UNITE Group plc · LSE:UTG
UNITE — FY2007 Earnings Presentation
27 slides from UNITE's earnings presentation, 2008
Slide 1: Preliminary Results 2007
Preliminary Results 2007 Year ended 31 December 2007 4 BUR OM ee 7, Tie Be Dee wf Urban Lifestyle ~ Friendly People ~ Student Living ~ In great locations With your friends On hand to help INVESTOR IN PEOPLE
Slide 2: Key themes
Key themes Strong progress against strategy - Completion of USAF and strong fund performance - Deepened pipeline in London and high quality University markets - Redemption of UFO completed and good progress on asset management and financing plans - Business model transition to be substantially compl
Slide 3: Headline results
Headline results Dec 07 Jun 07 Dec 06 Net Asset Value Basic NAV per share (IFRS) 364p 417p 391p Adjusted NAV per share 413p 463p 428p Adjusted NAV per share (fully diluted) 410p 460p 425p Adjusted NAV per share (fd (fd) fd) pre- pre-UFO 456p 460p 425p Earnings Investment segment revenue £69.9m £93.8
Slide 4: Market update
Market update IPD All Property Student Market Investment Market UNITE completed portfolio 7.0% Demand Update 6.5% Applications up 6.7% for 2008/09 academic 6.0% year 5.5% Yield Drivers of growth continue to be: 5.0% - Demographics 4.5% 4.0% - Government policy 3.5% - International students 3.0% Dec
Slide 5: Delivering our strategy - USAF
Delivering our strategy - USAF Beaumont Court, The Plaza, Leeds London Strong fund performance in 2007 - 13% total equity return - £3.8m performance and management fees - Over £155m equity capital released for UNITE Targeting further capital raise during 2008 - £150m remaining investment capacity to
Slide 6: Delivering our strategy – Shift to London, high quality markets and development
Delivering our strategy – Shift to London, high quality markets and development UNITE share of gross assets 30 June 06 31 Dec 07 £m % £m % London 157 12% 380 30% ↑ 18% Major provincial 727 55% 460 37% ↓ 18% Other Provincial 395 30% 331 26% 4% ↓4% Varsity Cities 35 3% 82 7% 4% ↑4% Total 1,314 1,253 D
Slide 7: Delivering our strategy – Deepening pipeline with focus on quality
Delivering our strategy – Deepening pipeline with focus on quality Secured in period Significant acquisition activity in year Year to Dec 07 6m to Jun 07 - 2,901 beds secured for future delivery Beds Est Value Beds Est Value - Have reduced development exposure in provincial £m £m cities in H2 2008 L
Slide 8: The Development portfolio
The Development portfolio Secured Future Developments Beds Completed Value £m Average Stabilised Yield 2008 - UNITE 3,178 234 5.67% 2008 - JV 729 184 5.10% 3,907 418 5.42% 2009 - UNITE 3,931 440 5.40% 2010+ 2,326 299 5.41% 10,164 1,157 5.41% Built- Built-out adjusted NAV Secured Pipeline by value £m
Slide 9: Operating update – Increasing Competitive Advantage
Operating update – Increasing Competitive Advantage Sales performance for 08/09 academic year Reservations Beds % reserved % reserved extremely strong 08/09 07/08 -62% of rooms reserved as at 29 February 2008 Minority interests ( 28 Feb 07: 56%) USAF 17,767 55% 51% Strong performance attributable to
Slide 10: Net asset value growth
Net asset value growth NAV Per Share 2007 2007 2006 NAV Growth H107 H207 Total Total Exc UFO reported £m £m £m pps pps pps pps NAV per share (IFRS) 364 364 391 Investment portfolio NAV on development properties 32 32 2 held in current assets - Rental growth 10 2 12 8 Provision for deferred tax 11 11
Slide 11: USAF / joint venture performance
USAF / joint venture performance USAF UCC USV GAV £m 835 344 63 USAF Successful second closing in 2007 Borrowings/other net (389) (219) (47) assets No redemptions until December 2009 – restricted thereafter NAV £m 446 125 16 Further capital raise in 2008 – minimum £125m Gearing¹ 87% 173% 287% Total
Slide 12: Financing - Overview
Financing - OVERVIEW £bn Tightening debt markets 1.6 Good progress increasing financing capacity - £863m new facilities since 1 October 1.4 (£515m additional capacity) 1.2 Available for new development facilities Significant debt capacity £1.4bn - £787m undrawn 1.0 UFO redemption successfully comple
Slide 13: Financing – Redemption of UNITE Finance One Bond
