Unite Group Plc · LSE:UTG
Unite — H1 2017 Earnings Presentation
30 slides from Unite's earnings presentation, Jul 26, 2017
Slide 1: Quality Earnings and Growth
Quality Earnings and Growth Interim Results Six months ended 30 June 2017 Angel Lane, London
Slide 2: A Successful Delivery
A SUCCESSFUL DELIVERY Delivering high-quality earnings 30 Jun 30 Jun 31 Dec - High-quality income with visible earnings 2017 2016 2016 growth prospects - Confidence in dividend growth EPRA Earnings £40.4m £36.1m £61.3m Maintaining our market leading platform EPRA EPS 18.0p 16.3p 28.6p - Excellen
Slide 3: Performance Highlights
UNITE STUDENTS PERFORMANCE HIGHLIGHTS
Slide 4: Clear Market Leading Service Platform
CLEAR MARKET LEADING SERVICE PLATFORM Strong sales performance Customer analysis - 91% reserved for 2017/18 100% - 59% nominations and 26% rebookers 90% DL 1st year 80% 35% - On track for rental growth of 3.0 - 3.5% 70% 41% Medium 60% - 65% of direct lets are returning students 50% 48% - China off
Slide 5: High-Quality Portfolio
HIGH-QUALITY PORTFOLIO High-quality portfolio positioned in high-quality Development deliveries locations Beds EPS 10,000 Beds EPS 16 - 73% in top 10 markets 9,000 14 8,000 12 - 91% beds in markets where Unite is no.1 / no.2 7,000 6,000 10 operator 5,000 8 4,000 6 - 45% in London (by value) 3,000
Slide 6: Quality Income Through University Partnerships
QUALITY INCOME THROUGH UNIVERSITY PARTNERSHIPS Increased focus on quality and length of Nominations agreements nominations agreements Length Beds % beds % income - 59% income secured through noms – 5,000 additional beds in the last three years 1 year 9,794 33% 31% - 6 years remaining life 2-5 year
Slide 7: Financial Review
UNITE STUDENTS FINANCIAL REVIEW
Slide 8: Strong Financial Performance
STRONG FINANCIAL PERFORMANCE 30 Jun 30 Jun 31 Dec % change 2017 2016 2016 Income EPRA earnings 12% £40.4m £36.1m £62.7m EPRA EPS 10% 18.0p 16.3p 28.6p Dividend per share (interim/full year) 22% 7.3p 6.0p 18.0p Balance sheet EPRA NAVps 4% 669p 620p 646p See-through LTV 4% ↓ 30% 35% 34% Cash f
Slide 9: Earnings Growth Momentum Maintained
EARNINGS GROWTH MOMENTUM MAINTAINED 30 Jun 2017 30 Jun 2016 31 Dec 2016 £m £m £m Total income 176.0 167.5 304.9 Unite’s share of rental income 92.4 86.9 159.1 Unite’s share of property operating (21.7) (20.6) (42.8) expenses Net operating income (NOI) 70.7 66.3 116.3 NOI margin 76.5% 76.3% 73.1% Man
Slide 10: Highly Visible Earnings Growth Progression
HIGHLY VISIBLE EARNINGS GROWTH PROGRESSION Earnings growth prospects supported by: Progressive dividend aligned to earnings - High-quality development programme growth and dependable income - Positive rental growth outlook - 75% pay out EPS 55 50 3p - 4p 2p - 3p 45 10p - 11p 40 35 6p 2p 3p 30 25
Slide 11: Growing Proportion of Earnings
GROWING PROPORTION OF EARNINGS NAV Pence per share 690 680 4 10 670 17 660 650 12 640 669 630 646 620 610 600 31-Dec-16 Rental Earnings Development Dividend 30-Jun-17 growth portfolio 10
Slide 12: Strong Capital Structure
STRONG CAPITAL STRUCTURE Strong debt position Key debt statistics (see-through) 30 Jun 30 Jun 31 Dec - Diversified sources and balanced maturity 2017 2016 2016 profile Net debt £696m £827m £776m - Limited refinancing requirements before 2020 LTV 30% 35% 34% Cost of debt 4.2% 4.4% 4.2% LTV reduce
Slide 13: Co-Investment Vehicles Continuing to Deliver
CO-INVESTMENT VEHICLES CONTINUING TO DELIVER Strong performance across USAF and LSAV Summary financials USAF LSAV £m £m USAF forward funds GAV 2,076 1,084 - Acquired three further forward funds in Durham and Birmingham Net debt (499) (307) Other assets/liabilities (18) (21) LSAV has £125 milli
Slide 14: Property Review
PROPERTY REVIEW
Slide 15: Robust Investor Demand
ROBUST INVESTOR DEMAND Active and diverse investor base Valuation yields 10.0% - £1.9 billion traded in H1 2017 9.0% 8.0% 7.0% - c.£5 billion forecast for 2017 6.0% 5.0% 4.0% 3.0% 2.0% Buyer demand outstrips supply 1.0% 0.0% YE 2004 HY 2010 YE 2015 - Good liquidity for all assets Unite Completed
