Slide 1: Preliminary Results: Year ended 31 December 2013
The UK’s leading developer and manager of student accommodation Preliminary Results Year ended 31 December 2013
Slide 2: Highlights
HIGHLIGHTS Continued strong performance based on high levels of service 2013 2012 - Adjusted EPS (pre UCC performance fee) up 37% to 13.6 pence Adjusted EPS - EPRA 18.0p 9.9p - recurring** 13.6p 9.9p - NPC up 34% to £25.6m Adjusted NAV per share 382p 350p - Adjusted NAV per share up 9.1% - Total r
Slide 3: Strategy and Market
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Slide 4: Market Outlook Strengthening on Three Fronts
MARKET OUTLOOK STRENGTHENING ON THREE FRONTS Applicants vs places 2008-2013 Positive outlook for student numbers 750,000 697,351 - 677,000 applicants for 496,000 places in 2013/14 700,000 700,161 677,375 650,000 - 4% increase in applications for 2014/15 639,860 653,637 600,000 588,689 - Government
Slide 5: Implications for UNITE
IMPLICATIONS FOR UNITE Built out portfolio breakdown Positive reservations and rental growth outlook Built-out Built-out - 64% reserved for 14/15 at end February (highest value ever) £m % - 3% rental growth guidance reaffirmed Central London 365 22 - Upside risk from policy announcements Zone 2 Lo
Slide 6: Placing and Open Offer
PLACING AND OPEN OFFER Placing and Open Offer to raise gross proceeds of £100m to invest further in strong UK university locations - Half for highly selective development activity in strong regional locations - Half used to acquire new units in USAF, increasing stake from 16% to 22% Takes advant
Slide 7: Financial Review
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Slide 8: Financial Highlights
FINANCIAL HIGHLIGHTS 2013 2012 Income Net Portfolio Contribution £25.6m £19.1m Adjusted EPS - EPRA 18.0p 9.9p - pre UCC promote 13.6p 9.9p Adjusted EPS yield on NAV 3.9% 3.1% Dividend per share – full year 4.8p 4.0p Balance Sheet NAV (adjusted, fully diluted per share) 382p 350p Total return on open
Slide 9: Adjusted NAV Bridge – Balanced Returns
ADJUSTED NAV BRIDGE – BALANCED RETURNS Pence per share 400 390 (5) 380 19 (12) 14 370 360 16 350 382 340 350 330 320 Financing 31-Dec-12 Retained Dividend 31-Dec-13 Investment Development Portfolio Profits Portfolio Rental growth of 3.0% LFL on stabilised portfolio 5bps yield shift due to portfo
Slide 10: Net Portfolio Contribution and Adjusted Earnings
NET PORTFOLIO CONTRIBUTION AND ADJUSTED EARNINGS Further improvements in profitability 31 Dec 31 Dec 2013 2012 - EPS up to 13.6pps, 3.9% yield on NAV £m £m - On track to hit target EPS yield of 4.5% Total income 240.7 240.2 on opening NAV in 2015 UNITE share of rental income 113.4 111.4 - NPC up 3
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 Dec 2013 Dec 2012 £m £m £m £m Balance sheet Rental Properties 767 408 1,175 1,162 Properties under development 180 15 195 83 Total property portfolio / GAV 947 423 1,370 1,245 Adj
Slide 12: Capital Structure
CAPITAL STRUCTURE Key debt statistics (see-through) Refinancing activity concluded 31 Dec 2013 31 Dec 2012 Net debt £666m £648m Key objectives delivered - diversified LTV 49% 52% sources, extended maturities, reduced cost Cost of debt 4.7% 5.5% £1.2bn new debt secured WALM (years) 7.1 4.2 - £5
Slide 13: Co-Investment Vehicles
CO-INVESTMENT VEHICLES USAF Summary financials USAF UCC LSAV OCB - £565m financing completed in secured £m £m £m £m bond market at 3.7% - Increases income yield from 5.5% to GAV 1,355 390 80 174 c.7.0% Net debt (583) (212) (25) (96) - High quality regional portfolio at 6.6% Other assets/ liabiliti
Slide 14: Asset Disposals
ASSET DISPOSALS Proceeds Book value £m £m Completed / exchanged - Wholly owned 19 20 - UCC 34 33 - USAF 7 7 Total 60 60 Conditionally exchanged - Wholly owned 15 15 Total 75 75 UNITE share 46 45 Non-core student assets sold in line with book values Legacy NHS properties (c.£25m) sold c.£4m below
Slide 15: Financial Impact of Placing and Open Offer
FINANCIAL IMPACT OF PLACING AND OPEN OFFER £100m of gross proceeds to be invested in strong UK university locations - Offer price £4.10p per share - 24,500,000 shares Development activity - Target 9.5-10% development yield - Total capex of £130 million with leverage - New openings in 2017-18 USAF
Slide 16: Operational Review
OPERATIONAL REVIEW
Slide 17: A Strong Brand and Scalable Operating Platform
A STRONG BRAND AND SCALABLE OPERATING PLATFORM UNITE brand increasingly a positive differentiator - University relationships - Efficient, service focused platform - Brand promise of “Home for Success” University relationships deepening - Over 50 active University relationships - Dedicated Univer
