UNITE Group plc · LSE:UTG
UNITE — FY2008 Earnings Presentation
28 slides from UNITE's earnings presentation, March 2009
Slide 1: Preliminary Results 2008
NEW COVER Preliminary Results 2008 Year ended 31 December 2008
Slide 2: Overview
OVERVIEW Strong operational performance underpinning market fundamentals - Record occupancy (99% for 2008/09) - Robust forward reservations (65% for 2009/10 already) - Continuing rental growth (9.5% for 2008/09) Challenging year for financing and valuations - Valuation declines despite rising rents
Slide 3: Headline Results
HEADLINE RESULTS 2008 2007 Net Asset Value Basic 258p 364p Adjusted fully diluted 325p 410p Earnings and dividend Adjusted profit before one-off items £(5.7)m £(3.6)m Final / Interim dividend Nil/0.83p 1.67p/0.83p Portfolio and gearing Total operating portfolio (beds) 36,700 37,522 Investment portfo
Slide 4: Continuing strong rental growth
Continuing strong rental growth Market underpinned by growing demand Rental growth history - First year intake for 2008/09 up 10.4% year-on- 700 600 year (43,000 extra students) 500 - Applications for 2009/10 up 7.8% as at 16 Feb 400 300 2008/09 record occupational performance 200 100 - 99% occupanc
Slide 5: Investment activity and yields
Investment activity and yields Transaction volumes robust for majority of 2008 Net initial yields - UNITE and IPD - Total volume c.£550m (2007: £700m) 8.00% - UNITE sold £325m of assets at average NOI 7.00% 6.00% yield of 5.9% (inc £171m to USAF) 5.00% - USAF sold £63m of assets at average NOI yield
Slide 6: Portfolio weighting and typical stabilised yield
PORTFOLIO WEIGHTING 30 June 06 31 Dec 07 31 Dec 08 £m % £m % £m % London 157 12% 380 30% 447 40% Major provincial 727 55% 460 37% 422 37% Other provincial 395 30% 331 26% 169 15% Varsity cities 35 3% 82 7% 85 8% 1,314 1,253 1,123 7.00 6.75 Typical Stabilised Yield 6.50 6.35 6.00 6.00 5.90 6.00 5.75
Slide 7: Development activity
Development activity In response to market conditions, the Group substantially scaled back its development commitments in Q4 2008, to preserve cash Committed Developments (fully funded) Bed Spaces Total costs Costs to Equity Commitment Average NOI complete yield on cost Total Invested Remaining £m £
Slide 8: Operating cost and overhead efficiency programme
Operating cost and overhead efficiency programme 2008 Total UNITE Operational “Blueprint” programme launched in cost base savings % share January 2008 with target of £10m annual savings £m £m £m - On track for full delivery by Q3 2009 Cost of Sales Operating portfolio 49 6 12% 3 Development and UMS
Slide 9: Net asset value Movement
Net asset value Movement 410 23 pps NAV Per Share 2008 2007 pps pps 400 (21) NAV per share (IFRS) 258 364 380 NAV on assets held at 23 32 costs 360 Provision for deferred - 11 (57) tax 4 (12) MTM of interest rate 46 6 340 (5) (4) hedgings (9) 325 Adjusted NAV per share 327 413 (4) 320 Fully diluted
Slide 10: Portfolio performance
PORTFOLIO performance 2008 2007 2006 Operational bed spaces 36,700 37,522 33.944 £m £m £m Total NOI 98.8 88.4 77.2 UNITE’s share of NOI 53% 64% 90% UNITE’s NOI 52.0 56.7 69.8 Management fee income 4.9 6.9 1.1 UNITE’s share of finance costs (42.3) (44.5) (43.1) Operational and corporate overhead (20.
