Empiric Student Property plc

Transcription

1 Premium Student Accommodation in the UK Empiric Student Property plc Interim Results Presentation September 2017

2 Agenda and Presentation Team Section Page Paul Hadaway, RIBA Founder and CEO Highlights and Company Development 3 Financial Results 14 Outlook 18 Tim Attlee, MRICS Founder and CIO Appendix 20 Lynne Fennah, FCA Chief Financial Officer Empiric Student Property 2

3 HIGHLIGHTS AND COMPANY DEVELOPMENT

4 Financial Highlights for the Six Months to 30 June 2017 Financial Results 3.05 pence dividend paid for the six months ended 30 June 2017 (3.05 pence for the six months ended 31 December 2016) Number of Beds Operating profit of 20.2 million (H2 2016: 20.2 million) 9, million rental income from standing assets (H2 2016: 19.2 million) 13.0 million revaluation gain (H2 2016: 14.5 million) NAV per share (basic) of pence 0.08% decrease from a NAV of pence (basic) as at 31 December 2016 net of all property acquisition costs 7,396 1,139 8,504 8, , Financing 1,726 LTV of approximately 36% as at 30 June 2017 Agreed a new 10 million three year unsecured loan, which has been drawn down Portfolio Value 3, ,775 6,833 7,841 Total property portfolio valuation of million as at 30 June 2017 (31 December 2016: million) Total valuation uplift of 96.6 million (13.4%) for the period compared to 31 December 2016 Market Cap and Trading Current market capitalisation of million (1) and average daily trading volume of 1.1 million (2) 4,531 2,990 Jun-15 Jun-16 Dec-16 Jun-17 Sept 17 Operational as at date Operational for next academic year Operational for later years (1) As at 11 th September 2017 (2) Average daily trading volume for the period 1 January to 30 June 2017 Picturehouse apartments, cinema Empiric Student Property 4

5 Operational Highlights for the Six Months to 30 June 2017 Portfolio Activity 90 assets in 30 prime university cities and towns at 30 June 2017, 75 of which were operational and 15 more for later years (31 December 2016: 89 assets) 6,833 operational or revenue generating beds at 30 June 2017 with additional 758 due to be operational for the 2017/18 academic year, and 1,171 for later years One new operating asset and one forward funded asset contracted in the period comprising 326 beds Assets on the Hello Student platform increased by 20 to 56 during the period Hello Student will be marketing and/or managing 61 operational buildings for the 2017/18 academic year Post Period End Highlights Raised gross proceeds of 110 million, reflecting strong support from existing and new shareholders Exchanged contracts / acquired two standing assets and two development sites consisting of 414 beds (2) at a cost of 51.2 million Rent Gross annualised rent on 84 operating properties of 66.8 million for the 2017/18 academic year (31 December 2016: 52.1 million) Yield Targeted average annualised rental uplift of 2.8% for the 2017/18 academic year Average valuation yield of 5.8% (31 December 2016: 5.9%) and acquisition yield of 6.9% (31 December 2016: 6.5%) for the operating properties 0% Operating Platform % of Operating Buildings Marketed and/or Managed by Hello Student 35% 48% Hello Student Marketing and/or Managed 69% Jun-15 Jun-16 Dec-16 Jun-17 Sept % Third Party Managed (1) On the basis of 97% occupancy or more (2) In addition, pre-application discussions underway with local council about a development of more than 325 beds in The Franciscan International Study Centre in Canterbury Empiric Student Property 5

6 Number of Beds Our Strategy 2025 Plan Our strategy enables us to respond in a targeted and distinctive way, opening up new channels and stock types which will add value to students, our business and our shareholders It facilitates selectively consolidating, broadening and diversifying our property exposure across a broader spectrum of the sector evolving from a niche operator to a multi-niche operator Premium Studio and Small Groups Premium Houses Affordable Apartments University Rooms Studios and 2 to 3 bed flats in central, attractive locations near good universities A hybrid model emerging from HMOs and university townhouses Addressing the need for more affordable residences Providing alternative solutions to universities on and off campus Dispersion of Number of Beds per Weekly Rent Boundary by Room Type /week Empiric (Standard) Empiric (Ensuite) Empiric (Studio) Ideal portfolio Picturehouse apartments, cinema Empiric Student Property 6

