Unite Group Plc · LSE:UTG
Unite — FY2014 Earnings Presentation
26 slides from Unite's earnings presentation, March 2015
Slide 1: Building Momentum: Preliminary Results 2014
Building Momentum Preliminary Results Year ended 31 December 2014 Sugarhouse Close, Edinburgh
Slide 2: Highlights
HIGHLIGHTS Strong financial performance 2014 2013 - EPRA EPS increased to 17.2 pence - 15.0% total return (NAV growth plus dividends) EPRA earnings £33.3m £23.1m - EPRA EPS yield of 4.5% (recurring)** - Dividend payout increased to 65% of EPS EPRA EPS (recurring)** 17.2p 13.6p (2013: 35%), full-ye
Slide 3: Strategy and Market
STRATEGY AND MARKET
Slide 4: Demand continues to strengthen
DEMAND CONTINUES TO STRENGTHEN Actual and prospective student numbers remain Applications and acceptances strong - 2014/15 intake highest ever (512,000) - 2015/16 applications up across all segments Removal of student number cap for 2015/16 likely to have a significant impact - Potential for Uni
Slide 5: Investment activity pointing to yield compression
INVESTMENT ACTIVITY POINTING TO YIELD COMPRESSION Transaction volumes remain elevated Yield and swap analysis - £2.2 billion of deals in 2014 (2013: £2.1 billion, 2012: £2.7 billion) - Further £2.5 billion currently in market - Expect transaction levels to fall once current portfolios traded Inv
Slide 6: Unite remains well positioned
UNITE REMAINS WELL POSITIONED Portfolio focused on Universities with strongest Top 10 University partners prospects - Unite locations 54% of student population, 67% of student number growth - Reflected in portfolio activity Occupancy and rental growth remain healthy - 99% occupancy for 2014/15 -
Slide 7: Financial Review
FINANCIAL REVIEW
Slide 8: Financial Highlights
FINANCIAL HIGHLIGHTS 2014 2013 Year-on-year movement Income EPRA earnings (recurring) £33.3m £23.1m 44% EPRA EPS (recurring) 17.2p 13.6p 26% EPS yield on NAV 4.5% 3.9% 15% Dividend per share (full year) 11.2p 4.8p 133% Balance Sheet EPRA NAVps 434p 382p 14% Total return (NAV growth plus dividend pai
Slide 9: Earnings growth momentum maintained
EARNINGS GROWTH MOMENTUM MAINTAINED Continuing improved performance 2014 2013 £m £m - High occupancy, rental growth and interest savings Total income 254.6 240.7 - EPRA earnings up to £33.3 million Unite’s share of rental income 130.0 113.4 Unite’s share of property operating (35.7) (32.4) 4.5%
Slide 10: Balanced total returns
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Slide 11: See-through balance sheet and income statement
SEE-THROUGH BALANCE SHEET AND INCOME STATEMENT USAF/JVs Unite Unite Wholly owned (Unite share) see-through see-through 2014 2013 £m £m £m £m Balance sheet Rental properties 952 558 1,510 1,175 Properties under development 49 65 114 195 Total property portfolio/GAV 1,001 623 1,624 1,370 Net debt (449
Slide 12: Strong capital structure
STRONG CAPITAL STRUCTURE Key debt statistics (see-through) Strong debt position 2014 2013 - Improved maturity profile and diversity of sources Net debt £697m £666m - Limited refinancing requirements before 2020 LTV 43% 49% - Beginning to lock into rates for development Cost of debt 4.7% 4.7% pipel
Slide 13: Co-investment vehicles simplified
CO-INVESTMENT VEHICLES SIMPLIFIED OCB sale completed Summary financials USAF LSAV/UCC - £174 million proceeds in line with book £m £m value - Unite share of proceeds reinvested into GAV 1,573 557 UCC Net debt (611) (230) UCC / LSAV merger completed Other assets/liabilities (27) (8) USAF £115 m
Slide 14: Operational Review
OPERATIONAL REVIEW St Pancras Way, London
Slide 15: Home for Success programme firmly on track
HOME FOR SUCCESS PROGRAMME FIRMLY ON TRACK Brand investment programme launched in April - £40 million total investment, £20 million Unite share - Launched from a position of strength Programme on track - All properties rebranded by start of 2014/15 academic year - LED lighting installed at 31 pr
Slide 16: Secured development programme
SECURED DEVELOPMENT PROGRAMME Secured Total Total Capex in Capex Forecast Forecast beds completed development period remaining NAV yield on value costs remaining cost £m £m £m £m £m % London (LSAV-Unite share) 2,320¹ 128 95 33 51 20 9.0% Regions (wholly owned) 4,400 347 259 33 221 77 9.5% Total 6,72
Slide 17: Highly visible earnings growth progression
HIGHLY VISIBLE EARNINGS GROWTH PROGRESSION Earnings growth prospects supported by high-quality development programme, positive rental growth outlook, brand and operating platform Note: Illustrative Earnings demonstrates building blocks of growth – not profit forecast 16
Slide 18: Summary and outlook
SUMMARY AND OUTLOOK Strong performance on all fronts - Delivering significant increase in dividend Well positioned for continued growth - Strongest ever student intake in 2014/15 - Further growth likely in 2015/16 with removal of cap - Supply of new accommodation less than anticipated growth in
Slide 19: Appendices
APPENDICES Saw Mill, Huddersfield
Slide 20: 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 2014/15 - Variations at city / University level Government plans to remove cap on UK / EU studen
Slide 21: Product and service offering
PRODUCT AND SERVICE OFFERING All-inclusive pricing - All utilities and services - High-speed (20Mb) Wi-Fi throughout our portfolio - 24/7 customer service - Transparency and certainty - Free cleaning City-centre locations - Close to University campuses - Flat shares and studios - Range of produc
Slide 22: Our top 10 markets
OUR TOP 10 MARKETS 2014 2013 Completed Completed FT student Market rank rank City beds beds numbers Share (14/15) (13/14) (13/14) 1 1 London 7,378 7,612 282,631 2.6% 2 2 Sheffield 3,728 3,728 47,579 7.8% 3 3 Liverpool 3,398 3,398 49,009 6.9% 4 4 Leeds 3,215 3,138 50,262 6.4% 5 5 Bristol 2,998 2,899
Slide 23: NNNAV
NNNAV 2014 2013 £m £m IFRS net assets 843 653 Valuation gains not recognised on properties held at cost 31 23 Mark to market of fixed rate debt (3) (11) Deferred tax - - EPRA NNNAV 871 666 EPRA NNNAV per share 429pps 373pps 22
Slide 24: Valuation to EPS yield bridge
VALUATION TO EPS YIELD BRIDGE 23
Slide 25: Debt facilities
DEBT FACILITIES On-balance sheet Co-investment vehicles Facility Drawn Maturity Facility Drawn Maturity £m £m £m £m RBS 46 - 2015 USAF BNP Paribas 33 33 2015 Secured bond 565 565 2023/25 HSBC 49 18 2016 Lloyds RCF 1 92 92 2016 Mass Mutual 124 124 2023 Lloyds RCF 2 25 14 2018 Legal + General 119 119
Slide 26: Secured development pipeline
SECURED DEVELOPMENT PIPELINE Total Total Target Secured completed Development Capex in Capex Forecast NAV Forecast delivery beds value costs 2014 remaining remaining yield on cost (£m) (£m) (£m) (£m) (£m) Regional wholly owned Trenchard Street, Bristol 2015 483 37 27 13 9 2 9.6% Greetham Street, Por