UNITE Group plc · LSE:UTG
UNITE — FY2010 Earnings Presentation
27 slides from UNITE's earnings presentation, 2011
Slide 1: Preliminary Results, Year ended 31 December 2010
The UK’s leading developer and manager of student accommodation Preliminary Results Year ended 31 December 2010
Slide 2: Highlights
Highlights Adjusted NAV up 11% to 295pps 31 Dec 31 Dec - Stabilised portfolio values up 5% 2010 2009 - £25m of development profit recognised Adjusted NAV 295p 265p Net Portfolio Contribution increased to £4.1m - Rental and occupancy growth NPC £4.1m £0.6m - NOI margin constant Good development
Slide 3: Strategy and market
The heart of student living Strategy and market
Slide 4: Market view
Market view Full time student number growth Demand for purpose built accommodation will remain strong for foreseeable future - 160,000 more applicants than places 2010 - Capital and planning constraints will limit new supply - Important to understand variations at city level UNITE customer base
Slide 5: Strategy
Strategy Effectively aligned to market dynamics - Investment focused in strongest student locations, particularly London - Financial capacity and in-house expertise to undertake attractive developments - Half of London development pipeline positioned at value end of spectrum Intent to grow NPC a
Slide 6: Financial review
The heart of student living Financial review
Slide 7: Financial highlights
Financial highlights 2010 2009 Income Statement Net portfolio contribution £4.1m £0.6m Adjusted profit /(loss) £2.4m (£28.7m) Profit / (loss) before tax £19.6m (£34.9m) Balance Sheet NAV (adjusted, fully diluted per share) 295pps 265pps Adjusted net debt £335m £390m Adjusted gearing 71% 92% See-thro
Slide 8: NAV bridge
NAV bridge student living }UMUND; The heart of Pence per share 300 290 280 270 260 250 31-Dec-09 Rental Growth Yield Compression _Disposals Development NPC UMS Loss 31-Dec-10
Slide 9: Constituents of NAV
Constituents of NAV 31 December 2010 31 December 2009 Wholly Share of Wholly Share of Typical owned JVs Total owned JVs Total NOI yield £’m £’m £’m £’m £’m £’m Investment portfolio London 6.25% 162 172 334 245 113 358 Major Provincial 6.5% 204 179 383 259 155 414 Provincial 6.75% 127 40 167 121 36 1
Slide 10: Net Portfolio Contribution
Net Portfolio Contribution 2010 2009 % change Rental growth and additional beds driving £‟m £‟m top line growth Total income 188.9 164.3 15% Cost pressure from utilities offset by UNITE share of rental income 89.0 81.9 9% efficiencies in operating model UNITE’s share 47% 50% Finance costs refl
Slide 11: Income Statement
Income Statement 2010 2009 £‟m £‟m Net Portfolio Contribution 4.1 0.6 Development pre-contract costs (3.2) (0.7) Development trading profits/write-downs 6.9 (15.3) UMS loss due to surplus capacity (4.8) (1.1) Swap break costs - (9.6) Restructuring costs - (3.0) Other (0.6) 0.4 Adjusted profit/(loss)
Slide 12: Investment portfolio
Investment portfolio Relative yield performance Valuation factors Yield compression of 13bps across portfolio - Portfolio average yield of 6.6% - Yield range widening Rental growth of 3.1% Value-add opportunities continuing to emerge - £6m capex in 2010 delivered £7m NAV uplift (UNITE share £3
Slide 13: Capital structure
Capital structure Key debt statistics Financing position remains robust Dec 10 Dec 09 Net debt £335m £390m - Net debt and gearing at sustainable levels Net gearing 71% 92% Banks remain supportive of student See through gearing 115% 133% accommodation Adjusted LTV 53% 59% Debt maturities extend
Slide 14: Built-out Balance Sheet
Built-out Balance Sheet 31 Dec Development Built out Balance sheet headroom to complete pipeline 2010 development plan £‟m £‟m £‟m Property 631 303 934 Debt facilities in place to complete secured Share of JV‟s NAV 172 172 pipeline – £231m of undrawn capacity Cash headroom 83 (39) 44 Completin
