Slide 1: Delivering Sustainable Earnings
Aston Student Village, Birmingham Delivering Sustainable Earnings Preliminary Results Year ended 31 December 2017
Slide 2: Delivering Another Successful Year
DELIVERING ANOTHER SUCCESSFUL YEAR Enhanced sustainable earnings 31 Dec 31 Dec - High-quality, repeatable income Change 2017 2016 - Strong cash conversion o 26% increase in dividend EPRA Earnings £70.5m £62.7m +12% o Pay-out ratio increasing to 85% in 2018 - 14% total accounting return EPRA EPS 30
Slide 3: Equity Fundraise
EQUITY FUNDRAISE Placing to raise gross proceeds of c.£170 million to drive growth through University partnership deals Proceeds to fund c.£270 million of University Partnership transactions and London re-entry - Oxford – 887-bed scheme with c.£73 million of capex (planning in place, target open
Slide 4: Performance Highlights
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Slide 5: Business in Strong Position
BUSINESS IN STRONG POSITION Strong sales performance Customer analysis - 99% occupancy for 2017/18 with 3.4% rental growth 100% 90% - 75% reserved for 2018/19 (2017/18: 73%) 80% DL, 40% 70% Non-1st Year, 69% Medium, 45% - Rental growth outlook 3.0 - 3.5% 60% 50% 40% High-quality portfolio in bes
Slide 6: Market Remains Supportive
MARKET REMAINS SUPPORTIVE UK Higher Education sector performing well Full-time student numbers - Adapting to political change 2,000 1,710 1,728 1,730 1,771 1,819 1,837 1,800 - Consistently strong in global league tables 1,600 1,400 Students (000's) 1,200 1,000 Overall student numbers at record l
Slide 7: University Partnerships Delivering
UNIVERSITY PARTNERSHIPS DELIVERING Real progress with new opportunities Nominations agreements Length Beds % beds % income - Growing appetite from Universities Single year 9,038 31% 29% - Relationships unlocking value 2-10 years 12,017 41% 44% - High-quality institutions 11-20 years 3,783 13% 14%
Slide 8: Operational Excellence – A Home for Success
OPERATIONAL EXCELLENCE – A HOME FOR SUCCESS Service enhancements - Service style Total beds Sales channels - New digital services 100% 8% 80% 40% Online - Student ambassadors 60% 14% In Property 40% 45% 20% 60% Service Centre 33% Sales channels and revenue 0% International Direct Let management
Slide 9: Financial Review
UNITE STUDENTS 1 FINANCIAL REVIEW
Slide 10: Strong Financial Performance
STRONG FINANCIAL PERFORMANCE 31 Dec 2017 31 Dec 2016 % change Income EPRA earnings £70.5m £62.7m 12% EPRA EPS 30.3p 28.4p 7% Dividend per share 22.7p 18.0p 26% Balance sheet EPRA NAVps 720p 646p 11% Loan to value 31% 34% 9% Cash flow Operations cash flow £63.2m £61.3m 3% Metrics Total ac
Slide 11: Earnings Growth Momentum Maintained
EARNINGS GROWTH MOMENTUM MAINTAINED 31 Dec 2017 31 Dec 2016 £m £m Rental income 170.8 159.1 Property operating expenses (44.3) (42.8) Net operating income (NOI) 126.5 116.3 NOI margin 74.1% 73.1% Management fees 14.1 14.0 Operating expenses (24.6) (23.1) Finance costs (45.2) (45.9) USAF acquisition
Slide 12: Earnings Growth (Excludes University Partnership Opportunities)
EARNINGS GROWTH (EXCLUDES UNIVERSITY PARTNERSHIP OPPORTUNITIES) Earnings growth prospects supported by: Increased pay-out ratio based on quality - High-quality development programme income and expectations of growth - Positive rental growth outlook and operating efficiencies EPS 55 50 2p - 3p 2p
Slide 13: Disciplined Approach to Leverage
DISCIPLINED APPROACH TO LEVERAGE Strong debt position Key debt statistics (Unite share) 31 Dec 31 Dec - Diversified sources and balanced maturity profile 2017 2016 Net debt £803m £776m - Limited refinancing requirements before 2020 LTV 31% 34% - Cost of debt 3.9% when fully drawn Cost of debt 4.1%
Slide 14: Co-investment Vehicles Continuing to Deliver
CO-INVESTMENT VEHICLES CONTINUING TO DELIVER Strong performance across USAF and LSAV Summary financials USAF LSAV USAF acquisitions £m £m - Acquired three further forward funds in GAV 2,233 1,159 Durham and Birmingham Net debt (588) (394) - Acquired two investment assets in Sheffield and Edinbur
Slide 15: Property Review
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Slide 16: Deepening Investor Demand
DEEPENING INVESTOR DEMAND Transactional volume remains strong Valuation yields 10.0% - Over £4 billion traded in 2017 9.0% 8.0% 7.0% - Volume up 20% year on year 6.0% 5.0% 4.0% 3.0% Active and diverse investor base 2.0% 1.0% 2004 2010 2015 - Good liquidity for all assets Unite Completed Portfoli
Slide 17: Portfolio Driving Performance
PORTFOLIO DRIVING PERFORMANCE Actively improving portfolio quality through Portfolio recycling development and recycling Unite share Gross £m £m Rental growth outperformance Disposals 181 472 - 3.4% growth compares to Knight Frank market growth 2.6% ASV 114 227 Portfolio optimisation USAF acqu
Slide 18: Development Pipeline
