Capital Markets Day 5 November 2019 Accelerating Growth in our - - PowerPoint PPT Presentation

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Capital Markets Day 5 November 2019 Accelerating Growth in our - - PowerPoint PPT Presentation

Capital Markets Day 5 November 2019 Accelerating Growth in our Core Markets Creating the Future of Living Welcome Duncan House Health & Safety Fire Exits two to the front of the building on the left and right as you leave this


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Capital Markets Day 5 November 2019 Accelerating Growth in our Core Markets Creating the Future of Living

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  • Fire Exits – two to the front of the building on the left and right as you leave

this room. Exits are clearly marked.

  • In the event of an emergency please leave the building via these exits, turn

left out of the building and congregate in the seating area outside Eleanor Rosa House

  • Safety around the building – please watch for trip hazards as you move

around the building

Welcome

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Duncan House – Health & Safety

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12:30 Welcome Investment case Investor perspective: Student Roost Growth analysis: Residential for rent sector overview Business unit deep dives Growth strategy financials Summary Q & A 14:15 Tour of building – in groups 15:00 Finish

Agenda

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Duncan House, Stratford

Investment Case

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Investment Case – Summary

WJ is the UK’s leading developer and manager of residential for rent

Opportunity to increase annual volumes of deliveries across UK residential for rent (‘living sector’) in our two core markets from FY 23/24

3500

PBSA beds

1000

BtR units

driven by following current themes:

Long term growing demand from tenants and in turn institutional investors High barriers to entry create attractive competitive environment WJ expertise – track record, sector specialism, customer insight & product development, delivery assurance

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2723 beds delivered in 2019 0 units delivered in 2019

utilising the established capital light, forward sale model

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Market leading track record throughout the UK 17,721 Total Units Under Management 50,179 Total Units Developed and In Build 357

Staff

512

BtR Units

17,209

PBSA Beds

2,500

Homes for Sale

1,518

BtR Units

46,161

PBSA Beds

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PBSA Schemes

4

BtR Schemes

  • c. £1.7bn

Assets under Management

90

Developments for Sale

7

BtR Schemes

135

PBSA Schemes

Locations where WJ(1) and Fresh(2) have been active

Investment Case – Established Track Record

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(1) since 1999 to date (2) since 2010 to date

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Investment Case – Strong Performance

(1) 2019 figures refer to broker consensus estimates. (2) As at 1/11/2019 close (3) Group’s IPO was in March 2016 (4) Pre-exceptionals

Financial Performance Operational Delivery

Student Beds Completion Fresh Beds Under Management Revenue EBITDA(4)

Leading to 137% share price return(2) while returning £56m in dividends since IPO(3)

28.0k 38.0k

2015 2019

8.3k 17.7k

2015 2019

£244.2m £363.1m £387.7m

2015A 2018A 2019E

£34.1m £52.0m £52.9m

2015A 2018A 2019E

(1) (1)

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WJ structure built around four core business areas, employing c. 700 people

Residential for Rent – PBSA, BtR Resi for Sale

18 people Value creation: land buying, secures planning & forward sells to investors 292 people Value protection: Provides assurance in project delivery 357 people Consumer experience: Tenant & asset owner 36 people Self contained house building business

Delivery Fresh Homes Investment

Working Together

  • Leverage experience across the business especially customer insight from Fresh
  • All business areas collaborate in devising the proposition & product for PBSA, BtR & Homes

Investment Case – Resourced for Success

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  • Progress with the secured pipeline already moving towards these increased levels of deliveries
  • 3-4 year rolling visibility of pipeline
  • WJ resourced & structured for this level of growth across the development lifecycle
  • Sufficient headroom to grow with supply chain, trade packages and subcontractors
  • Use of framework contractors to derisk growth – focus on core value add of upfront development expertise
  • Strong investor demand for product in the open market means BtR Fund is not essential

‘Creating the future of living’

2609 1928 448 462 1032 415 1610 500 1000 1500 2000 2500 3000 3500 FY20 FY21 FY22

Forward sold In legals to sell fwd fund Secured with planning Secured subject to planning Unsecured in legals

2609 3253 2642

*

**

WJ PBSA Pipeline Delivery

159 782 71 184 213 336 350 800 200 400 600 800 1000 1200 FY20 FY21 FY22 FY23

# units

159 782 818 1136

* Assets owned by WJ and under offer to sell ** WJ in legals to acquire the site

WJ BtR Pipeline Delivery

# beds

Investment Case – Ready for Growth ‘

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Economic downturn Rent controls & tenant protections – Govt initiatives to drive up standards BtR/PBSA part of solution to PRS/housing crisis Land availability, planning consent, build assurance Core expertise, track record, reputation, long term partners Forward sale liquidity Resi for rent structural growth & diversification strongly positioned for investor demand Managing additional work Resourced for growth with detailed plans in place Business model minimises exposure