Slide 11: Profit and Loss Account
PROFIT AND LOSS Account 2008 2007 £m £m Net portfolio contribution (5.4) 1.7 Development segment recurring 0.2 (3.8) Tax and share of JV costs (0.5) (1.4) Adjusted loss before one-off items (5.7) (3.6) Restructuring costs (4.8) - Land write-downs (27.7) - Share of Landsbanki provision (6.1) - Share
Slide 12: Co-investment vehicles
Co- Co-investment vehicles USAF UCC USV USAF £58m capital raise GAV £m 897 367 56 £65m asset sales and £171m acquisition Full provision for Landsbanki deposit Borrowings/other net (484) (252) (48) assets UCC Development pipeline now complete NAV £m 413 115 8 USV LTV 53% 64% 79% Lehman Brothers place
Slide 13: Debt financing - summary
Debt financing - summary Financing stable following severe impact of banking crisis Cash preservation activities generating cash to - All banking covenants being met manage LTVs within covenant limits - All 2009 and 2010 development pipeline financed Net debt reduced during the year - Facilities in
Slide 14: Debt financing – covenant compliance
Debt financing – covenant compliance Financial covenants Cash headroom - LTV Applicable to £289m of investment debt Debt £m - ICR Applicable to all investment debt Cash 111.8 - Minimum net worth Applicable to £157m of debt Held for re-financing (30.8) No LTV or ICR covenants on development debt, but
Slide 15: Managing balance sheet for yield expansion
MANAGING BALANCE SHEET FOR Yield EXPANSION Actively managing risk of further outward yield movement Yield headroom NOI yield movement (bps) in 2009 - LTV covenants 09/10 rental growth 30-40 - Refinancing 2009 completions - Full development capex commitments Available cash (£56.9m) 20-25 Three main m
Slide 16: Summary and outlook
Summary and outlook 2009 focus is on balance sheet protection - Maximising cash generation/preservation within business - Suspending dividend for time being - Delivering rental growth to partially offset expected yield expansion - Continuing asset sale programme (target £150m) Important progress alr
Slide 17: Pioneers of Student Living
PIONEERS OF STUDENT LIVING
Slide 18: What we do
The heart of WHAT WE D 0 student living Equity investment Acquisition As an active asset manager, UNITE continually Understanding where students want to monitors the performance of its portfolio, live, and focusing on high growth markets, identifying disposals of non-core assets. The UNITE is well p
Slide 19: The UK student Market
The UK student Market Strong and growing demand Total Student Growth 2.4m students in UK, of which 1.4m are full time 3,000 Full Time UG Part Time UG Full time student numbers are expected to increase by 2,500 Full Time PG Part Time PG 11% by 2013, underpinned by: 2,000 - Continued favourable custom
Slide 20: The London student Market
The London student Market • The attractive fundamentals of the UK student Proportion of International accommodation sector generally are increasingly well HESA – All Students understood by investors. What is less appreciated is the truly unique position that London holds. 19 26 • London has three im
Slide 21: Differentiating the student experience
Differentiating the student experience Accommodation and Offer - Prime student locations - Online booking and payment - Flat shares for up to 8 people - Single & double studios - Group booking facility - Dedicated Management Teams - No hidden costs (rents inclusive of utilities, internet & insurance
Slide 22: Our top markets
our top 10 markets 2009 2008 City Completed Completed FT Student Projected Rank Rank Beds Beds Numbers Market (09/10) (08/09) (08/09) Share 1 1 London 3,925 3,929 239,140 1.64% 2 2 Sheffield 3,734 3,729 42,255 8.83% 3 3 Liverpool 3,372 3,371 32.815 10.27% 4 4 Bristol 3,193 3,304 35,420 9.01% 5 6 Lee
Slide 23: 2009 development programme
2009 development programme Sky Plaza, Leeds Chalmers Street, Edinburgh Gibson Street, Glasgow Hale Village, London Quantum Court, London Newington Court, London 22
Slide 24: USAF and UCC - key terms
USAF and UCC - key terms USAF UCC History: Multi investor fund formed Dec ‘06 JV with GIC formed March ‘05 Strategy: UK direct let student accommodation London & Edinburgh focus Exclusivity over UNITE pipeline Build a £350m+ portfolio Development led Capitalisation: Target £1bn Target £350m+ GAV Max
Slide 25: Debt Facilities
Debt Facilities UNITE Group Co- Co-investment vehicles £m £m USAF HSH Nordbank 224 - CMBS 280 Fortis 158 - Lloyds 115 RBS 145 - Abbey/ HSH Nordbank 120 515 Bank of Ireland 116 UCC Nationwide 50 - HSH Nordbank 300 Anglo Irish * 300 USV Others 147 - Lehmans 36 1,140 - Natixis 12 48 *Following the rece
Slide 26: NNNAV
nnnav 2008 2007 £m £m Net assets 320 450 Valuation gains not recognised on 29 39 properties held at cost Fair value of fixed rate debt (7) - Deferred tax (6) (11) NNNAssets 336 478 NNNAV per share 270p 387p 25
Slide 27: Operating and investment portfolio
OPERATING AND INVESTMENT PORTFOLIO Gross ………………… UNITE share of investment assets (£ (£m)…… m)…….. ……..… ..…..… ..… Stake Beds Stabilising Stabilised GAV Debt NAV Wholly owned 9,885 203 281 484 (354) 130 Leased 4,005 - - - - - USAF share 19% 18,563 - 166 166 (89) 77 UCC share 30% 2,864 - 117 117 (75
Slide 28: Unite parents vs UK population
UNITE PARENTS VS UK POPULATION 35.2 33.6 29.7 31.2 23.7 23.2 18.0 19.3 15.7 15.2 13.9 12.0 10.6 9.4 9.3 Ha r d P r e sse d M ode r a t e M e a ns Comf or t a bl y Of f Ur ba n P r ospe r i t y We a l t hy Ac hi e v e r s UK P opulation Unite London Unite UK (ex London) Source: CACI Hard Pressed Mode