Unite Group Plc · LSE:UTG
Unite — FY2015 Earnings Presentation
26 slides from Unite's earnings presentation, Mar 14, 2017
Slide 1: Maintaining Momentum: Preliminary Results 2015
Angel Lane, London Maintaining Momentum Preliminary Results Year ended 31 December 2015
Slide 2: Highlights
HIGHLIGHTS Strong financial performance 2015 2014 - Adjusted EPRA earnings (excluding yield element of USAF fee) up 49%, EPRA EPS up 34% - 37% total return (NAV growth plus dividends) EPRA earnings £61.3m £33.3m - Full year dividend increased to 15.0 pence Adjusted EPRA earnings £49.5m £33.3m Ex
Slide 3: Strategy and Market
STRATEGY AND MARKET
Slide 4: Demand / Supply Imbalance Widening
DEMAND / SUPPLY IMBALANCE WIDENING Student numbers continue to grow Applications and acceptances - 20,000 increase (+3.9%) in first years to 532,000 - c.92,000 increase in total student population - 180,000+ unplaced applicants - High tariff (+7.0%) and medium tariff (+5.7%) Universities growing f
Slide 5: Investor Demand Remains Strong
INVESTOR DEMAND REMAINS STRONG Record transaction volumes in 2015 Yield and swap analysis - £5.5 billion traded (2014: £2.2 billion) - Activity continuing in 1Q16 - Majority of buyers are long-term investors - No sign of irrational leverage Average Unite portfolio yield compressed 70bps to 5.55%
Slide 6: Consistent Strategy Leaves Us Well Positioned
CONSISTENT STRATEGY LEAVES US WELL POSITIONED Portfolio and pipeline focused on Universities with University partners by ranking strongest growth prospects - Over 85% aligned to stronger institutions Strong University partnerships crucial - 57% nominated rooms for 2015/16 - Nominations discount
Slide 7: Financial Review
/ UNITE STUDENTS LL iii FINANCIAL REVIEW
Slide 8: Financial Highlights
FINANCIAL HIGHLIGHTS Year-on-year 2015 2014 movement Income EPRA earnings £61.3m £33.3m ↑ 84% Adjusted EPRA earnings £49.5m £33.3m ↑ 49% EPRA EPS 28.6p 17.2p ↑ 66% Adjusted EPRA EPS 23.1p 17.2p ↑ 34% Adjusted EPS yield on opening NAV 5.3% 4.5% ↑ 18% Dividend per share (full year) 15.0p 11.2p ↑ 34% B
Slide 9: Earnings Growth Momentum Maintained
EARNINGS GROWTH MOMENTUM MAINTAINED Continuing improved performance 2015 2014 £m £m - High occupancy, rental growth and portfolio Total income 277.9 254.6 growth Unite’s share of rental income 144.3 130.0 - Adjusted EPRA earnings up to £49.5 million Unite’s share of property (39.8) (35.7) operatin
Slide 10: Highly Visible Earnings Growth Progression
HIGHLY VISIBLE EARNINGS GROWTH PROGRESSION Earnings growth prospects supported by: Earnings growth will drive further dividend - High quality development programme growth - Positive rental growth outlook - Policy to pay out 65% of adjusted EPS - Brand and operating platform - Pay-out ratio to in
Slide 11: Balanced Returns Enhanced by Yield Compression
BALANCED RETURNS ENHANCED BY YIELD COMPRESSION 10
Slide 12: See-Through Balance Sheet and Income Statement
SEE-THROUGH BALANCE SHEET AND INCOME STATEMENT Wholly USAF/JVs Unite Unite owned (Unite share) see-through see-through 2015 2014 £m £m £m £m Balance sheet Rental properties 1,024 811 1,835 1,510 Properties under development 150 80 230 114 Total property portfolio/GAV 1,174 891 2,065 1,624 Net debt (
Slide 13: Strong Capital Structure
STRONG CAPITAL STRUCTURE Strong debt position Key debt statistics (see-through) - Diversified sources and balanced maturity profile 2015 2014 Net debt £731m £697m Opportunity to reduce average cost of debt LTV 35% 43% - Forward starting swaps on 2016 and 2017 pipeline Net debt:EBITDA 6.9 8.5 sho
Slide 14: Co-Investment Vehicles Performing Well
