Unite Group Plc · LSE:UTG
Unite — FY2024 Earnings Presentation
47 slides from Unite's earnings presentation, Feb 25, 2025
Slide 1: Positioned for Growth: 2024 Preliminary results
Positioned for Growth 2024 Preliminary results 25 February 2025
Slide 2: Contents
Contents 1. Performance highlights 2. Financial review 3. Property review 4. Operations review 5. Outlook 6. Q&A 7. Appendices
Slide 3: Performance highlights
1 Performance highlights Joe Lister, Chief Executive
Slide 4: Performance highlights: Strength and resilience
PERFORMANCE HIGHLIGHTS Strength and resilience Attractive market Leading platform Structural undersupply Positioned for growth Structurally 5% growth growing in adjusted demand EPS 11% growth in Compounding earnings growth UK 18-year-olds by 2030 Limited 93% aligned new supply to Fully funded pipeli
Slide 5: Strong performance in 2024
PERFORMANCE HIGHLIGHTS Strong performance in 2024 • Sustained growth in earnings and dividends 2024 2023 % Change • 5% growth in adjusted EPS • 8.2% rental growth and 97.5% occupancy for 2024/25 Adjusted EPS 46.6p 44.3p +5% • Dividend at 80% of adjusted earnings Dividend per share 37.3p 35.4p +5% •
Slide 6: Structurally supported demand
PERFORMANCE HIGHLIGHTS Structurally supported demand UK 18-year-old population and 000’s acceptance rate • Positive longer-term outlook 1,000 40% 893 900 36.2% 35% • 11% growth in UK 18-year-olds by 2030 801 800 30% • International demand for world-class UK Higher Education 700 25% • UK increasingly
Slide 7: Constrained supply of student housing
PERFORMANCE HIGHLIGHTS Constrained supply of student housing Corporate PBSA University-owned HMOs accommodation • Requires >£200/week rent • Many universities facing • Increasing licensing and housing shortages regulatory requirements • Increasingly high-end product • Obsolescence sees 2-3% of • Hig
Slide 8: Financial review
2 Financial review Mike Burt, Chief Financial Officer
Slide 9: Strong financial performance
FINANCIAL REVIEW Strong financial performance LfL rental growth Adj. EPRA EPS Dividend per share 8.2% 46.6p 37.3p +5% YoY +5% YoY NTA per share Total accounting Net debt: EBITDA return1 972p 5.5x +6% 9.6% 1) NTA growth + dividends paid / opening NTA 9
Slide 10: Robust operating performance
FINANCIAL REVIEW Robust operating performance • LfL rental growth of 8%, reflecting strong leasing performance for 2023/24 and 2024/25 academic years • 5% growth in operating costs, primarily driven by staff costs (Real Living Wage) and utilities (commodity prices) • EBIT margin stable at 68.1% (202
Slide 11: Operating performance driving earnings growth
FINANCIAL REVIEW Operating performance driving earnings growth • 5% adjusted EPS growth driven by rental increases, strong occupancy and investment activity • Impact of higher funding costs, new debt issuance and increased share count • 5% dividend growth, 80% payout of adjusted earnings 50.0p 0.5p
Slide 12: Strong NAV growth and return on equity
FINANCIAL REVIEW Strong NAV growth and return on equity • 6% growth in EPRA NTA to 972p, translating to 9.6% total accounting return • 8.0% net rental growth1 offset by 10bps yield expansion and net initial yield at 5.1% • Recognition of development profits expected to accelerate with increasing con
Slide 13: Balance sheet to support growth
FINANCIAL REVIEW Balance sheet to support growth 31 Dec 2024 31 Dec 2023 • £1.6bn of funding raised in 2024 24% 27% LTV • £450m equity issue Net debt: EBITDA ratio 5.5x 6.1x • £850m of debt issuance Interest cover ratio 6.2x 4.6x • £304m of disposals Average cost of debt 3.6% 3.3% • Focused on balan
Slide 14: Continued earnings growth in 2025
FINANCIAL REVIEW Continued earnings growth in 2025 • LfL rental growth underpinned by 2024/25 leasing and reservation progress for 2025/26 • Targeting margin improvement as underlying cost growth slows • Impact from National Insurance increase (£2m p.a. from April 2025) • Finance cost increase drive
Slide 15: Property review
3 Property review Mike Burt, Chief Financial Officer
Slide 16: c.£600m of investment activity to drive growth
PROPERTY REVIEW c.£600m of investment activity to drive growth • Continued focus on portfolio quality and ability to deliver sustainable rental growth • Portfolio 93% aligned to Russell Group cities by value • Proceeds of 2024 equity raise 50% deployed Development University Partnerships Acquisition
Slide 17: Increasing development activity
PROPERTY REVIEW Increasing development activity Committed development by year • Committed developments increased to £1.2bn £1,250m £1,171m £1,171m £1,000m • Three planning consents in year for 2,400 beds £750m • Three development commitments in past 12 months £569m £500m • Delivery of £36m Bromley P