7 Full-time Students (Rebased to 100 at 2010/11) Full-time Students Our Cities Empiric s portfolio is based in growth cities Empiric s cities attract more non-local students high quality institutions recruit from further afield / /16 growth +8.1% 600, % , % +5.1% , , % , % , / / / / / /16 - UK Regional UK National EU Non EU Empiric's cities National 2010/ /16 Source: HESA Source: HESA 7

8 Our Customers Customers by Level of Study as at 31 October 2016 Customers by Nationality as at 31 October % = Others 19% Postgraduate 26% Undergraduate (First Year) 21% Undergraduate Returner 34% UK based first year students aged under 20, minimising overlap with other national student accommodation companies Age range of Nationalities 55% Female Non-EU 41% EU 10% UK 49% Hello Student Reaches Students Across the Globe 72% engagement from UK 7% engagement from India With Strong Core Based in the UK 7% engagement from UAE 8

9 Hello Student Operating Platform Launched in February city managers and more than 80 nationwide employees More than 5,000 beds migrated to Hello Student since launch Direct benefits to Empiric from increase in scale Significant traction in its second year of marketing All currently owned buildings planned to be on Hello Student platform by September 2018 Customer satisfaction survey carried out with over 3,000 tenants in June buildings (73% of beds) marketed and/or managed through Hello Student at September % year-on-year growth in Hello Student website traffic (1) Attracted c.59,000 traffic hits in August 2017 Achieved rebooking rates of 55% of tenants who were potential rebookers (1) July/August 2016 vs. July/August 2017 Empiric Student Property 9

10 Portfolio Overview 84 operating assets comprising 7,841 beds for the 2017/18 academic year Total portfolio of 94 assets comprising 9,449 beds 10 development assets comprising 1,608 beds Location Beds Value / Cost (2) Location Beds Value / Cost (2) Location Beds Value / Cost (2) 1 Aberdeen 11 Glasgow 21 Nottingham Standing assets Standing assets Standing assets Development assets Bath 22 Oxford Standing assets Hatfield Standing assets Standing assets Birmingham 23 Portsmouth Standing assets Huddersfield Standing assets Development assets Standing assets Reading 4 Bristol 14 Lancaster Standing assets Standing assets Standing assets Development assets Sheffield 15 Leeds Standing assets Canterbury Standing assets Development assets (1) Standing assets Standing asset Leicester 26 Southampton Standing assets Standing assets Cardiff Development assets Standing assets Stirling 17 Liverpool Development assets Durham Standing assets Standing assets Standing asset St Andrews Standing assets Edinburgh 18 London Standing assets Standing assets Stoke-on-Trent Development assets Standing assets Manchester 9 Exeter Standing assets York Standing assets Development assets Standing assets Development assets Falmouth 20 Newcastle Standing assets Standing assets Total as at 30 June , Development assets Total as at 31 August , (1) Practical completion of Trippet Lane, Sheffield, is delayed but the Group benefits from a rental guarantee for the 2017/18 academic year (2) Valuation based on CBRE valuation as of 30 June 2017 where available, or where not, total committed funds Standing assets as at 30 June Development assets as at 30 June 2017 Assets subject to planning for which conditions or planning remained outstanding as at 30 June 2017 Post period acquisitions Empiric Student Property

11 Aberdeen Bath Birmingham Bristol Canterbury Cardiff Durham Edinburgh Exeter Falmouth Glasgow Hatfield Huddersfield Lancaster Leeds Leicester Liverpool London Manchester Newcastle Nottingham Oxford Portsmouth Reading Sheffield Southampton St Andrew Stirling Stoke-on-Trent York Bed Count Operational now Operational from Sept 2018 Operational in future years Empiric Student Property 11