Risk Mitigation

Investment Case – Risks to Growth

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PBSA & BtR (residential for rent) have long term structural growth characteristics Growing consumer & in turn institutional investor demand WJ specialist in residential for rent – our consumer insight & delivery assurance Institutional investor demand for our product and services High barriers to entry for non sector specialists – attractive competitive environment

Investment Case – Well positioned for Growth

Strong investor demand for new, high-quality product drives demand for forward fund transactions De-risk development activity, capital light, visibility of longer-term earnings & quickly cash generative Balance sheet strength, resilience & agility

Growth sectors, Growing investor demand, Market leading position WJ well placed to grow

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Hollis Croft, Sheffield

Investor Perspective – Brookfield’s Student Accommodation

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Nathan Goddard Chief Executive Officer Student Roost

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Student Roost Portfolio Overview

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Nottingham 1 / 22 Sheffield 3 Snowdon Hall Trinity Square

Oct-13 2,495

Nottingham 32 The Summit Queens Court Regents Court Sheffield 2 Brookland Road Newarke Street Upperton Road Eastern Boulevard Newcastle 1

Total beds operational, managed and under development

Dec-13 2,944 Apr-14 3,638 Sep-14 4,158 Dec-14 4,697 Feb-15 5,313 Oct-15 5,684 Apr-16 5,684

Brookfield completes acquisition of Student Roost and the Portfolio

Sep-16 6,837

Collegelands St James’ House St James’ Point

Oct-16 8,949

St Mungo Avenue Swanson House Great Patrick Street Hollis Croft

Mar-17 13,121

Buchanan View Gibson Street Apollo Court Capital Gate Myrtle Court The Railyard Lady Nicholson Court Panmure Court Portsburgh Court Mealmarket Exchange The Heights Corfe House The Boulevard

Feb-18 20,759

The Depot John Bell House The Old Fire Station Home Park Tramways Towpath Chapel Heights Dobbie’s Point Merchant Studios Byrom Point Mannequin House Hydrogen Cornerhouse Laycock Studios Vincent Place St Davids I & II St Davids III (land)

Jul-17 14,943

Little Patrick Street Pittodrie Street Nelson Street

(1) Nottingham 1, 2 and 3 refer to one asset; now named Nottingham 2

Operating assets Development assets

Nov-17

Student Roost Brand and website launch

May-18

Operations internalisation completed

Oct-18

Back Office internalisation completed

Jan-19 20,846

Calton Road

Student Roost Brief History Company history and evolution

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Aberdeen Edinburgh Newcastle Durham York Nottingham Birmingham Southampton Bournemouth Poole Bath Swansea Belfast Glasgow Liverpool Chester Wrexham Leicester Sheffield London

Portfolio Breakdown by Region*

*by bed numbers and includes developments

Portfolio Summary Operational Assets Secured Development Pipeline

Sheffield 14% Glasgow 12% Belfast 11% Nottingham 9% Leicester 9% Liverpool 8% Birmingham 7% Other 31%

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PROPERTIES

20 1,500

CITIES BEDS IN DEVELOPMENT PIPELINE

19,000

OPERATING BEDS

Location Sites Beds Location Sites Beds Sheffield 5 2,869 Swansea 1 722 Glasgow 6 2,390 London 1 527 Belfast 3 1,204 Bournemouth 1 454 Nottingham 3 1,960 York 1 356 Leicester 7 1,849 Edinburgh 3 331 Liverpool 5 1,557 Poole 1 308 Birmingham 2 1,392 Southampton 1 283 Aberdeen 2 896 Durham 1 200 Newcastle 3 936 Wrexham 1 156 Chester 2 736 Bath 1 104 Location Sites Beds Delivery Date Belfast 2 1,204 AY20/21 & AY22/23 Swansea 1 245 AY 20/21 Edinburgh 1 87 AY 20/21

Student Roost at a glance Fourth largest privately-owned providers of student accommodation in the UK

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3 Year Relationship 3,000 Beds delivered across 5 cities – Glasgow, Belfast, Aberdeen, Sheffield and Swansea Forward Funding and Development Partner structures Development partner for our flagship scheme Hollis Croft – delivered on time and on budget in September 2019 Current development partner in Swansea and forward funding Little Patrick Street in Belfast Additional 4,500 beds across our acquired portfolio are WJ built 100 % occupied on full tenure for 19/20 on all WJ schemes

Student Roost and Watkin Jones

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Deliver on-time and on-budget every time – Trust. Wealth of experience – design and deliver fantastic desirable homes which support our customer satisfaction Fantastic working relationship and culture of

  • partnership. Can-do attitude.

Aligned strategies – supports our growth agenda in key regional markets . Flexible deal mindset.

Why Watkin Jones?