Slide 18: Unlocking university partnerships
PROPERTY REVIEW Unlocking university partnerships • JV with Newcastle University for 2,000 new beds • Unite providing 1,600 beds during construction • Planning approval targeted in Q2 • First phase expected in 2028/29 • Confident of securing second university JV in next three months with Manchester
Slide 19: Pipeline underpins significant growth
PROPERTY REVIEW Pipeline underpins significant growth • 7,700 bed development pipeline adding 30% to investment portfolio GAV once complete • £90m of future NOI, of which £71m¹ is committed and fully funded • New BSA gateways for high-rise residential buildings have added six months to development p
Slide 20: Increasing focus on the UK's strongest universities
PROPERTY REVIEW Increasing focus on the UK’s strongest universities £281m of acquisitions £48m of Asset Mgmt. Initiatives • Eight properties in strong regional markets • Refurbishments of 11 properties for High / mid-tariff and London, all operated by Unite 2024/25 academic year universities • 5.4%
Slide 21: Operations review
4 Operations review Karan Khanna, Chief Operating Officer
Slide 22: Sector-leading brand and platform
OPERATIONS REVIEW Sector-leading brand and platform Partnerships 24/7/365 model Student welfare PRISM platform • Trusted partner • Passionate teams • Industry leading offer • End-to-end technology platform • 40% market share of • There if you need us • Support to Stay nominations with • Growing use
Slide 23: Strong performance for 2024/25
OPERATIONS REVIEW Strong performance for 2024/25 Occupancy and rental growth 99% 99% • Rental growth underpinned by growing demand 10% 97.5% 97%-98% 100% 94% • Record 18-year-old intake, supporting 2% YoY growth 8% 95% in undergraduates 6% 90% • Continued outperformance by high-tariff universities 4
Slide 24: Encouraging outlook for 2025/26
OPERATIONS REVIEW Encouraging outlook for 2025/26 2025/26 applications by university tariff 7.5% • 70% reserved for 2025/26 (2024/25: 79%) 66% Unite alignment 5.0% • Strong demand from universities 24% 2.5% 4.3% • Expect normalised sales cycle with later bookings 10% 0.3% - (3.1%) • Normalisation of
Slide 25: Improving outlook for international demand
OPERATIONS REVIEW Improving outlook for international demand Student visa applications • New government more supportive of international 20% students 10% YoY change • Visa applications now growing - (10%) • Encouraging 2025/26 applications data (20%) • International Education Strategy due in 2025 (3
Slide 26: Delivering for our students and partners
OPERATIONS REVIEW Delivering for our students and partners Service Customer NPS Income • Sector-leading welfare provision • Affordable offering at range of prices +50 (+8pt YoY) Product Staff • Upgraded accommodation for 5,200 students • Trialling new designs for different customer types University
Slide 27: Outlook
5 Outlook Joe Lister, Chief Executive
Slide 28: Positioned for growth
OUTLOOK Positioned for growth 11% growth in UK 18-year-olds by 2030 Best-in-class operator wth o New supply down 60% on 2019 l gr Pl a Investing to stay ahead ra tfo HMO sector in decline Proven development capability ctu rm Stru ps Qu 93% aligned to Russell Group 60+ partnerships hi ty ns al t io i
Slide 29: Significant growth opportunities
OUTLOOK Significant growth opportunities • Capital has become more expensive Unite investment opportunities • Increased return targets for new investment Risk-adjusted New • Income producing assets becoming more attractive Opportunity Size returns investment • Wider range of opportunities now availa
Slide 30: Our growth outlook
OUTLOOK Our growth outlook Focus on high-quality, sustainable earnings growth 2025 Medium term Rental growth p.a. 4-5% CPI +0.5-1.0% EBIT margin c.68.5% >70% Development/AMI completions p.a. ~£200m £250-300m Yield on cost ~7.5% 7-8% Cost of debt 4.1% 4.5-5.0% Net debt: EBITDA ~6x 6-7x EPS growth p.a
Slide 31: Confident outlook
OUTLOOK Confident outlook • Strong 2024 performance • 5% EPS growth and 9.6% total accounting return • Record customer feedback • Entering 2025 in a strong position • Expect adjusted EPS of 47.5-48.25p • Total accounting return of 8-10% in 2025¹ • Structurally supported growth • Growing demand for U
Slide 32: Q&A
6 Q&A
Slide 33: Appendices
7 Appendices
Slide 34: Home for Success