12 Standing Assets as at December 2016 York (Foss Studios) York (Percy's Lane) Glasgow (155 George Street) Manchester (The Chapel) Exeter (Clifton Place) Sheffield (Provincial House) York (Samuel Tuke Apartments) Portsmouth (Europa House) Sheffield (Trippet Lane) Leicester (134 New Walk) Nottingham (The Frontage) Liverpool (Hahnemann Building) Bristol (St Mary's Hospital) Canterbury (Franciscan International Study Centre) Edinburgh (King's Stables Road) Net Initial Yield Analysis Valuation Yield Net Initial Yield / Yield on Cost Acquisitions in H Development and Forward Funded assets now operational Post period acquisitions 10.0% 9.0% Average Yield on Acquisition or Cost: 6.9% Average Valuation Yield: 5.8% (1) 8.9% (3) 8.0% 7.0% 6.0% 6.5% 5.7% 7.4% 6.7% 7.5% 7.1% 7.6% 7.1% 7.7% 7.1% 5.2% 7.2% 6.2% 6.4% (2) 6.2% (3) 5.0% 5.9% 5.7% 6.0% 6.1% 5.5% 5.9% 6.2% 6.0% 6.0% 6.0% 6.1% 5.8% 6.2% 5.5% 5.3% 5.3% 4.0% Note: Includes forward funded or development assets which became operational under Empiric s ownership (1) CBRE valuation of standing and forward funded assets as at 30 June 2017 (2) Projected net initial yield (3) Projected yield on cost Empiric Student Property 12

13 Pipeline and Portfolio Activity London portfolio Unlikely to proceed as a corporate acquisition, a direct property offer is under discussion Five standing assets in Birmingham, Bournemouth, Bristol, Edinburgh, Nottingham 895 beds 5.1 million gross annualised rent 64 million total acquisition price (exclusive of costs) All expected to contract before year end Eight development assets in Edinburgh, Egham, Leicester, Manchester, St Andrews, Sheffield c.1,195 beds c. 92 million total acquisition/development price (exclusive of costs) c. 35 million targeted to contract by year end Redevelopments Eight operational standing assets, currently owned, are potentially more valuable as development sites (subject to planning) with significant projected income and capital uplift Asset sales Two assets (Midlands and Scotland) under offer in excess of acquisition price and valuation Picturehouse apartments, cinema Empiric Student Property 13

14 FINANCIAL RESULTS Ladybarn House, Manchester Operational Mar 16

15 Income Statement Unaudited six months to 30 June Audited six months to 31 December Unaudited six months to 30 June Revenue 24,459 19,210 12,205 Property Expenses (9,688) (8,152) (3,435) Net rental income 14,771 11,058 8,770 Administrative and other expenses (7,627) (5,323) (4,108) Changes in fair value of investment properties 13,021 14,474 10,332 Operating profit 20,165 20,209 14,994 Net finance expense (5,745) (3,976) (2,057) Share of JV results ,161 Profit before taxation 14,477 16,946 14,098 Dividends paid 15,415 15,038 13,294 Earnings per share basic Earnings per share diluted Empiric Student Property 15

16 Statement of Financial Position Unaudited six months to 30 June Audited six months to 31 December Audited six months to 30 June Property, plant and equipment Intangible assets 1,319 1, Investment property 818, , ,194 Investment in joint ventures - 4,923 4,197 Derivative financial assets Trade and other receivables 19,436 24,852 18,716 Cash and equivalents 23,250 59, ,923 Total assets 862, , ,082 Deferred rental income 7,472 15,760 4,418 Trade and other payables 25,865 16,033 14,974 Bank borrowings 298, , ,896 Derivative financial liability 943 1,233 1,685 Total liabilities 332, , ,973 Net assets 530, , ,109 Net Asset Value per share basic Net Asset Value per share diluted Empiric Student Property 16