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Granary Studios, Chester

Residential for Rent - Sector Overview

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  • UK Residential for Rent (‘living’)
  • Long term structural trends driving

institutional demand

  • Real estate moving away from

physical buildings to provision of consumer experience

  • Population growth & urbanisation
  • Societal change in view of asset
  • wnership
  • Tenant demand has low correlation to

the cycle

  • Investors increasing weighting to this

‘living’ sector

Residential for Rent - Growth Sector

55,000 60,000 65,000 70,000 75,000 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 To-date Projection UK Population (‘000s) Student Accommodation PRS

2015 £31bn 2019 £51bn Forecast 2025 £65bn 2015 £15bn 2019 £35bn Forecast 2025 £75bn

Source: Knight Frank Residential Investment Survey 2019, ONS

Intend to reduce holdings No Change Intend to increase holdings

8%

25% 67%

UK population is forecast to grow by 7.3 million by 2035 Residential investment intentions in the next five years Total residential investment

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Source: ONS

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BtR growth PBSA obsolescence of existing stock

140k → 1.7m units c.£35bn → c.£544bn

Current Market Size At maturity

PBSA growth

620k → 910k beds c.£51bn → c.£75bn c.75k beds to redevelop, 24% of PBSA built pre-1999 (51% pre-2009)*

  • Our growth is driven from both

providing for demand and replacing inadequate, older stock

  • Institutional capital ‘force for good’
  • Improving standards in PRS
  • Helping to fix the housing crisis
  • Urban regeneration

*Excludes London. It also excludes Oxbridge collegiate beds Source: Savills

Residential for Rent – Quantifying Growth

Source: WJ Management data Source: Cushman & Wakefield

By 2071(1) By 2030(2)

(1) Based on current run rate of net 30,000 units per annum (2) Based on current run rate of net 25,000 beds per annum

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PBSA Sector - Strong Student Demand Trends

  • Long-term growth in demand; favourable underlying UK student demographics &
  • verseas demand accelerating (EU and non-EU)
  • Student expectations over quality of housing changing
  • The UK is the world’s second ‘most in demand student market’ – good place to study &

live

  • 33 of UK universities in top 250 global ranking

Projection of full-time UK undergraduates Number of top ranked universities by country

Source: Knight Frank Residential Investment Survey 2019, ONS, UCAS, HESA

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PBSA Sector - Demand Exceeds Supply

  • Applications continue to significantly

exceed university places available

  • Flight to Quality – winners & losers
  • Existing PBSA supply unable to meet

‘Accommodation Promise’

  • PBSA net supply of c. 25,000 new beds

per annum

  • Private HMO sector under pressure
  • Potential for increased PBSA demand

from 2nd, 3rd & postgraduate year students

654 677 700 718 718 700 696 465 496 512 532 535 534 533 1710 1728 1730 1771 1827 1875 1878 500 1000 1500 2000 Applicants Acceptances Full time students

Applications vs Acceptances

Students 000s)

Students and supply

1728 1730 1771 1827 1875 1878 682 699 713 727 731 739 487 503 527 553 580 603 500 1000 1500 2000 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Students (000s) Total students 1st years (UG) + International (UG + PG) PBSA Beds

Source: UCAS, HESA

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Fiscal headwinds to Buy to Let Growth in consumerism Push Factor Pull Factor ‘UK housing crisis’ Lifestyle flexibility Population growth Demand for premium locations Declining household size Labour mobility Affordability of house purchases Focus on total accommodation experience (amenities and service)

2x

Number of residents renting in England in last 10 years(1)

20% → 25%

( By 2021) Private renters as % of all households(2)

37%

Renters by choice(3)

BtR – Growing Consumer Demand

(1) English Housing Survey (2) Knight Frank, EHS, DCLG (3) CBRE

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PBSA & BtR – Investor Demand

Valuation Yields

  • NIYs for PBSA/BtR have been stable/trending positive over the period
  • Investor appetite has remained robust
  • Driven by sector performance, future outlook & spread to 10yr Swap

Source: IPD, CBRE

8% 7% 6% 5% 4% 3% 2% 1% 0%

2006 2008 2010 2012 2014 2016 2018 10 yr swap rate PBSA Av. UK NIY BtR Av. UK NIY

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  • FY2019 forecast investment volumes are above the 5-year average
  • Structural demand, defensive characteristics and growth prospects drive investment
  • Significant competition for newly built & forward funded assets

1.0 2.7 2.0 1.7 5.7 3.2 4.1 3.2 0.96 2.9 £0 £1 £2 £3 £4 £5 £6 2011 2012 2013 2014 2015 2016 2017 2018 2019 Completed Under offer

5 year average = £3.57bn (£bn)

Source: CBRE

100 200 300 400 500 600 700 800 900 1000 1100 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

Investment (£m)

Average 1/4ly investment volume

2019 PBSA investment volumes YTD Institutional investment volume into the PRS

3.86

PBSA & BtR – Investor Demand

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Competitive Landscape

  • New supply response is not keeping pace with both underlying consumer and institutional

investor demand

  • PBSA annual supply stable over last five years at c.5% of total PBSA market
  • BtR building momentum from a low base
  • Competitive landscape – few experienced developers with national presence
  • Barriers to Entry are high – specialist sector, track record, navigating planning consents, build

assurance, property management

500 1000 1500 2000 2500 3000 # units

BtR Developer Ranking in 2019 (by BtR units in build) PBSA Developer Ranking (by beds delivered in 2019)

