Unite Group Plc · LSE:UTG
Unite — H1 2020 Earnings Presentation
34 slides from Unite's earnings presentation, Jul 30, 2020
Slide 1: Leading the sector: Interim Results
Leading the sector Interim Results Six months ended 30 June 2020
Slide 2: Leading the sector
Leading the sector Focused on doing the right thing for all stakeholders H1 2020 H1 2019 FY 2019 • First PBSA provider to forgo summer term rents • Decisive actions have enhanced our reputation with Universities, creating new partnership opportunities EPRA Earnings £74.8m £61.2m £110.6m EPRA ear
Slide 3: Content
Content Performance Highlights Financial Review Property Review Outlook Appendices 3
Slide 4: Performance Highlights
Performance Highlights Interim Results Six months ended 30 June 2020
Slide 5: Sector-leading platform
Sector-leading platform High-quality, well located portfolio Customer satisfaction and University engagement • 88% aligned to strongest Universities 100 85 • 4% rise in applications to High-tariff Universities 80 75 83 80 81 83 79 79 80 81 82 69 Trusted partner to Universities 60 • Collected 97%
Slide 6: Encouraging outlook for 2020/21
Encouraging outlook for 2020/21 Universities will be open for business this Autumn University plans for the 2020/21 Autumn term • 97% will offer face-to-face teaching (Universities UK survey) (% of ‘Yes’ responses) • Campuses will be open offering a range of social opportunities 100% and student s
Slide 7: Continued structural demand for Higher Education
Continued structural demand for Higher Education We expect strong student demand in 2021/22 Forecast growth in UK 18-year-old population and • Enhanced campus experience 000s number of UK acceptances to university1 1,000 • Significant recovery in international student numbers 800 • Return to growt
Slide 8: 2020/21 sales update
2020/21 sales update Reservations at 84% for 2020/21 (2019/20: 93%) Current breakdown of reservations • Later sales cycle due to some students and Universities delaying (2020/21, total group) their decision making Status Beds % of beds to Gross rental • Targeting 90% occupancy, translating to a 10
Slide 9: Successful integration of Liberty Living
Successful integration of Liberty Living Significant progress during H1 £m Expected synergy realisation • Liberty Living city based employees and properties integrated 20 onto the Unite operating platform 15 • Liberty Living head office closed with all support functions integrated 10 • Unite custo
Slide 10: Financial Review
Financial Review Interim Results Six months ended 30 June 2020
Slide 11: Resilient financial performance
Resilient financial performance % change H1 2020 H1 2019 FY 2019 Income statement EPRA earnings +22% £74.8m £61.2m £110.6m EPRA EPS (12)% 20.5p 23.2p 39.1p Dividend per share (100)% 0.0p 10.25p 10.25p Balance sheet EPRA NAVps1 (2)% 833p 820p 853p EPRA NTAps1 (2)% 828p 812p 847p Loan to val
Slide 12: Earnings impacted by summer term refunds
Earnings impacted by summer term refunds H1 2020 H1 2019 FY 2019 £m £m £m Rental income 154.9 108.3 213.9 Property operating expenses (37.5) (23.9) (53.1) Net operating income (NOI) 117.4 84.4 160.8 NOI margin 75.9% 78.0% 75.2% Management fees 7.7 7.2 14.4 Operating expenses (14.1) (9.3) (21.8) Fina
Slide 13: Earnings bridge
Earnings bridge EPRA earnings impacted by Covid-19 • Growth driven by acquisition of 24,000 bed Liberty Living portfolio in November 2019 • 15% reduction in income for 2019/20, reflecting our decision to forgo summer term rents for students returning home o Loss of £27m of contracted rent in H1 (U
Slide 14: Earnings and cashflow guidance
Earnings and cashflow guidance We anticipate EPRA EPS of 22-25p in 2020, reflecting: • 10-20% YoY reduction in rental income for Autumn term of 2020/21 o Targeting 90% occupancy o Includes contingency for a reduction in pricing and shorter tenancy lengths • £12-15m of P&L cost savings, in addition
Slide 15: NAV bridge
NAV bridge 2% reduction in EPRA NAV in H1 • 2.6% reduction in property values in H1 on a like-for-like basis o Reflecting impact of rental income deductions relating to Covid-19 disruption o Yields unchanged • 9.5% placing in June at 870p Swap breakage costs of £24m/6p to be incurred on repaymen
Slide 16: Cash and debt facilities
Cash and debt facilities Robust balance sheet and liquidity position Key debt statistics (Unite share) • £541m of unrestricted cash 30 Jun 2020 30 Jun 2019 31 Dec 2019 o Eligible for CCFF but no plans to draw Net debt £1,688m £897m £1,884m • Significant headroom to withstand material Covid-19 rela
Slide 17: Resilient performance by co-investment vehicles
Resilient performance by co-investment vehicles Performance of USAF and LSAV impacted by disruption caused Summary financials by Covid-19 USAF LSAV • Consistent with the performance of the wider business £m £m • Property valuations reduced by 2.2% and 1.5% for USAF and GAV 2,789 1,316 LSAV in Q1 b
Slide 18: Property Review