17 Debt Financing Current LTV of approximately 36% as at 30 June 2017 Weighted average interest payable of 3.42% Weighted average term to maturity of 7.1 years Loan Provider Facility Drawn (1) Type Term Expiry Cost Security Long Term Debt 191.1m 191.1m Canada Life 40.0m 40.0m Term % Fixed Rate Four standing assets Canada Life 31.1m 31.1m Term % Fixed Rate Eight further standing assets, nonrecourse to other assets Mass Mutual 80.0m 80.0m Term % Fixed 18 standing assets Mass Mutual 40.0m 40.0m Term % Fixed Five standing assets Short Term Debt 108.9m 92.6m RBS 30.6m 21.1m Development / Forward Funded RBS 35.5m 35.5m Term 2019 AIB 32.8m 26.0m Development / Forward Funded 2018 LIBOR + 300bps / 190bps Five forward funded assets LIBOR + 190bps Fully swapped at 1.78% Eight standing assets, non-recourse to other assets 2020 LIBOR + 280bps / 180bps Five forward funded assets FCB 10.0m 10.0m Term 2020 LIBOR + 180bps Unsecured RCF 20.0m 20.0m RBS Additional 20.0m 20.0m Redrawable Loan Facility 2019 LIBOR + 190bps Capped at 2.50% 7 further standing assets, non-recourse to other assets provided prior to draw (1) Drawn as at 30 June 2017 Empiric Student Property 17

18 OUTLOOK Ladybarn House, Manchester Operational Mar 16

19 Outlook Current portfolio of 94 assets consisting of 9,449 beds in 30 cities with 84 trading for the 2017/18 academic year and 10 assets consisting of 1,608 beds to be operational in future years Gross annualised rent of 66.8 million for the 2017/18 academic year up from 52.1 million Current development sites will add gross annualised rent of 5.2 million from September operational assets marketed or managed through Hello Student, equivalent to in excess of 40 million gross annual rent All 94 current owned assets will be transferred to the platform by September 2018 Strong letting well in excess of target 70% at end of June, with target of fully let for the academic year 2017/18 Target dividend of 3.05 pence for H Picturehouse apartments, cinema Empiric Student Property 19

20 APPENDIX Talbot Point, Nottingham Operational Sep 14

21 The UK Student Accommodation Market Demand for UK Higher Education to keep rising Demand has remained robust throughout the introduction of increased tuition fees in 2012 and the weakened economic environment Government caps on student numbers in the UK were removed altogether in 2015/16 The effect of greater competition means there is a greater polarisation between winning and losing universities Number of international students is expected to double globally by 2025 In 2013 the UK was the second largest destination for international higher education with a 10% global share, second only to the USA with a 19% share Accepted students as a percentage of applicants 80% 75% UK Higher Education Applicants vs. Acceptances A record 535,200 students were placed in UK higher education through UCAS in 2016 UCAS, 14 th December 2016 Students 800k 700k 600k 500k 400k 300k 200k 100k 0k 535,200 all time high Excess Applicants over Acceptances Acceptances Student Accommodation Yields have Hardened Source: Savills Source: Savills 2017 UK Student Accommodation Yields Lease Nomination Agreement Direct Let Prime London 3.75% 4.25% 4.25% Super Prime Regional 4.25% 4.75% 5.20% Prime Regional 4.50% 5.00% 5.50% Secondary Regional 5.00% 5.75% 6.50% Growth In Global Student Mobility Trend Number of students enrolled outside their country of citizenship (m) E Source: UCAS and JLL Source: UCAS Source: Savills, UNESCO Institute for Statistics, OECD 21