500 1000 1500 2000 2500 3000

Source: CBRE, JLL, Knight Frank, Savills, C&W

# beds

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Kyle Street, Glasgow

Delivering Growth - Business units deep dives

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Alex Pease Group Investment Director

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Watkin Jones Proposition

UK-Wide Opportunity Sourcing & Land Procurement Product and Design Planning Investors / Forward Funding Delivery / Construction Operations / Building Communities

  • Synergies across PBSA & BtR
  • WJ ‘One stop shop’
  • Levering vertically

integrated model

  • Target growth in PBSA
  • De-risk expansion in to BtR

PBSA & BtR Synergies

BtR PBSA

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Core Proposition – PBSA & BtR

78% of PBSA < 10 mins to University 75% of BTR < 10 mins to transport node 76% of PBSA in Top 50 University town

  • Av. 100k Professional Workers in BtR

catchment

  • Av. PBSA Amenity = 0.8sqm per unit
  • Av. BtR Amenity = 1.6sqm per unit
  • Av. PBSA Scheme = 350 units
  • Av. BtR Scheme = 257 units
  • Aligned investor analysis/trends
  • Customer focus driving asset returns
  • Reversionary value / alternate use
  • Defensive market positioning
  • NOI growth

Massing, design & lifecycle efficiencies = building & operational performance

  • Re-bookers & increased tenancies
  • Future proofing assets
  • Catering to requirements

PBSA – Av. 79% Cluster beds BtR – Av. 44% 1-beds / 32% 2-beds

Proposition WJ - Delivering Investor Focus

  • Widest customer market
  • Granular sustainable income
  • Maximise NOI not GOI

Customer & Investor Focused

  • Macro to micro analysis
  • Quantitative and

qualitative Geography / Micro Location

  • Brownfield & urban centres
  • Transport, amenities, employment

& universities Design

  • High quality & designed for rent
  • Maximise density & efficiency
  • Lifecycle & environmental focus

Product

  • Amenity & technology led
  • Building communities

Target Market

  • Mid market target rental
  • < 35% of household income
  • Variable price points

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Growth

  • Market supply

continues to be cyclical

  • Av. of 4,000 units

fallen out of the supply chain in last five years**

  • Obsolescence

will grow with 24% built pre-1999 51% pre-2009

  • Strong historic

and future growth in UK student macro dynamics

  • Supply consistent

but has not accelerated to meet growth

Obsolescence Universities Headroom Analysis

  • Estimated 2020

the 1st year Private sector supply will exceed University stock*

  • Increased

proportion of ageing stock with 50% built pre- 1999 and 74% pre-2009

  • University

partnership

  • pportunities for

WJ to target Current point in time

  • 180,000 bed

head room – across Tier 1-3 target cities

  • 18 cities with in

excess of 3,000 unit headroom Factoring in Growth and Obsolescence

  • 247k bed head

room – across Tier 1-3 target cities

  • 20 cities with in

excess of 3,000 unit headroom***

Headroom for Growth - PBSA

* Source: StuRents

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**C&W *** WJ Management

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WJ Target Location Graduate Retention Rent Affordability Metrics Size of Professional Workforce Economic Power of Area (GDP / GVA) House Price Affordability Population Demographic Population Growth & Forecasts Transport & Connectivity Current & Pipeline Supply

BtR Supply

  • Structural UK housing shortage
  • Historic BtR planning and financial

constraints

  • Fledgling BtR Supply – 35,000 built /

113,000 pipeline * BtR Demand

  • Population and urban expansion
  • Prolific growth in rental
  • ‘Rental Revolution’

Existing Quality

  • PRS – a fragmented & inconsistent sector
  • Unregulated
  • 27%** of PRS fail to meet Decent Homes

Standards Target Profile

  • CACI / alternate data
  • Pinpoint core demand hotspots

Headroom for Growth - BtR

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* Source: CBRE, BPF ** Source: Ministry of Housing’s 2016-17 English Housing Survey

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Recognising key value chain

Investment and land procurement Technical / design development Planning

Structured for Growth

Hubs are the engine room of growth

Strategic Planning Transaction Lead Transaction Analyst Technical Lead Technical Manager

HUB

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Core strength in land procurement Strong networks across the UK 80% of these developments sourced Off-Market 76% procured with planning or subject to planning Deliverability & reputation breed further success Sites assessed across PBSA / BtR & mixed use bases

  • Av. development cycle

34 months acquisition - delivery Past five years WJ has acquired 51 developments

16% 22% 8% 27% 14% 6% 8%

London North Midlands South Scotland Wales Northern Ireland

A genuine cross UK coverage:

‘Watkin Jones have the only genuine integrated platform that allows the successful delivery of PBSA and BtR. Their success relies on an active land buying team that are expert in identifying institutionally acceptable sites and then transacting at speed. This capability is complemented by high quality planning, construction and management to ensure successful exits.’ James Hanmer Director - Savills

Land Procurement

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CBRE June 2019: “In recent months there have been a number of land deals, raising the question as to whether land prices have now reached a level where Build to Rent opportunities are now more viable. L&G recently exchanged contracts on its largest investment into the sector to date; two adjacent sites in Wandsworth, South London extending to six acres and which will deliver 1,000 rental homes.”

