Unite Group Plc · LSE:UTG
Unite — H1 2013 Earnings Presentation
28 slides from Unite's earnings presentation, August 2013
Slide 1: The UK's leading developer and manager of student accommodation
The UK’s leading developer and manager of student accommodation Interim Results Six months ended 30 June 2013
Slide 2: Highlights
HIGHLIGHTS Robust financial performance 30 Jun 30 Jun 31 Dec - NPC up 12.5% to £16.2m 2013 2012 2012 - Adjusted EPS of 9.3p Net Portfolio £16.2m £14.4m £19.1m - NAV per share up 3.1% Contribution - Total return on NAV of 4.0% for the six months Adjusted EPS 9.3p 9.0p 9.9p University admissions u
Slide 3: Strategy and Market
STRATEGY AND MARKET
Slide 4: Rent and Occupancy Outlook
RENT AND OCCUPANCY OUTLOOK Total Applicants / Placed Applicants Demand outlook (as at 13 days post A Level results day) - Applications up 3.5% YOY, 175,000 likely unplaced applicants - Fit for purpose admissions procedure / policy - International demand remains strong Supply outlook - Signs of r
Slide 5: Yield Outlook
YIELD OUTLOOK Indicative stabilised yields Average yields stable at 6.6% Trend – UNITE - Flat overall since late 2009 Asset type Lease type Yield range view - Yield range stabilising at c.200 bps London Lease/noms* 5.35 – 5.6% Stronger Transaction volumes healthy Direct let 6.0 – 6.25% Stable/st
Slide 6: Strategy
STRATEGY Targeting average low double digit total returns on NAV p.a; modest risk Development programme Investment portfolio Operating platform Investing c.£100m pa, peak Maintain focus on London On track to hit target 4.5% c.20% of GAV in 2015 and strongest regional EPS yield on NAV by 2015
Slide 7: Financial Review
FINANCIAL REVIEW
Slide 8: Financial Highlights
FINANCIAL HIGHLIGHTS 30 Jun 2013 30 Jun 2012 31 Dec 2012 Income Net Portfolio Contribution £16.2m £14.4m £19.1m Adjusted EPS 9.3p 9.0p 9.9p Adjusted EPS yield on NAV 2.7% 2.9% 3.1% Dividend per share – interim/full year 1.6p 1.0p 4.0p Balance Sheet NAV (adjusted, fully diluted per share) 361p 335p 3
Slide 9: Adjusted NAV Bridge – Balanced Returns
ADJUSTED NAV BRIDGE – BALANCED RETURNS Pence per share 370 8 (3) 8 (4) (3) 360 7 (2) 350 361 350 340 330 320 310 300 31-Dec-12 Rental growth Specific asset Development Swap close outs Retained profit Dividend Equity Raise 30-Jun-13 w/downs Rental growth of 1.2% LFL on completed portfolio Write-d
Slide 10: Net Portfolio Contribution and Adjusted Earnings
NET PORTFOLIO CONTRIBUTION AND ADJUSTED EARNINGS Further improvements in profitability 30 Jun 30 Jun 31 Dec 2013 2012 2012 - NPC up 12.5% to £16.2m £m £m £m - EPS up to 9.3pps Total income 122.6 124.1 240.2 - On track to hit target EPS yield of 4.5% UNITE share of rental income 58.3 56.7 111.4 on
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 30 Jun 2013 31 Dec 12 £m £m £m £m Balance sheet Rental Properties 766 403 1,169 1,162 Properties under development 117 13 130 83 Total property portfolio 883 416 1,299 1,245 Net d
Slide 12: Capital Structure
CAPITAL STRUCTURE Key debt statistics Diversifying, extending and reducing cost of 30 Jun 30 Jun 31 Dec debt 2013 2012 2012 - USAF £405m 10 year bond – 3.4% Net debt: Balance sheet £425m £501m £453m - All 2013 maturities refinanced See-through £619m £683m £648m - 43% of debt from non-bank sources
Slide 13: Asset Disposals
ASSET DISPOSALS Proceeds Book value £m £m Completed / exchanged - Wholly owned 12.2 12.8 - USAF 7.0 7.1 Total 19.2 19.9 Under offer – wholly owned - Wholly owned 24.3 27.4 Total 43.5 47.3 On track for £100m disposals by December 2013 Non-core student assets sold/offers accepted broadly in line w
Slide 14: Co-investment Vehicles
CO-INVESTMENT VEHICLES Strong performance from all co- Summary financials investment vehicles USAF UCC LSAV OCB £m £m £m £m Investment in OCB JV to be realised - Assets to be sold over next 6 months GAV 1,327 388 77 175 - Re-invest proceeds into UCC JV to Borrowing / others (595) (222) (41) (102
Slide 15: Operational Review
The heart of student living LOUD) Ti | [Eee e =a OPERATIONAL REVIEW