Financing – Redemption of UNITE Finance One Bond STRATEGY PROGRESS Restrictive financing structure preventing proactive Redemption costs in line with interims disclosure asset management strategies Good progress with asset management initiatives Rebase of capital through external sale/transfer to £3
Slide 14: The investment portfolio
The investment portfolio Gross ………………… UNITE share of investment assets (£ (£m)…… m)…….. ……..… ..…..… ..… Stake Beds Stabilising Stabilised GAV Debt NAV Wholly owned 13,154 268 330 598 (409) 189 Leased 3,015 - - - - - USAF share 20% 17,767 - 167 167 (78) 89 UCC share 30% 2,203 - 67 67 (44) 23 USV Sh
Slide 15: Portfolio Performance
Portfolio Performance 08/09 07/08 06/07 2007 Wholly Co- Co- 2007 2006 owned investment Total Total UNITE share £m and vehicles Total beds in operation 40,195 37,522 33,944 leased Rental income 62.8 19.5 82.3 97.9 Occupancy (% of n/a 92% 91% available rooms) Direct expenses (20.5) (5.1) (25.6) (28.1)
Slide 16: Adjusted Profit
Adjusted Profit 2007 2006 £m £m Portfolio Profit 7.5 8.0 Corporate Costs (including pre contract costs) (9.7) (9.2) Tax and share of JV costs (1.4) (1.1) Adjusted profit/(loss) before one- one-off items (3.6) (2.3) Costs associated with UFO redemption/USAF set up (57.4) (9.2) Interest rate swap gain
Slide 17: Summary and outlook
Summary and outlook Developer-manager business model - Strong progress in 2007 - Expect to substantially complete in 2008 Robust valuation outlook for student accommodation - London direct let strongest - University agreements slightly less resilient - Reflected in UNITE’s strategy Good pipeline vis
Slide 18: Pioneers of Student Living
PIONEERS OF STUDENT LIVING
Slide 19: What we do
WHAT WE DO Ca Lo — (Co-Invest Investing in our pipeline Equity raised from asset sales into the UNITE UK Student Accommodation Fund enables UNITE to deepen its forward pipeline of development. UNITE UK Student Accommodation Fund The Fund is in a unique position to acquire properties from the UNITE p
Slide 20: A different student experience
A different student experience Accommodation - prime city centre locations - 1-6 bed flats - mainly en-suite bedrooms - apartments, halls & villages Management - marketing, sales and lettings - facilities management - multiple stakeholders - account management - operating platform - systems The Heig
Slide 21: Our top markets
our top 10 markets 2008 2007 City Completed Completed FT Projected 3Yr Growth Rank Rank Beds Beds Student Market in FT (08/09) (07/08) Numbers Share Student (05/06) Numbers 1 4 London 3,931 3,039 218,405 2% 14% 2 1 Sheffield 3,734 3,734 40,390 9% 6% 3 2 Liverpool 3,371 3,453 37,080 9% 8% 4 3 Bristol
Slide 22: Completed properties 2007
Completed properties 2007 Corfe House, Poole Forge II, Sheffield Callice Court, coventry Panmure Court, Edinburgh Charles Morton court, London Phoenix Court, Bristol THE ANVIL, Sheffield Piccadilly Point, William Morris halls, Loughborough Manchester Raglan Court, Coventry 21
Slide 23: Modular construction
Modular construction 70% modular completions in 2007 (2006: 63%) Delivery time, cost and quality control 180,000 sq ft production area Produces modular bedrooms, kitchens and ancillary components New technology allows building elevations up to 10 storeys Riverside Point - Completed September 2006 So
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: Lease types
Lease types Leases Direct Let Nominations Agreements Conventional structures Full benefit of market Off balance sheet lease for - 15+ years demographics University - annual uplifts fixed/RPI- - strong rental growth - hybrid solution linked - high occupancy Similar features to leases Lower yields ref
Slide 26: Key Banks
Key Banks Available facilities Facility Type Wholly- Wholly-owned assets £m Anglo Irish Bank 300 Development and investment revolving facility HSH Nordbank 273 Development and investment revolving facilities Royal Bank of Scotland¹ 256 Development and investment revolving facilities Fortis 192 Devel
Slide 27: NNNAV
nnnav 31 Dec 2007 31 Dec 2006 £m £m Net assets 450 481 Valuation gains not recognised on 39 2 properties held at cost Fair value of fixed rate debt - (10) Deferred tax (11) 3 NNNAssets 478 476 NNNAV per share 387p 386p 26