Resilient Sectors

  • Procure land across the spectrum of

economic cycles Barriers to Entry - Remain high

  • Planning, procurement &

development expertise required to unlock many markets Economic Uncertainty – Potential Opportunities

  • Brownfield land a key barometer
  • Potential ripple effect out from

Central London Capital Light – Forward Fund Model

  • A point in time… an unusually

attractive land opportunity

15 12 9 6 3

  • 3
  • 6
  • 9
  • 12

2015 2016 2017 2018 2019

Annual change in average land values (%) Residential development land prices

Land Availability

Source: Knight Frank Source: Knight Frank

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50 PBSA consents 25,000 beds 8 BtR consents 1,066 units

  • Planning in UK remains a key barrier to entry for both

PBSA and BtR

  • Planning recognised as a key contributor in the value

chain

  • Core internal skill sets & collaboration with market

leading & key local consultants

  • Combined investment, design and planning expertise to

maximise consents

  • Exceptional planning record over the last 10 years….

3001 5389 3850 4903 5531 2255 1089

London North Midlands South Scotland Wales Northern Ireland

  • True national coverage and success across the UK
  • Worked successfully in 33 different local authorities

Planning consents by region

Planning

Planning consents by year (2009-2019)

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Institutions & Investors

24 clients 14 repeat clients 63 repeat deals 73 assets sold £2bn revenue

  • Avg. c £300m pa

Since 2012…..

  • Key USP is WJ’s ability to partner and sell to leading institutions
  • Built on trust, track record and delivery
  • Fantastic rate of repeat clients and deals
  • Striving to be the ‘Partner of Choice’ across PBSA and BtR

AIG have funded 5 WJ projects – 1,885 PBSA and 395 BtR units. All projects, including the tallest tower in Cardiff, have been delivered on time and budget. Watkin Jones stand out for their professionalism, & understanding of the investor perspective. When issues emerge, they mobilise additional resources to ensure all problems are

  • addressed. We hope to work further with Watkin Jones in

the future. - Naveen Patha, Managing Director, AIG Investments

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PBSA Case Study – Kelaty House, London

The Scheme

  • 599 PBSA beds, 300 BtR units / Practical Completion Q3 2021

Acquisition

  • Off market acquisition – agent & vendor confidence WJ would

deliver Structuring – transactional & technical

  • Development expertise unlocked complex mixed-use scheme
  • Comprehensive structural & title redesign

Planning

  • In-house planning unlocks +100 beds

Insight

  • Wembley regeneration area
  • Transport links & amenities

Institutional Grade

  • Forward fund to DWS
  • New entrant to UK PBSA

Capital Light Structure

  • DWS capital forward fund land & PBSA
  • Lum Chang forward fund BtR development

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BtR Case Study – Sutton Court Rd, Sutton

The Scheme

  • 166 BtR units
  • Practical Completion Q2 2021

Acquisition

  • Off-market
  • Investor introduction

Planning

  • Challenging BtR consent
  • Negotiated with key stakeholders GLA & Sutton

Development Expertise

  • Reworked existing unviable consent
  • 25% increase in density & amenity provision

Insight

  • Undervalued area
  • Commuter belt location (25 minutes to Central London)
  • Proximity to station & high street amenities

Institutional Grade

  • Competitive market bidding
  • Forward fund to M&G Real Estate

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The Scheme

  • 159 BtR units and 37,000 sqft commercial
  • Practical Completion Q1 2020

Acquisition

  • Off-market
  • Mixed use multi-phased development

Planning

  • Change of use
  • Office to BtR led scheme

Development Expertise – Master Planning

  • 940 PBSA / 129 Hotel / 159 BtR / 125,000 sqft commercial

Insight

  • Strong demographic and economic analysis
  • Micro location
  • Identify new BtR market

Institutional Grade

  • Competitive market bidding
  • Forward fund to M&G Real Estate

BtR Case Study – Holdenhurst Rd, Bournemouth

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Jim Davies Director Watkin Jones Group

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17% 12% 30% 41% 100% Scotland & NI North England Midlands South 10% 35% 24% 31% 9% 16% 75% Scotland & NI North England Midlands South

Inner ring = PBSA Outer ring = BtR FY2020 Delivery FY2021 Delivery

2019 Deliveries

  • All 2019 schemes delivered on time & well ahead of

student occupation 2020 - 2021 Deliveries

  • 11 PBSA & 4 BtR live schemes due for delivery in 2020 & 2021
  • All currently on track

