UNITE Group plc · LSE:UTG
UNITE — FY2006 Earnings Presentation
25 slides from UNITE's earnings presentation, March 2007
Slide 1: Preliminary Results 2006
Preliminary Results 2006 Year ended 31 December 2006
Slide 2: Key themes
Key themes • Strong Net Asset Value growth - 17% increase in adjusted NAV per share - Underlying 21.5% growth before UNITE UK Student Accommodation Fund set up costs • Sustainable business model established - Europe’s largest dedicated fund established - Improved flexibility and cost of capital base
Slide 3: Headline results
Headline results 2006 2005 Change Net asset value Basic NAV per share (IFRS) 391p 314p ↑ 25% Adjusted NAV per share 428p 367p ↑ 17% Adjusted NAV per share (fully diluted) 425p 363p ↑ 17% Earnings Profit before tax £58.6m £28.1m ↑ £30.5m Adjusted profit/(loss) before tax £(14.3m) £3.4m ↓ £17.7m Manag
Slide 4: Market update
Market update Student demand Projected demand for student accommodation • Overall demand - 1.4 million full time students Students demanding accommodation 1,250 • Drivers of growth: demographics, Government 1,200 policy, international and EU students 000's • Student funding regime introduced in 20
Slide 5: 2006 achievements
2006 achievements •Managed portfolio increased 10% to 33,944 beds - Customer service awards - Scalability initiatives progressed - Proactive portfolio management •Business reorganised along “city centric” lines - London and UK teams •Increased utilisation of modular building technology - 63% of new
Slide 6: The development portfolio
The development portfolio Secured future developments Completed Beds Value £m 2007 – UNITE 3,090 182 – JV 601 59 3,691 241 2008 – UNITE 2,596 209 – JV 1,105 134 3,701 343 2009 + 4,086 281 11,478 865 Built out NAV Modular £m fd pps 70% 60% NAV to recognise: wholly-owned 82 66 50% NAV to recognise JVs
Slide 7: A sustainable business model
A sustainable business model DEVELOPMENT STABILISING ASSETS STABILISED INVESTMENT PORTFOLIO Base portfolio acquisition UNITE BALANCE - £115m complementary portfolio UNITE Finance One Portfolio (“UFO”) - Rental growth strategy Development activity - Predominantly pre-2002 SHEET - £175m per annum - In
Slide 8: Balance Sheet - Portfolio Analysis
Balance Sheet - Portfolio Analysis UNITE share of assets (£m) Stake Stabilising Stabilised GAV Debt NAV Wholly owned 217 440 657 (412) 245 USAF share 39% - 196 196 (109) 87 UCC share 30% 7 45 52 (34) 18 USV share 50% 50 - 50 (39) 11 275 680 955 (594) 361 Development assets 75 (wholly owned and share
Slide 9: Valuation yields & financing costs
Valuation yields & financing costs Average portfolio initial yields 5.7% 6.0% 5.0% 4.0% Stabilising Stabilised USAF USAF Properties Properties Properties Dividend Yield Average Cost of Debt UNITE wholly owned 6.7% UCC 5.6% USV 5.8% USAF 5.2% 8
Slide 10: 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 • London & Edinburgh focus accommodation • Build a £350m+ portfolio • Exclusivity over UNITE pipeline • Development led Capitalisation: •Target £1bn • Target £
Slide 11: 2006 NAV growth
2006 NAV growth Key Indicators Dec 06 Dec 05 NAV growth components pps pps £m pps %NAVPS Investment portfolio fd Reported NAV per share 391 314 NAV on developments - 2 - Net rental growth 15 12 3% properties held in current assets - Yield compression 55 43 12% Provision for deferred tax 36 38 MTM of
Slide 12: Portfolio performance
Portfolio performance 2006 performance 2006/07 Academic Year Dec 06 Dec 05 06/07 05/06 £m £m Gross rental income 92.3 81.1 Total beds in operation 33,944 30,729 Direct operating costs (27.3) (22.9) Occupancy 91% 94% Rentals under sale and (6.5) (3.1) 50 + week tenancies 6,428 4,095 leaseback Portfol
Slide 13: Adjusted Profit
Adjusted Profit 2006 2005 £m £m Portfolio operating profit (inc JVs) 50.9 48.0 Net interest charge (42.9) (42.7) Portfolio profit 8.0 5.3 Non rental profits - 5.2 Pre contract costs (4.1) (2.2) Corporate costs (6.0) (5.0) USAF set up costs (12.1) - Other items (0.1) 0.1 Adjusted profit (loss) before
Slide 14: UNITE's strategy for growth
UNITE’s strategy for growth • Maximise our unique combination of skills to deliver sustainable growth - Acquisition, development and planning expertise - Market leading modular building technology - Customer focused professional management • Over the next five years we aim to double the size of our
Slide 15: Summary
Summary Strong NAV performance Transformed business and financing model Asset class firmly established A clear strategy for growth 14
Slide 16: Appendices
Appendices Our property portfolio NNNAV Debt Base Limited acquisition A different student experience Completed properties UNITE Top 10 Markets Lease types Modular construction 15
Slide 17: Our property portfolio
Our property portfolio Beds Properties Completed value Completed Portfolio: £m 2005 and prior 13,375 60 575 2006 completions 1,803 4 82 Joint venture properties 3,992 12 274 USAF properties 11,759 33 505 30,929 109 1,435 Beds under management 3,015 8 - Development portfolio: 2007 - UNITE 3,090 9 182
Slide 18: NNNAV
NNNAV 2006 2005 £m £m Net assets 481.2 382.7 Fair value of fixed rate debt (10.4) (22.1) Deferred tax 3.1 6.6 NNNAssets 473.9 367.2 NNNAV per share 385p 302p 17
Slide 19: Debt
Debt 31 Dec 31 Dec 2006 2005 Net Debt £411m £739m Adjusted gearing 78% 162% Adjusted see through gearing 111% 172% Average life of investment debt 8.0 yrs 8.2 yrs Average cost of investment debt 6.7% 6.6% %hedged/fixed 72% 95% 18
Slide 20: Base Limited acquisition
Base Limited acquisition £114.5 million acquisition Acquisition Portfolio of 5 operational properties: cash locations consideration of £76.4 million − estimated net annual income of £3.7 million Option to buy Manchester property in development for £38.1 million − estimated net annual income of
Slide 21: 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 − st
Slide 22: Completed properties
Completed properties Beaumont Court, The Plaza, Leeds London Somerset Court, London Portsburgh Court, Edinburgh The Bakery, Cardiff Riverside Point, Nottingham Central Quay, Sheffield 21
Slide 23: UNITE Top 10 Markets
UNITE Top 10 Markets 3 Yr Growth FT Student Projected 2006 2005 Completed Completed in FT City Numbers Market Rank Rank Beds 12/06 Beds 12/05 Student (05/06) Share 12/06 Numbers 1 3 Sheffield 3,132 2,365 40,390 8% 6% 2 1 Bristol 3,080 3,080 33,865 9% 10% 3 2 Liverpool 2,833 2,833 18,590 15% 8% 4 5 L
Slide 24: Lease types
Lease types Leases Direct Let Nominations Agreements Conventional structures Full benefit of market Off balance sheet lease - 15+ years demographics for University - annual uplifts - strong rental growth - hybrid solution fixed/RPI-linked - high occupancy Similar features to Lower yields r
Slide 25: Modular construction
Modular construction 63% modular completions in 2006 (2005: 51%) 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 Septemb