Slide 18: High Value Development Pipeline
HIGH VALUE DEVELOPMENT PIPELINE 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 (wholly owned) 1,572 187 123 52 21 7 10.5% London (LSAV-UNITE share) 2,356¹ 132 98 10 88 28 9.0% Total Lond
Slide 19: Summary and Outlook
SUMMARY AND OUTLOOK 2014 continued positive momentum of recent years - 10.4% average annual total return on NAV since 2010 - On track for 4.5% EPS yield for 2015 Sector outlook improving on three fronts - Student number outlook strengthening further, supported by Government policy - Regional eco
Slide 20: Appendices
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Slide 21: 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 - 181,000 more applicants than places in 2013/14 - Variations at city/university level UK attractive to global students Supply Bre
Slide 22: Product and Service Offering
PRODUCT AND SERVICE OFFERING All-inclusive pricing - All utilities and services - Wi-Fi throughout our portfolio - 24/7 customer service - Transparency and certainty City centre locations - Close to university campuses - Flat-shares and studios - Range of products and price points - Good transpo
Slide 23: Phases of Growth
PHASES OF GROWTH 1991 2000 – 2006 2006 – 2009 2006 – today Now market leader – First mover advantage Operational & Managed growth operating ~13,000 Founded Rapid national expansion financial Growing recurring cash 1999 consolidation beds more than the flows Development led £1.3bn assets ne
Slide 24: The Competitive Landscape
THE COMPETITIVE LANDSCAPE Long standing but financially constrained Smaller operators and entrants lacking scale - Grew rapidly 2000-2007, often with high - Typically less than 5,000 beds leverage - Lack of scale impacts brand recognition and - Struggling to invest in business and estate efficiency
Slide 25: 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 31 Dec 2013 Rental Properties 767 222 117 25 44 1,175 Properties under development 180 - - 15 - 195 Adjusted net debt (470) (96) (64) (12) (24) (666) Other assets/(liabilities) (24) (1) 5
Slide 26: 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) (12/13) Share 1 1 London 7,612 8,074 292,734 2.6% 2 2 Sheffield 3,731 3,731 48,632 7.7% 3 3 Liverpool 3,398 3,372 42,911 7.9% 4 4 Leeds 3,138 3,138 53,402 5.9% 5 5 Bristol 2,
Slide 27: The London Student Market
THE LONDON STUDENT MARKET Proportion of International Students HESA 12/13 – All Full-time Students London has three important characteristics that distinguish it from the wider UK market - A full time student population (281,000) that is larger than the next five largest student markets combined -
Slide 28: Secured Development Pipeline
SECURED DEVELOPMENT PIPELINE Total completed Total development Capex in Capex Forecast NAV Target Forecast yield on Beds value cost period remaining remaining delivery cost (£m) (£m)* (£’m) (£’m) (£m) London wholly owned St Pancras Way, Camden 2014 571 85 59 19 9 3 9.8% Stratford City, Stratford 201
Slide 29: Debt Facilities
DEBT FACILITIES On-balance sheet Co-investment vehicles Facility Drawn Maturity USAF Facility Drawn Maturity £m £m £m £m Secured bond 565 565 2023/25 Investment Lloyds RCF 1 92 67 2016 RBS 28 21 2015 Lloyds RCF 2 25 8 2018 BNP Paribas 34 34 2015 682 640 Legal + General 120 120 2024 UCC Mass Mutual 1
Slide 30: 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 31: USAF – A High Quality Portfolio
USAF – A HIGH QUALITY PORTFOLIO Focused on strong university locations – Offers UNITE the best prospective returns in the current market portfolio value £1.35bn* USAF is an unlisted, multi-investor fund which UNITE manages Diverse, high quality and modern student accommodation in strong location
Slide 32: Additional Investment in USAF
ADDITIONAL INVESTMENT IN USAF Proposal UNITE will subscribe for £48m of new units in USAF under a subscription window open until 31 March 2014 New units will be acquired at a 0.8% discount to USAF’s NAV at 31 December 20131 UNITE’s stake in USAF will increase from 16.4% to approximately 22.0%
Slide 33: NNNAV
NNNAV Dec 2013 Dec 2012 £’m £’m Net assets 653 516 Valuation gains not recognised on properties held at cost 23 19 Fair value of fixed rate debt (11) (12) Deferred tax - - NNNAssets 665 523 NNNAV per share 373pps 323pps 33
Slide 34: Please Note
PLEASE NOTE THE INFORMATION HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, OUTSIDE OF THE UNITED KINGDOM, INCLUDING IN OR INTO AUSTRALIA, CANADA, JAPAN, SWITZERLAND, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR THE UNITED STATES