Resourced for Growth

  • Capacity, expertise & supply chain relationships in place

Brexit/Economic Uncertainty

  • Long established relationships with key subcontractors &

suppliers

  • Good payment track record & strong aged debt position
  • Active involvement & engagement as we navigate

through Brexit and potential Government change

  • Detailed risk analysis of direct & indirect supply
  • Dedicated procurement teams provide constant

monitoring of critical item stock levels to assure unbroken delivery

Construction

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Rebecca Hopewell Chief Executive Officer Fresh Property Group

Connecting WJ with the Customer

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Delivering Growth

  • 2

4 6 8 10 12 14 16 18 20

Units (000s)

Units Cumulative Ave. (Units)

Continuous Sustainable YoY growth

8 x growth in Units over 10 years

  • 23% CAGR
  • Largest 3rd party student operator*
  • c. £1.7bn AuM
  • 44% non WJ built units managed

National Infrastructure

  • 17,721 units
  • 64 schemes
  • 30 cities
  • 357 staff

Well positioned for BtR growth

  • Core infrastructure
  • Business readiness
  • Institutional client confidence
  • End to end solution for Group

Growth in non WJ built units 100% 2010/11 2019/20 Areas of operation Growth in units under management 56% 44%

WJ built 3rd party built

* CBRE Operator League Table

2,265 units 17,721 units

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Delivering exceptional customer experience

‘Experts in creating and managing vibrant communities which people really want to come home to’

OVERALL MANAGEMENT KNOWLEDGE FRIENDLINESS

91% 94% 93%

What our customers say...

25%

‘The location is second-to-none, the staff are lovely and the building is beautiful inside and out. I wish I could live here forever.’ 'Perfect place for student accommodation. Lovely people and staff and every facility available.' ‘The accommodation is in perfect condition and run by a fantastic manager who really looks after us brilliantly!’ ‘Love the cosy study room and social space, all ready to book for next year.’

Source: NSHS

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31 clients 7 take overs 2018/19

  • Av. 7.4

schemes per top 5 Clients

Client confidence…

  • Commercial alignment
  • Design input
  • Financial visibility
  • Driving NOI
  • Customer feedback loop

“We were impressed with the enthusiasm, interest and local market knowledge shown by FPG when we were selecting

  • ur operating partner. They have been thoroughly

professional in their approach supporting the initial development with an array of specialist personnel. The on-site team have been fantastic and their performance speaks for its self - Mill House was 100% let for 2018/19 and was full for 2018/19 since Q1 2018.“Maven Capital Partners LLP Student Trust

Institutional Grade Client Services

42% of schemes across 5 cities Student Operator of the year 2018*

* Source: Property Week

Delivering value…

"The scale & quality of Fresh's infrastructure ensures consistently high levels of service delivery to students & therefore a high level of satisfaction & better returns from our assets." Curlew Student Trust

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Base Case

  • Early mover site in a Regeneration Area
  • Under provision of student facilities
  • Not an established student area

Fresh PG input

  • Off Site marketing suite
  • Redesigned amenity spaces
  • Initial pricing strategy

Results

  • 100% occupancy each year
  • Above RPI increases each year (4.8% average)
  • Partial nominations agreement

Value Add to PLC

  • Stabilised asset has proven location and values
  • Positive impact on adjacent WJ site value
  • FPG retained as manager on asset sale

Case Study – Merlin Heights, Leicester

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SLIDE 49

Phil Byrom

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SLIDE 50

Homes – Residential Expertise

North West UK is a strong performing region in the UK. This is the core area for WJ Homes Maintain current delivery rates of c.150 homes per annum WJ Homes have built in the North West region for

  • ver 20 years

BtS and single family part of the ‘Living’ expertise of WJ Target sites between 50 to 100 homes, avoiding the larger developers Delivery of residential units under a mixed- use scheme across UK Maintain a small landbank (c. 450 units) with new sites progressed quickly into development Core product will be mid- market units BtR opportunities eg Trafford Street, Chester

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SLIDE 51

Financials

Albion Way, London

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SLIDE 52

£0 £100 £200 £300 £400 FY16 FY17 FY18 PBSA, £312.7m (86%) BtR, £3.8m (1%) Residential, £30.0m (8%) Accommodation mgmt, £7.3m (2%) Other, £9.3m (3%) £0 £20 £40 £60 £80 FY16 FY17 FY18 PBSA, £60.7m (84%) BtR, £1.0m (1%) Residential, £4.4m (6%) Accommodation mgmt, £4.5m (6%) Other, £1.8m (3%)

Group Revenues Group Gross Profit FY18 Revenues FY18 Gross Profit £267.0m +9.3% £301.9m +13.1% £363.1m +20.3%

£m £m

£53.8m +22.2% GM 20.1% £63.5m +18.0% GM 21.0% £72.4m +14.0% GM 20.0%

Financials - KPIs

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SLIDE 53

Group Adjusted PBT Group Net Cash Earnings per share (adjusted) Dividend per share ROCE excluding net cash