22 The UK Student Accommodation Market Full-time Students in UK By Domicile 2015/16 Academic Year Growth in First Year Undergraduate Acceptances (2016 EOY Cycle) Growth in First Year Undergraduate Applicants (2017 September) 16% UK 7.0% 1.0% 2.0% 7% EU International Students (Non-EU) 0.5% Source: HESA 77% Source: UCAS (2.3%) All Students EU Students International Students (Non-EU) English 18-Year Old (4.0%) Total UK (5.0%) EU Students International Students (Non-EU) Total Full-time Students Evolution 18 Year-Old Population Trend in the UK current / / / / Source: HESA Source: ONS Series1 Population 22

23 Key Terms Issuer Empiric Student Property plc, FCA registered as an AIFM Structure UK REIT Index Inclusion FTSE All-Share, FTSE SmallCap Current market capitalisation million as at 11 th September 2017 Listing Main Market, London Stock Exchange; Premium Listing on the UKLA Official List Target dividend 6.1 pence for 2017 with RPI uplift Target total shareholder return 10% p.a. Gearing LTV up to 40% of gross assets; Long-term LTV target of 35% Valuation Half-yearly valuation by CBRE (June and December) Discount control Corporate Broker and Joint Financial Adviser Share buy-back authority for up to 14.99% of issued share capital. Repurchased shares can be held in treasury. Return of disposal proceeds from investments to shareholders if not re-invested within 12 months Jefferies International Limited Joint Financial Adviser Akur Limited Board Brenda Dean, Rt Hon Baroness Dean of Thornton-le-Fylde Chair; Paul Hadaway Chief Executive Officer; Tim Attlee Chief Investment Officer; Lynne Fennah Chief Financial Officer; Jim Prower Senior Non Executive Director; Stephen Alston Non-Executive Director; Stuart Beevor Non-Executive Director Investors should note that the figures in relation to targeted dividend, total shareholder return and target NAV growth rate set out above and in the rest of this presentation are for illustrative purposes only and are not intended to be, and should not be taken as, a profit forecast or estimate. Actual returns cannot be predicted and may differ materially from these illustrative figures. There can be no assurance that they will be met or that any dividend, NAV growth or total shareholder return will be achieved. Empiric Student Property 23

24 Important Information and Disclaimer This presentation has been prepared by Empiric Student Property plc (the "Company"). No representation or warranty (express or implied) of any nature is given nor is any responsibility or liability of any kind accepted by the Company or any of its directors, officers, employees, advisers, representatives or other agents, with respect to the truthfulness, completeness or accuracy of any information, projection, representation or warranty (expressed or implied), omissions, errors or misstatements in this presentation, or any other written or oral statement provided. In particular, no responsibility or liability is or will be accepted and no representation or warranty is or is authorised to be given as to the accuracy, reliability or reasonableness of any forward-looking statement, including any future projections, management targets, estimates or assessments of future prospects contained in this presentation, or of any assumption or estimate on the basis of which they have been given (which may be subject to significant business, economic or competitive uncertainties and contingencies beyond the control of the management of the Company). Any such forward-looking statements have not been independently audited, examined or otherwise reviewed or verified and nothing in this presentation should be construed as a profit forecast. All views expressed in this presentation are based on financial, economic, market and other conditions prevailing as of the date of this presentation. The Company does not undertake to provide access to any additional information or to update any future projections, management targets, estimates or assessment of future prospects or any other forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation, or to correct any inaccuracies in this presentation which may become apparent. Past performance is not indicative of future results and forward-looking statements are not guarantees of future performance. This presentation is for information purposes only and does not constitute an offering document or an offer of transferable securities to the public in the UK. This presentation is not intended to provide the basis for any credit or other evaluation of any securities of the Company and should not be considered as a recommendation, invitation or inducement that any investor should subscribe for, dispose of or purchase any such securities or enter into any other transaction with the Company or any other person. The merits and suitability of any investment action in relation to securities should be considered carefully and involve, among other things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of such securities. 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