DEVELOPMENT PIPELINE Pipeline aligned to high and Total Total Forecast mid-ranked Universities Target delivery Secured completed beds value development costs yield on cost (£m) (£m) 2,150 beds delivered in 2017 on Regional wholly owned budget, programme and quality Newgate Street, Newcastle 2018
Slide 19: University Partnerships Building Momentum
UNIVERSITY PARTNERSHIPS BUILDING MOMENTUM Three new partnerships Total Total Forecast Target Secured completed development yield delivery beds value costs on cost - Aston University (£m) (£m) Cowley Barracks, Oxford 2019 887 91 73 6.5% - Oxford Brookes University Middlesex Street, London 1 2021 1,
Slide 20: Outlook
a UNITE STUDENTS OUTLOOK
Slide 21: Well Positioned for Future Growth
WELL POSITIONED FOR FUTURE GROWTH Visible earnings growth Salisbury Court, Edinburgh - Underpinned by increasing nominations agreements, development pipeline and improved margins High quality portfolio - Aligned to the strongest universities where intake continues to grow Significant progress
Slide 22: Appendices
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Slide 23: Student Numbers Remain Strong
STUDENT NUMBERS REMAIN STRONG Overall student numbers up c.20,000 in 2017/18 Full-time student numbers 1,710 1,728 1,730 1,771 1,819 1,837 2,000 1,500 2017 student intake in line with 2016 Students (000's) 1,000 654 677 700 718 718 700 465 496 512 532 535 534 500 - Participation rates increasing
Slide 24: Market Remains Undersupplied
MARKET REMAINS UNDERSUPPLIED 580,000 purpose-built beds for 717,000 1st year Students and supply and international students 2,000 1,771 1,819 1,837 1,710 1,728 1,730 1,800 - 300,000 University owned 1,600 1,400 1,200 - 280,000 corporately owned 1,000 682 699 713 713 717 800 642 600 400 580 503 527
Slide 25: Competitive Landscape
COMPETITIVE LANDSCAPE Unite remains the largest provider of student accommodation New beds 280k corporate beds in the UK (17/18) 43k expected over the next 2 years 60,000 9,437 50,000 40,000 49,606 47,608 30,000 20,000 32,874 31,500 27,524 23,700 23,502 22,974 22,403 19,453 18,000 17,679 16,082 10
Slide 26: Product and Service Offering
PRODUCT AND SERVICE OFFERING All-inclusive pricing - All utilities and services - High-speed (70Mbps) Wi-Fi throughout our portfolio - 24/7 customer support centre - Free communal kitchen and bathroom cleaning - ‘Living with Unite’ app - Maintenance teams on hand City-centre locations with range
Slide 27: Our Top 10 Markets
OUR TOP 10 MARKETS 2017 City Completed FT student Market rank beds numbers Share (17/18 (15/16) 1 London 9,541 293,620 3.2% 2 Birmingham 4,846 59,920 8.1% 3 Sheffield 4,168 51,080 8.2% 4 Bristol 3,479 43,050 8.1% 5 Leeds 3,458 53,885 6.4% 6 Liverpool 3,015 48,545 6.2% 7 Manchester 2,336 65,880 3.5%
Slide 28: Summary EPRA Balance Sheet and Income Statement
SUMMARY EPRA BALANCE SHEET AND INCOME STATEMENT Wholly USAF LSAV Unite Group Unite Group owned (Unite share) (Unite share) Dec 2017 Dec 2016 £m £m £m £m £m Balance sheet Rental properties 1,261 539 579 2,379 2,085 Properties under development 206 10 - 216 192 Total property portfolio/GAV 1,467 549 5
Slide 29: Portfolio Analysis
PORTFOLIO ANALYSIS 31 December 2017 Wholly Unite USAF LSAV Lease Total owned share London Value (£m) 350 915 466 - 1,731 1,009 Beds 1,886 5,406 1,989 260 9.541 42% Properties 7 13 6 1 27 Major provincial Value (£m) 1,517 244 566 - 2,327 1,062 Beds 18,222 3,067 7,000 2,577 30,866 45% Properties 50 1
Slide 30: Debt Facilities
DEBT FACILITIES On-balance sheet Co-investment vehicles Facility Drawn Maturity Facility Drawn Maturity £m £m £m £m USAF Legal + General 115 115 2022 Secured bond 690 690 2023-25 Mass Mutual 124 124 2024 Wells Fargo 100 - 2021 790 690 Others 7 7 2022 LSAV Unsecured HSBC 81 81 2018 RBS 3 3 2019 Retai
Slide 31: NNNAV
NNNAV 2017 2016 £m £m IFRS net assets 1,729 1,452 Mark to market on fixed rate debt (55) (20) Convertible bond - 85 EPRA NNNAV 1,674 1,517 EPRA NNNAV per share 692pps 630pps 30
Slide 32: Partnerships Opportunity: Oxford
PARTNERSHIPS OPPORTUNITY: OXFORD Strong market fundamentals Transaction Growth in student numbers 887 beds for completion in 2019 £73m of capex (c.£82k per bed) Partnering with Oxford Brookes Constrained supply Planning secured 25-year agreement - 10-year 98% income guarantee Restric
Slide 33: Partnerships Opportunity: London
PARTNERSHIPS OPPORTUNITY: LONDON Strong market fundamentals Zone 1 Location Over 300,000 students c.1,000 beds for completion in 2021 Over 30 HE institutions with 4 £195m of capex (c.£195k per Universities ranked in the top 50 bed) in the world Support from King’s College London Constrai
Slide 34: Secured Development and Partnerships Pipeline
SECURED DEVELOPMENT AND PARTNERSHIPS PIPELINE Total Total Target Secured completed development Capex in Capex Forecast NAV Forecast delivery beds value costs 2017 remaining remaining yield on cost (£m) (£m) (£m) (£m) (£m) Regional wholly owned Newgate Street, Newcastle 2018 575 40 37 11 18 5 8.0% Br