2 4 6 8 10 12 14 16 18 FY16 FY17 FY18

6.0p 12.4p +19.2% 14.0p +12.9% 16.0p +14.3% 6.6p 7.6p

£0 £10 £20 £30 £40 £50 £60 FY16 FY17 FY18 £0 £20 £40 £60 £80 £100 FY16 FY17 FY18 pence £m £m

£32.2m

  • 17.6%

£41.0m +27.3% £80.2m +95.5% £39.8m +22.7% £43.3m +8.8% £50.1m +15.7% EPS DPS

Financials - KPIs

57.90% 51.8% 69.7%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% FY16 FY17 FY18

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SLIDE 54

Earnings Model – PBSA & BtR

PBSA and BtR – Forward Sales Model

  • Revenue and profit recognition
  • Typical deal structure
  • Land sale
  • Development works
  • Final payment
  • IFRS 15 ‘Revenue from Contracts with Customers’
  • Applicable to WJ for FY19
  • No major impact on WJ’s results
  • Formal separation of land sale and development agreement
  • Current average gross margins
  • PBSA – 20%
  • BtR – 15%+

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SLIDE 55

Worked Example - PBSA

Model PBSA Scheme – 500 beds

  • Total capital value - £50.0 million
  • Land value - £12.5 million
  • Build value - £34.0 million
  • Final payment - £3.5 million
  • Current gross margin 20% - £10.0 million
  • Build period – 24 months

WJ – example PBSA scheme financial profile

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SLIDE 56

Worked Example - BtR

Model BtR Scheme – 250 units

  • Total capital value - £70.0 million
  • Land value - £15.0 million
  • Build value - £50.0 million
  • Final payment - £5.0 million
  • Current gross margin 15% - £10.5 million
  • Build period – 30 months

WJ – example BtR scheme financial profile

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SLIDE 57

Illustrative Cost Value Margin for Developments

SOUTH EAST Rent: £175/wk Net income: £5,600 pa NIY: 5.5% Capital value: £105k Land: £25k Build costs: £60k Target margin: 22-24% LONDON Rent: £230/wk Net income: £9,070 pa NIY: 4.75% Capital value: £184k Land: £60k Build costs: £85k Target margin: 26-28% OTHER UK REGIONS Rent: £140-165/wk Net income: £4,500-5,600 pa NIY: 5.5-6.0% Capital value: £60-90k Land: £10-15k Build costs: £55-60k Target margin: 18-22%

All figures are illustrative and relate to an approximate per bed basis Rent = gross per week / Net Income = net annualised Net initial yield (NIY) = forward fund yield / Capital Value = net per bed Land = per bed with planning / Build costs = all other costs per bed

PBSA

SOUTH EAST Rent: £1.3k/mth Net Income: £11.5k pa NIY: 4.0% Capital value: £280k Land: £65k Build costs: £170k Target margin: 15%+ LONDON Rent: £1.4k/mth Net Income: £12.5k pa NIY: 3.75% Capital value: £325k Land: £95k Build costs: £188k Target margin: 15%+ OTHER UK REGIONS Rent: £1.1k/mth Net Income: £10k pa NIY: 4.5% Capital value: £210k Land: £23k Build costs: £155k Target margin: 15%+

BtR

All figures are illustrative and relate to an approximate per BtR unit basis Rent = gross per month / Net Income = net annualised Net initial yield (NIY) = forward fund yield / Capital Value = net sale value per unit Land = per unit with planning / Build costs = all other costs per unit 57

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SLIDE 58

Growth Profiling

Identify site Negotiation

  • f site

purchase Obtain planning consent Marketing of

  • pportunity

Negotiation of land sale & development agreement Completion of land purchase & sale Construction

  • f asset

Practical completion

24 months 6 months 24 months 24 months 6 months 30 months

PBSA timeline to 3,500 beds per annum delivery BtR timeline to 1,000 units per annum delivery Revenue Recognition

Land sale Development

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SLIDE 59

Cash Profile

  • Typical “hockey stick” cash profile
  • Land acquisition and planning

costs, overheads, tax and dividend payments utilise cash during the year

  • Final payments received on

completion of developments and sales transactions re-build cash at the year end

  • BtR should help smooth the cash

profile Cash Requirement

  • Current year end cash required is c.

£100m

  • Growth strategy is likely to increase

this requirement to c. £150m

Cash Requirement

  • 20

40 60 80 100 120 1 2 3 4 5 6 7 8 9 10 11 12

Monthly Cash Balance

Dividend

  • Progressive dividend in line with

earnings growth (2 x cover)

  • Achieving the growth strategy may

lead to free cash and enable a further review of the dividend policy

Typical cash profile

(£m) month

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SLIDE 60

The Future of Living – In Summary

Kelaty House, London

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SLIDE 61

Creating the Future of Living – In Summary

Business is fundamentally scalable and set for growth Resilient, Flexible & Cash Generative