Slide 15: Co-investment vehicles
Co-investment vehicles USAF UCC USV OCB USAF: established track record, size, 31 December 2010 £‟m £‟m £‟m £‟m diversification GAV (£‟m) 1,231 379 63 180 - Acquired £170m of property in 2010 Borrowing / others (£‟m) (595) (252) (44) (102) - Portfolio valued £1.25bn Adjusted NAV (£’m) 636 127 19 78
Slide 16: Operational review
Operational review The heart of student living 15
Slide 17: Development pipeline
Development pipeline Total Capex Completed development in Capex NAV Stabilised Beds value cost period remaining remaining yield on cost £‟m £‟m £‟m £‟m £‟m 2011 1,277 100 85 36 26 6 8.3% 2012 1,341 172 127 37 90 29 9.2% 2013-14 1,452 152 118 - 118 34 9.0% Total 4,070 424 330 73 234 69 9.0% Secured
Slide 18: UNITE Modular Solutions
UNITE Modular Solutions £4.8 million loss due to surplus capacity - £4.6 million arose in first half Pipeline of third party opportunities enhanced - Two contracts secured - Healthy pipeline of other opportunities - Student accommodation, budget hotel and residential sectors Improved outlook f
Slide 19: Summary and outlook
Summary and outlook Good progress against all strategic objectives - Growth in NAV and NPC - Development pipeline growing - Effective capital and liability management Business and strategy well positioned for future - Strong and diverse portfolio supports rental growth outlook - Attractive custo
Slide 20: Pioneers of Student Living
PIONEERS OF STUDENT LIVING
Slide 21: The London student market
The London student market London has three important characteristics that Proportion of International distinguish it from the wider UK market HESA – All Students - A full time student population (266,000) that is larger than the next five largest student markets combined - An incredibly low supply
Slide 22: Differentiating the student experience
Differentiating the student experience UNITE‟s accommodation and offer - Prime student locations - Online booking and payment - Multi-lingual telephone booking line - Flat shares for up to 8 people - Single & double occupancy studios - Group booking facility - Dedicated management teams - No hidden
Slide 23: Our top 10 markets
Our top 10 markets 2010 2009 City Completed Completed FT Projected Rank Rank Beds Beds Student Market (10/11) (09/10) Numbers Share (09/10) 1 1 London 6,586 5,327 284,036 2.3% 2 2 Sheffield 3,734 3,734 46,325 8.1% 3 3 Liverpool 3,372 3,372 40,720 8.3% 4 4 Leeds 3,137 3,137 52,371 6.0% 5 5 Bristol 2,
Slide 24: See through balance sheet and income statement
See through balance sheet and income statement Wholly owned USAF UCC USV OCB Total £‟m £‟m £‟m £‟m £‟m £’m Balance sheet Rental Properties 493 201 114 31 45 884 Properties under development 138 - - - - 138 Net debt on completed (335) (94) (74) (20) (24) (547) properties Other assets/(liabilities) 7
Slide 25: Debt facilities
Debt facilities On-balance sheet Co-investment vehicles USAF Facility Drawn Maturity LTV Facility Drawn Maturity LTV Amount @ 31 Lloyds 115 115 2012 51% Dec HSH / Abbey 106 106 2013 44% Investment £‟m £‟m CMBS 280 280 2014 52% Bank of Ireland 100 100 2013 58% Santander 62 50 2015 50% HSBC 75 62 2015
Slide 26: Co-investment vehicles – key terms
Co-investment vehicles – key terms USAF UCC OCB JV History: Multi investor fund formed Dec JV with GIC formed March 05 JV with OCB formed August 09 06 Strategy: UK direct let student London & Edinburgh focus Build and operate 3 London accommodation Build a £350m+ portfolio assets Exclusivi
Slide 27: NNNAV
NNNAV Dec 2010 Dec 2009 £m £m Net assets 387 366 Valuation gains not recognised on properties held 37 18 at cost Fair value of fixed rate debt (6) (6) Deferred tax - - NNNAssets 418 378 NNNAV per share 261pps 237pps 26