CO-INVESTMENT VEHICLES PERFORMING WELL Strong performance across USAF and LSAV Summary financials USAF LSAV - LSAV out-performance driven by £m £m development profits and stronger capital GAV 2,074 894 growth in London Net debt (602) (308) Other assets/liabilities (64) (17) USAF has £125 million
Slide 15: Planning for REIT Conversion in 2017
PLANNING FOR REIT CONVERSION IN 2017 Reflects earnings and leverage strategy Saw Mill, Huddersfield Majority of historic tax losses will be utilised by end 2016 Currently meeting key REIT requirements - Dividend pay-out levels - Gearing levels - Developing assets for investment purposes Fund
Slide 16: Operational Review
UNITE STUDENTS OPERATIONAL REVIEW
Slide 17: Unite Students Brand Increasingly Valuable
UNITE STUDENTS BRAND INCREASINGLY VALUABLE Deep relationships with strong Universities Orchard Heights, Bristol - 57% of rooms nominated for 2015/16 - Trend towards longer term agreements - Opportunity to close discount on longer standing agreements Customer base focused on UK first years and in
Slide 18: Development Programme Progressing Well
DEVELOPMENT PROGRAMME PROGRESSING WELL Highly accretive secured pipeline Total Total Forecast Target Secured completed Development yield - 2016 projects on track delivery beds value costs on cost (£m) (£m) - 2017 pipeline secured, planning in place Regional wholly owned or well progressed Greetham
Slide 19: Summary and Outlook
SUMMARY AND OUTLOOK Strong performance on all fronts Stratford ONE, London Continuing to deliver on consistent, focused strategy - To be the most trusted brand in our sector - To maintain the highest quality portfolio - To have the strongest capital structure Strong brand and scalable operatin
Slide 20: Appendices
UNITE STUDENTS APPENDICES
Slide 21: UK Student Accommodation Market
UK STUDENT ACCOMMODATION MARKET Full-time student numbers Student numbers have doubled since 1991 - Driven by government policy, demographics, global mobility - 180,000 more applicants than places in 2015/16 Government removed cap on UK / EU student numbers from 2015/16 Supply breakdown - 92,000
Slide 22: Product and Service Offering
PRODUCT AND SERVICE OFFERING All-inclusive pricing Sky Plaza, Leeds - All utilities and services - High-speed (25Mb) Wi-Fi throughout our portfolio - 24/7 customer service - Transparency and certainty - Free communal kitchen and bathroom cleaning City-centre locations - Close to University campu
Slide 23: Our Top 10 Markets
OUR TOP 10 MARKETS 2015 City Completed FT student Market rank beds numbers Share (15/16) (14/15) 1 London 8,567 279,160 3.1% 2 Sheffield 3,731 48,815 7.6% 3 Bristol 3,479 40,275 8.6% 4 Leeds 3,458 50,700 6.8% 5 Liverpool 3,398 43,160 7.9% 6 Birmingham 2,688 58,980 4.6% 7 Glasgow 2,396 55,115 4.3% 8
Slide 24: NNNAV
NNNAV 2015 2014 £m £m IFRS net assets 1,275 843 Valuation gains not recognised on properties held at cost - 31 Mark to market on fixed rate debt (28) (3) Convertible bond 83 - EPRA NNNAV 1,330 871 EPRA NNNAV per share 552pps 429pps 23
Slide 25: Debt Facilities
DEBT FACILITIES On-balance sheet Co-investment vehicles Facility Drawn Maturity Facility Drawn Maturity £m £m £m £m HSBC 30 30 2016 USAF Secured bond 565 565 2023/25 HSBC/RBS 180 6 2020 Lloyds RCF 1 92 82 2016 Legal + General 117 117 2022 Lloyds RCF 2 25 - 2018 Mass Mutual 124 124 2024 682 647 Other
Slide 26: Secured Development Pipeline
SECURED DEVELOPMENT PIPELINE Total Total Target Secured completed Development Capex in Capex Forecast NAV Forecast delivery beds value costs 2015 remaining remaining yield on cost (£m) (£m) (£m) (£m) (£m) Regional wholly owned Greetham Street, Portsmouth 2016 836 60 42 26 11 8 9.3% Causewayend, Aber