Slide 16: Unparalleled Portfolio
UNPARALLELED PORTFOLIO Actively improving portfolio quality through London weighting recycling £472 million assets sold in H1 (Unite share: £181 million) at 3% above book value 45% Regional - Reducing exposure to studios and lower 55% ranked Universities London £227 million investment in ASV (
Slide 17: Development Deliveries on Track
DEVELOPMENT DELIVERIES ON TRACK Highly accretive secured pipeline Target Secured Total completed Total development Forecast yield delivery beds value costs on cost - 2017 projects completing (£m) (£m) Regional wholly owned St Leonard's, Edinburgh 2017 581 65 41 9.5% - 2018 pipeline secured, with p
Slide 18: Outlook
UNITE STUDENTS OUTLOOK i | |
Slide 19: Well Positioned for Continued Growth
WELL POSITIONED FOR CONTINUED GROWTH Actively positioning the portfolio for income Tramworks, Glasgow and growth - Unparalleled property portfolio - University partnership opportunities emerging Maintaining our market leading platform - Most experienced and committed operator in the sector - Foc
Slide 20: Appendices
UNITE STUDENTS APPENDICES
Slide 21: Student Numbers Remain Strong
STUDENT NUMBERS REMAIN STRONG Overall student numbers expected to be up Full-time student numbers c.20,000 in 2017/18 2,000 1,819 1,837 1,749 1,728 1,730 1,771 1,710 1,800 1,600 2017 student intake expected to be in line with 2016 1,400 Students (000's) 1,200 - Participation rates increasing off
Slide 22: 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 1,000 682 699 713 713 717 800 642 600 400 553 580 487
Slide 23: Fire Safety Overview
FIRE SAFETY OVERVIEW Full review of fire safety at all 132 properties undertaken post Grenfell Working closely with DCLG and local fire authorities - Cladding samples submitted to Department for Communities and Local Government (DCLG) for preliminary tests – six buildings did not meet the initia
Slide 24: Fire Safety Systems
FIRE SAFETY SYSTEMS Fire safety is a priority at Unite - Work in partnership with Avon Fire Authority as our primary authority - Audited by British Safety Council in last 12 months - Buildings are modern, purpose built - Rigorous fire safety management and maintenance regimes Fire safety systems
Slide 25: 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 26: Our Top 10 Markets
OUR TOP 10 MARKETS 2017 City Completed FT student Market Market rank beds numbers Position Share (17/18 (15/16) 1 London 9,541 292,706 1 3.5% 2 Birmingham 4,846 57,767 1 8.4% 3 Sheffield 3,731 51,095 1 7.3% 4 Bristol 3,479 41,286 1 8.4% 5 Leeds 3,458 53,185 1 6.5% 6 Liverpool 3,015 65,664 1 3.4% 7 M
Slide 27: See-Through Balance Sheet and Income Statement
SEE-THROUGH BALANCE SHEET AND INCOME STATEMENT Wholly USAF LSAV Unite Unite owned (Unite share) (Unite share) see-through see-through Jun 2017 Dec 2016 £m £m £m £m £m Balance sheet Rental properties 1,051 473 542 2,066 2,085 Properties under development 263 14 - 277 192 Total property portfolio/GAV
Slide 28: Portfolio Analysis
PORTFOLIO ANALYSIS 30 June 2017 Wholly USAF LSAV Lease Total Unite owned London Value (£m) 316 848 431 - 1,595 929 London Beds 1,886 5,406 1,989 260 9,541 45% Major provincial Value (£m) 1,380 236 430 - 2,046 872 Major provincial Beds 17,381 3,067 5,643 2,577 28,668 42% Provincial Value (£m) 322 - 1
Slide 29: Debt Facilities
DEBT FACILITIES On-balance sheet Co-investment vehicles Facility Drawn Maturity Facility Drawn Maturity £m £m £m £m USAF HSBC/RBS 280 106 2020 Secured bond 690 690 2023-25 Wells Fargo 100 - 2021 Legal + General 116 116 2022 790 690 Mass Mutual 124 124 2024 LSAV UOB 25 25 2017 Others 29 29 2018-22 HS
Slide 30: Secured Development Pipeline
SECURED DEVELOPMENT 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 St Leonard's, Edinburgh 2017 581 65 41 10 3 9 9.5% Millennium Way, Covent