Slide 16: Operations
OPERATIONS Operational overhead efficiency Significant efficiency improvements over 3 25 1.40% years 20 1.20% Overheads - Overheads per bed reduced to £415, 1.00% down 17% since 2010 15 0.80% Fees £m % - Efficiency measure below 60bps target 10 0.60% 0.40% 5 Overheads 0.20% less fees as Service
Slide 17: Development Pipeline
DEVELOPMENT PIPELINE Beds Completed Estimated Capex in Capex NAV Yield on value TDC period remaining remaining cost £m £m £m £m £m % Wholly owned projects St Pancras Way, Camden (2014) 571 83 59 6 22 11 9.7% Stratford City, Stratford (2014) 1,001 102 64 13 32 4 9.1% Kings Mill Lane, Huddersfield (20
Slide 18: Summary and Outlook
SUMMARY AND OUTLOOK 2013 performance tracking ahead of plan - 90% reservations for 2013/14 - 3% rental growth for full year - Significant cost savings realised Market fundamentals returning to strength - Continued applications growth - Fit for purpose admission process - UNITE portfolio well pos
Slide 19: Appendices
APPENDICES
Slide 20: UK Student Accommodation Market
UK STUDENT ACCOMMODATION MARKET Full time student numbers growth Student numbers have doubled since 1991 - Driven by government policy, demographics, global mobility - >188,000 more applicants than places for 2012/13 - Variations at city/university level UK attractive to global students Supply B
Slide 21: Product and Service Offering
PRODUCT AND SERVICE OFFERING All-inclusive pricing - All utilities and services - Wi-Fi across our portfolio for September 2013 - 24/7 customer service - Transparency and certainty City centre locations - Close to university campuses - Flat-shares and studios - Range of products and price points
Slide 22: Phases of Growth
PHASES OF GROWTH ——}> 1991 Founded 1999 —Listed on AIM 45,000 —_| 40,000 _| 35,000 —_| 30,000 | Number of beds 15,000 —| 10,000 —4 5,000 | o 1 25,000 —4 20,000 —_| 2000-2006 First mover advantage - Rapid national expansion —- Development led - High quality sites secured 2000 2001 2002 2003 Hi comple
Slide 23: See-Through Balance Sheet and Income Statement
SEE-THROUGH BALANCE SHEET AND INCOME STATEMENT Group USAF UCC LSAV OCB Total £m £m £m £m £m £m Balance sheet at 30 June 2013 Rental Properties 766 217 117 25 44 1,169 Properties under development 117 - - 13 - 130 Net debt (425) (94) (64) (11) (25) (619) Other assets/(liabilities) (20) (3) (3) (9) (1
Slide 24: Our Top 10 Markets
OUR TOP 10 MARKETS 2013 2012 City Completed Completed FT Student Projected Rank Rank Beds Beds Numbers Market (13/14) (12/13) (11/12) Share 1 1 London 7,612 8,074 292,734 2.8% 2 2 Sheffield 3,731 3,731 48,632 7.7% 3 3 Liverpool 3,372 3,372 42,911 7.9% 4 4 Leeds 3,138 3,138 53,402 5.9% 5 5 Bristol 2,
Slide 25: The London Student Market
THE LONDON STUDENT MARKET Proportion of International Students HESA 11/12 – All Students London has three important characteristics that distinguish it from the wider UK market - A full time student population (294,000) that is larger than the next five largest student markets combined - A very lo
Slide 26: Debt Facilities
DEBT FACILITIES On-balance sheet Co-investment vehicles USAF Facility Drawn Maturity Facility Drawn Maturity £m £m £m £m Santander 63 50 2015 Investment HSBC 75 75 2015 Nationwide 100 49 2014 Lloyds 1 115 115 2016 HSH/NAB 64 64 2014 Lloyds 2 25 25 2018 RBS 28 28 2015 Secured bond 380 380 2023 Barcla
Slide 27: Co-investment Vehicles – Key Terms
CO-INVESTMENT VEHICLES – KEY TERMS USAF UCC LSAV OCB JV History: Multi investor fund JV with GIC formed JV with GIC formed JV with OCB formed formed Dec 06 March 05 Sept 12 August 09 Strategy: UK direct let London & Edinburgh London focus Build and operate 3 student focus Build a £400m+ Lo
Slide 28: NNNAV
NNNAV Jun 2013 Jun 2012 Dec 2012 £’m £’m £’m Net assets 601 419 516 Valuation gains not recognised on properties held at cost 23 83 19 Fair value of fixed rate debt (1) (8) (12) Deferred tax - - - NNNAssets 623 494 523 NNNAV per share 353pps 308pps 326pps 28