UK market leader in developing & managing residential for rent (PBSA and BtR) Strong underlying market fundamentals driving growth Growing institutional demand for new projects, both from UK and overseas investors Scalable business platform with full end-to-end offering A strong track record of ‘on time and on cost’ project delivery High earnings visibility with new build pipeline stretching 3-4 years out Robust capital structure, working capital light model and low gearing

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SLIDE 62

Q&A

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SLIDE 63

Tour Duncan House

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SLIDE 64

Duncan House

Entered contract (off market) Topping out Ceremony Construction commenced Planning submission Discussions commenced with University

  • f London

Practical Completion Forward fund to UPP / University

  • f London

Planning granted Jan 2015 Jun 2015 Nov 2015 Aug 2016 Dec 2016 Nov 2016 Sept 2018 Aug 2019

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Student Accommodation 32 storey tower and 4 storey low rise Student Accommodation providing 511 beds, 420 student cluster bedrooms & 91 studios. 7 student communal areas offering various study, recreation and relaxation

  • pportunities.

Academic 2,786 sqm, 4 storey academic block designed to accommodate teaching spaces, lecture theatres and fully service dining facilities. External landscaped courtyard and furnished for social gatherings. Residential 8 storey residential includes 23 private residential apartments and 22 affordable/shared ownership housing partnerships. Communal family play space sheltered within an enclosed roof garden. Commercial Ground floor corner plot 62 sqm off Jupp/Ward Road Development Value

  • 1. Student accommodation &

affordable workspace = £78,480,795

  • 2. Academic = £10,252,022
  • 3. Residential = £13,866,084

Total Development Value = £102,598,901

Duncan House - Highlights

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SLIDE 66
  • Glossary of terms
  • Presentation team – biographies
  • Projects – list and scheduled completion dates
  • Financial track record of Group

Appendices

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SLIDE 67

Glossary of Terms

BtR Build to rent CAGR Compound annual growth rate EBITDA Earnings before interest, taxes, depreciation and amortisation GOI Gross operating income HMO House in multiple occupation NOI Net operating income PBSA Purpose built student accommodation PG Post graduate PRS Private rented sector UG Under graduate

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Alex Pease - Group Investment Director

  • Joined WJ in 2010 & promoted to the role of Group Investment Director in 2013
  • Alex is a chartered surveyor (MRICS)
  • Previously Alex spent 6 years in the Savills Residential Investment team specialising in brokerage, consultancy and valuation across all residential asset classes

Richard Simpson - Chief Executive Officer

  • Joined WJ in January 2019 as CEO
  • Richard has 17 years’ experience working in the property development and student accommodation sector, most recently as Group Property Director at Unite

Group plc (“Unite”)

  • Richard’s board level roles include seven years serving on the Plc Board of Unite as well as two years in a Non-Executive capacity with CityWest Homes

Phil Byrom - Chief Financial Officer

  • CFO of WJ since joining the business in 2002
  • Phil qualified as a chartered accountant with PwC in 1990, with whom he progressed rapidly to senior manager and had responsibility for several public company

clients

  • Prior to joining WJ Phil spent 7 years in industry where he held several posts as group financial controller and finance director, including divisional finance director

at BWI plc

Rebecca Hopewell - Chief Executive Officer Fresh Property Group

  • Joined Fresh Property Group in 2010 to create a specialist 3rd party management company (wholly owned by WJ)
  • Has over 15 years of experience in student accommodation industry
  • Prior to specialising in student accommodation, Rebecca spent 17 years as a Senior Director for Sanctuary Housing Association

Jim Davies – Managing Director, Newmark

  • Joined the business in 1999, and is currently Managing Director of Newmark Developments (wholly owned by WJ)
  • Jim is tasked with focusing on bringing the sites in the land bank forward, ensuring they are ready for the student construction teams to commence work

immediately.

  • Prior to joining WJ Jim worked with Mowlem, Norwest Holst and Allenbuild

Presentation Team

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Projects List & Completion Dates

PBSA Beds Completion Planning Status Little Patrick Street, Belfast 430 2020 Granted Forest Road, London 353 2020 Granted Albion Way, London 283 2020 Granted Whitefriars, Coventry 778 2020 Granted Swansea 245 2020 Granted Military Road, Canterbury 197 2020 Granted Liverpool Road, Chester 323 2020 Granted Kelaty, Wembley, London 599 2021 Granted Cathedral Street, Glasgow 422 2021 Granted Rockingham Street, Sheffield 691 2021 Granted Dundee Street, Edinburgh 216 2021 Granted Wilder Street, Bristol 348 2021 Granted Bath Lane, Leicester 462 2021 Granted Birmingham 608 2022 Pending Exeter 154 2022 Pending Edinburgh 270 2022 Pending Bath 191 2022 Pending BTR Bournemouth 159 2020 Granted Reading 315 2021 Granted Wembley 301 2021 Granted Sutton 166 2021 Granted Leicester 184 2021 Granted Sheffield 71 2022 Granted Hove 213 2022 Pending Woking 336 2023 Pending

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2024

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SLIDE 70

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