APPENDICES Home for Success 84% of customers using new student app • City-centre locations with range of price points • • Close to university campuses Shared living and studios 68% of customers used • Good transport links online check-in • Help when it’s needed • 24/7 customer support centre • • New
Slide 35: Value-for-money accommodation
APPENDICES Value-for-money accommodation • PBSA is better value for money than competing accommodation types • Appeal of fixed-price all-inclusive offer • Continued investment in service and offer supports price increases • Rising Net Promoter Scores • Strong earnings growth and fee freeze has made
Slide 36: A responsible and resilient business
APPENDICES A responsible and resilient business EPC ratings A-C 99% • Significant improvement in EPC ratings 100% A, 4% 81% • >99% A-C rated (2023: >99%) 75% 57% • Energy intensity per m2 reduced 9% from 2019 baseline 50% B, 88% 44% • Further £11m investment planned for 2025 25% • Continued progress
Slide 37: Fire safety
APPENDICES Fire safety • All properties safe to operate with risk-based approach to cladding remediation works • New provision for works on a further 15 properties in 2025, to be incurred over next 12-18 months • Expect to recover 50-75% of total costs through claims from contractors • £32m of claim
Slide 38: Portfolio overview
APPENDICES Portfolio overview Geographical breakdown of portfolio Aberdeen 2024 Completed beds Full-time student City rank (24/25) numbers (22/23) Edinburgh Glasgow 1 London 12,578 389,778 2 Manchester 5,639 101,029 Newcastle 3 Leeds 5,530 70,655 Durham 4 Liverpool 5,340 56,038 5 Birmingham 4,984 84
Slide 39: Portfolio and customer breakdown
APPENDICES Portfolio and customer breakdown Customers by domicile Distribution of beds by weekly price 30% 2024/25 2023/24 2022/23 20% UK 72% 72% 72% 10% Non-EU 26% 26% 25% 0% Other EU 2% 2% 3% RoUK London Customers by year of study Bookings by type Room types Post graduate, Non en-suite, 5% 17% Nom
Slide 40: Rental portfolio analysis December 2024
APPENDICES Rental portfolio analysis 31 December 2024 Wholly owned USAF LSAV Lease Total Unite share London Value (£m) 1,298 430 1,769 - 3,497 2,307 Beds 4,072 1,863 6,643 - 12,578 38% Properties 12 6 14 - 32 Prime regional Value (£m) 1,315 912 - 22 2,249 1,603 Beds 8,517 5,526 - 618 14,661 26% Prop
Slide 41: 2025 financial outlook
APPENDICES 2025 financial outlook AY2024/25 AY2025/26 FY2025 Comment Operating performance Rental growth 8.2% 4-5% One term of 2025/26 income in FY2025 Occupancy 97.5% 97-98% EBIT margin ~68.5% +50bps YoY Property activity (Unite share) Development capex £275-300m Build costs on committed pipeline D
Slide 42: Rental income outlook
APPENDICES Rental income outlook Pro forma income assumes property activity completed on 1 January 2024 Group Share of JVs Unite share £m £m £m 2024 rental income 282 116 398 Completed disposals (1) (2) (3) Acquisitions from USAF 16 (5) 11 Sales to USAF (8) 2 (6) 2024 development completions 1 - 1 A
Slide 43: EPRA earnings statement
APPENDICES EPRA earnings statement £m Wholly owned USAF LSAV Unite Group Unite Group (Unite share) (Unite share) 2024 2023 Rental income 282.0 59.0 57.0 398.0 369.5 Property operating expenses (87.2) (20.7) (14.0) (121.9) (113.0) Net operating income (NOI) 194.8 38.3 43.0 276.1 256.5 NOI margin 69%
Slide 44: EPRA balance sheet
APPENDICES EPRA balance sheet £m Wholly owned USAF LSAV Unite Group Unite Group (Unite share) (Unite share) 2024 2023 Balance sheet Rental properties1 4,025 830 997 5,852 5,510 Leased properties 72 - - 72 85 Properties under development 451 - - 451 175 Total property portfolio/GAV 4,588 830 997 6,37
Slide 45: Debt information
APPENDICES Debt information 31 Dec 2024 31 Dec 2023 Facility Drawn Maturity £m £m Net debt £1,510m £1,571m On-balance sheet LTV 24% 28% Sustainable RCF 750 - 2026/27 Net debt:EBITDA ratio 5.5x 6.1x Unsecured term loan 150 150 2027 Interest cover ratio 6.2x 4.6x Unsecured bond (Unite) 275 275 2028 Av
Slide 46: Secured development and partnerships pipeline
APPENDICES Secured development and partnerships pipeline Type1 Target Secured Total Total Capex in Capex Forecast NTA Forecast yield delivery beds/ completed development period remaining remaining on cost units value costs no £m £m £m £m £m % Off-campus pipeline Avon Point, Bristol Noms 2025 623 120
Slide 47: Development capex phasing
APPENDICES Development capex phasing Committed pipeline Future pipeline 2025 – 2029 2028+ 6,600 beds / 8 projects Secured pipeline £655m development cost to go¹ 1,100 beds / 2 projects Phasing of committed development capex1 £305m total development cost £400m £300m c.£290m New opportunities c.£185m