40% • New staf
Slide 49: EPRA performance measures
APPENDIX EPRA performance measures 2022 2021 2022 2021 £m £m Pence per share Pence per share EPRA Earnings 161.9 152.0 40.5 38.1 Adjusted earnings 163.4 110.1 40.9 27.6 EPRA NTA 3,715.2 3,536.1 927 882 EPRA NRV 4,034.2 3,829.7 1,006 955 EPRA NDV 3,655.5 3,499.7 912 874 EPRA net initial yield 4.6% 4.
Slide 50: EPRA Earnings statement
APPENDIX EPRA Earnings statement USAF LSAV 31 Dec 2022 31 Dec 2021 Wholly owned (Unite share) (Unite share) £m £m Rental income 241.7 48.8 49.2 339.7 282.7 Property operating expenses (72.0) (15.9) (10.8) (98.7) (90.9) Net operating income (NOI) 169.7 32.9 38.4 241.0 191.8 NOI margin 70.2% 67.4% 72.
Slide 51: EPRA balance sheet
APPENDIX EPRA balance sheet USAF LSAV Unite Group Unite Group £m Wholly owned (Unite share) (Unite share) 2022 2021 Balance sheet Rental properties 3,624 813 960 5,397 4,865 Leased properties 90 - - 90 98 Properties under development 203 - - 203 324 Total property portfolio/GAV 3,917 813 960 5,690 5
Slide 52: EPRA capital expenditure
APPENDIX EPRA capital expenditure 2022 2021 • Our portfolio investment plan Wholly Share of Group Wholly Share of Group includes £1,000/bed p.a. of £m owned JVs share owned JVs share protective spend Acquisitions 1.3 - 1.3 - - - 1. Sustainability (c.£200/bed): <10 Developments 193.0 - 193.0 81.4 - 8
Slide 53: LTV reconciliation
APPENDIX LTV reconciliation Group maintains 30-35% LTV target on 31 December 2022 Net debt GAV LTV see-through basis See-through LTV (1,734) 5,600 31% EPRA LTV includes net payables reflecting: Net payables (150) - • Deferred income (£67m) Intangibles - 18 • Trade creditors (£24m) EPRA LTV (1,884) 5
Slide 54: Debt information
APPENDIX Debt information 31 Dec 2022 31 Dec 2021 Facility Drawn Maturity £m £m Net debt £1,734m £1,522m On-balance sheet LTV 31% 29% Unsecured bond (LL 2024) 300 300 2024 Net debt:EBITDA ratio 7.3 8.3 Sustainable RCF 600 232 2026 Interest cover ratio 3.7 2.8 Unsecured bond (Unite) 275 275 2028 Aver
Slide 55: Secured development and partnerships pipeline
APPENDIX Secured development and partnerships pipeline Type1 Target Secured Total Total Capex in Capex Forecast NAV Forecast yield delivery beds completed development period (£m) remaining remaining on cost value costs (£m) (£m) (£m) (£m) Committed development Derby Road, Nottingham DL 2023 705 88 6