UNITE Group plc · LSE:UTG
UNITE — FY2009 Earnings Presentation
23 slides from UNITE's earnings presentation, February 2010
Slide 1: The UK's leading developer and manager of student accommodation
The UK UK’ss leading developer and manager of student accommodation Preliminary Results Year ended 31 December 2009
Slide 2: Overview of 2009
Overview of 2009 Financial Highlights Profitable operating business b siness 2009 2008 Balance sheet strength and flexibility improved Earnings - Asset A t sales l and d jjoint i t venture t att good d prices i Total portfolio £164m £144m income - Front foot equity issue Net portfolio £0.6m -£5.
Slide 3: Investment Market Outlook
Investment Market Outlook Increased yield range in sector 8.5% 8 5% UNITE vs IPD All Property p y NIY 8.0% 7.5% UNITE portfolio average NOI yield 6.7% 7.0% 6.5% ((June 2009: 6.8%)) 6.0% 5.5% 5.0% Investor demand for secure income and 4.5% 4.0% 3.5% diversified direct let exposure 3.0% YE 2004
Slide 4: Occupational Market Outlook
Occupational Market Outlook Demand-supply pp y imbalance remains Full‐time Full time Students studying in UK 1,600,000 - Applications for 2010/11 up 23% as at 8 February 2010 1,400,000 pp y of c.4,000 - Limited new supply , beds for 2010/11 1,200,000 Solid rental growth prospects 1,000,000 mbers
Slide 5: Strategy
Strategy Three strategic objectives 1. Increase value of student accommodation investments 2. Grow profits from management of portfolio 3. Leverage competitive advantage Four drivers of g growth Grow profits Increase value Leverage f from off student competitive management investments advantage Targ
Slide 6: Development Activity
Development Activity Beds Completed Capex in Costs to NAV to Stabilised beds value period complete recognise yield on £m £m £m £m cost 2009 Deliveries 2,853 294 101 - - 7.2% 2010 D Deliveries li i – UNITE share h 1 119 1,119 49 8 11 3 8 3% 8.3% F t Future activity ti it 900 beds secured in London
Slide 7: UNITE UK Student Accommodation Fund
UNITE UK Student Accommodation Fund Successful S ccessf l £167m capital raise in December 2009 USAF has £200m to £250m of investment capacity at 50% to 55% LTV - Up p to £100m third p party y acquisitions q - Further UNITE pipeline acquisitions in due course Benefits of USAF to UNITE: - Well W
Slide 8: Net Asset Value Bridge
Net Asset Value Bridge NAV (pence per share) 450 400 350 58 (71) 300 ((26)) 1 3 1 ((3)) (6) ((2)) (1) (4) (10) 325 250 286 276 265 200 7
Slide 9: Portfolio Movement – UNITE share
Portfolio Movement – UNITE share Investment : Development analysis £m Geographic split Leasing analysis Indicative yields London Provincial Direct let 6.25-6.75% 6.75-7.5% Nominations / leases 5.75-6.25% 6.0-6.75% 8
Slide 10: Net Portfolio Contribution
Net Portfolio Contribution 2009 2008 % • Significant improvement in performance £m £m change g from investment segment Total income 164.3 143.8 14% • Strong rental growth and occupancy performance UNITE share of rental 81.9 78.2 5% i income • Positive P iti iimpactt off Blueprint Bl i t programme UN
Slide 11: Income Statement
Income Statement Income Statement 2009 2008 Development Segment £ £m £ £m £m Write down of land and development assets 15.7 Net portfolio contribution 0.6 (5.4) UMS loss (due to surplus capacity) 1.1 Development p segment g ((16.8)) ((27.5)) Restructuring costs (3.0) (4.8) Development segment result
Slide 12: Capital Structure
Capital Structure • Strengthened balance sheet Key y debt statistics 2009 2008 - Operational performance - £246m asset sales including OCB JV Adjusted net debt £390m £531m - Extended debt maturities Adjusted gearing 92% 131% - Placing and open offer with little dilution Average cost of debt - £220m
Slide 13: Co-investment Vehicles
Co investment Vehicles Co-investment USAF UCC USV OCB USAF GAV (£m) 1,003 370 59 124 £167m equity raised in December Borrowing / other assets (407) (252) (45) (62) Acquired £95m assets from UNITE (£m) 6th best performing fund in the IPD Pooled Adjusted NAV (£m) 596 118 14 62 Property Funds Ind
Slide 14: Summary and Outlook
Summary and Outlook Profitable operating business established - Strong rental growth - ‘Blueprint’ change programme Balance sheet strength and flexibility improved - Self-help initiatives successful - Placing and open offer with little dilution - Significant ‘take out’ capacity in USAF Changes
Slide 15: Pioneers of Student Living
PIONEERS OF STUDENT LIVING
Slide 16: 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. • London has three importan
Slide 17: 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 18: Our top 10 markets
Our top 10 markets 2009 2008 City Completed Complete FT Projected Rank Rank Beds d Beds Student Market (09/10) (08/09) Numbers Share (07/08) 1 1 London 5,327 3,925 254,445 2.1% 2 2 Sh ffi ld Sheffield 3 734 3,734 3 734 3,734 42 250 42,250 8 8% 8.8% 3 3 Liverpool 3,372 3,372 37.955 8.9% 4 5 Leeds 3,1
Slide 19: 2009 development programme
2009 development programme Blithehale Court, London Gibson Street, Glasgow Sky Plaza, Leeds Charlton Court Court, Bath Emily Bowes Court, London 18
Slide 20: Co-investment vehicles – key terms
Co-investment 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 as
Slide 21: See through balance sheet and income statement
See through balance sheet and income statement December 2009 Group USAF UCC USV Total Devt Devt Group Adjusted £m £m £m £m Investment OCB Group £m total £m £m £m £m Property 625 164 111 29 929 31 39 - 999 Net debt (355) (64) (74) (20) (513) (12) (35) - (560) Other assets 9 (3) (2) (2) 2 (3) (15) - (
Slide 22: Debt facilities
Debt facilities UNITE Group Co-investment vehicles £m £ £m USAF Fortis 180 - CMBS 280 HSH Nordbank 155 - Lloyds 115 - Abbey/ HSH Nordbank 106 Bank of Ireland 100 501 UCC Nationwide 100 - HSH Nordbank 300 RBS 82 USV - Lehmans L h 35 Deutsche Postbank 50 - Natixis 12 47 Others 76 Development JV 743 -
Slide 23: NNNAV
NNNAV Dec 2009 Dec 2008 £m £m Net assets 366 320 Valuation gains not recognised on 18 29 properties held at cost Fair value of fixed rate debt (6) (7) Deferred tax - (6) NNNAssets 378 336 NNNAV per share 237p 270p 22