Horizon Heights Skelhorne Street, Liverpool Property Review Interim Results Six months ended 30 June 2020
Slide 19: Valuations well supported
Valuations well supported Strong valuation performance relative to wider UK real estate Capital value growth (6m to Jun-2020) sector in H1 0% • Acquisition of iQ by Blackstone for £4.7 billion -4% -2.6% -2.5% o Underlines willingness of investors to attribute value to brand, -3.7% operating and de
Slide 20: Development progress
Development progress 2,257 beds to be delivered across three schemes for 2020/21 White Rose View in Leeds will be completed on time and budget • 30-year nomination agreement for 559 beds with the University of Leeds Completion of First Way, London and Artisan Heights, Manchester delayed until
Slide 21: Significant investment opportunities
Significant investment opportunities Current secured pipeline of 5,370 beds to deliver by 2024 Current secured development pipeline • £693m total development cost at 6.6% yield on cost Total Placing to fund acquisition of three new sites exchanged or under offer for Beds Development Yield on cos
Slide 22: Outlook
Outlook Interim Results Six months ended 30 June 2020
Slide 23: Well positioned for growth
Well positioned for growth A sector-leading business with an enhanced reputation • Committed to delivering long-term growth in earnings and cashflow • Continued balance sheet and investment discipline Increased visibility following start of the 2020/21 academic year • Intention to re-instate div
Slide 24: Appendices
Appendices Interim Results Six months ended 30 June 2020
Slide 25: Student numbers remain strong
Student numbers remain strong A UK University education is highly valued Cumulative change in applications by • Unite works with 21 of 28 UK Universities ranked in top 200 globally (Source: QS World Rankings) University tariff 300 200 Strong student demand for 2020/21 100 (000s) • Material growt
Slide 26: Home for Success
Home for Success All-inclusive pricing • All utilities, insurance and services Of customers using • High-speed Wi-Fi (70 Mbps) 90% MyUnite app • MyUnite app • Maintenance teams on hand Help when it’s needed Of customers used • 24/7 customer support centre 75% online check-in at • Customer servic
Slide 27: High-quality, affordable accommodation
High-quality, affordable accommodation Value-for-money is the most important factor influencing students’ decisions on where to live The cost of our accommodation is only 8% more expensive than HMO • Equivalent to an extra £10 per week for all the additional product and service features we provi
Slide 28: Unite as a responsible business
Unite as a responsible business Demonstrating sector leadership around Covid-19 Widening HE access and improving student outcomes • First student accommodation provider to forgo summer • Unite Foundation supporting 189 students in 2019/20 term rents for students who chose to return home • Nation
Slide 29: Portfolio overview
Portfolio overview Geographical breakdown of portfolio 2020 Completed beds Full-time student City Market share rank (20/21) numbers (18/19) Aberdeen 1 London 11,591 327,840 3.5% 2 Birmingham 6,498 73,845 8.8% Edinburgh Glasgow 3 Liverpool 6,469 51,980 12.4% 4 Manchester 5,620 66,195 8.5% 7 Newcastle
Slide 30: Rental portfolio analysis
Rental portfolio analysis 30 June 2020 Wholly USAF LSAV Lease Total Unite share owned London Value (£m) 1,015 397 1,046 17 2,475 1,641 Beds 3,499 1,863 5,291 260 10,913 35% Properties 11 6 12 1 30 Prime provincial Value (£m) 867 638 - 28 1,533 1,037 Beds 7,042 5,337 - 618 12,997 22% Properties 16 18
Slide 31: Summary EPRA balance sheet and income statement
Summary EPRA balance sheet and income statement USAF LSAV Unite Group Unite Group £m Wholly owned (Unite share) (Unite share) Jun 2020 Dec 2019 Balance sheet Rental properties 3,317 614 658 4,589 4,702 Leased properties 107 - - 107 110 Properties under development 458 - - 458 412 Total property port
Slide 32: Debt facilities
Debt facilities On-balance sheet Co-investment vehicles Facility Drawn Maturity Facility Drawn Maturity £m £m £m £m Secured USAF Legal + General1 107 107 2022 Secured bond 775 775 2023-25 Mass Mutual2 100 100 2024 Wells Fargo 150 135 2024 Unsecured Total 925 910 HSBC/RBS3 350 350 2022 LSAV HSBC/RBC/
Slide 33: Reconciliation of NAV measures
Reconciliation of NAV measures Jun 2020 Jun 2020 Dec 2019 Dec 2019 £m p £m p Net asset value reported under IFRS 3,273 822 3,072 845 Mark to market interest rate swaps 25 8 Unamortised swap gain (2) (2) Unamortised fair value of debt recognised on acquisition 30 32 Current/deferred tax (1) - Real es
Slide 34: Secured development and University Partnerships pipeline
Secured development and University Partnerships pipeline Target Secured Total completed Total Capex in period Capex remaining Forecast NAV Forecast yield on delivery beds value (£m) development (£m) (£m) remaining (£m) cost costs (£m) Traditional development First Way, London 2020 678 132 103 10 22