Student Finance Plc Annual Investor Call 24 April 2019 Sections - - PowerPoint PPT Presentation

Student Finance Plc Annual Investor Call 24 April 2019

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Sections

1. Executive Summary 4 2. Board of Directors 6 3. Portfolio Overview 8 4. Financial Covenants 13 5. Operational Update 15 6. Summary 17 Appendix: Contacts

SECTION 1 – EXECUTIVE SUMMARY

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1.1 Executive Summary

1. Solid financial performance 2. Internalised operations through rebrand and changes in management 3. Capital expenditure investment continues 4. Financial covenants satisfied 5. Group portfolio continuing to grow

SECTION 2 – BOARD OF DIRECTORS

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2.1 Board of Directors

Internal

Nathan Goddard – Chief Executive Officer

• Nathan has over 20 years of industry experience and was previously Chief Operating Officer at Student Roost
• Previously held senior roles at Student.com, Greystar and Unite

Jon Hire – Chief Financial Officer

• Jon is a Chartered Accountant with over 20 years’ experience in real estate and finance roles
• Previously held senior role at Enterprise Inns plc

Tim Butler – Founder & Chief Strategist

• Formerly CEO of Student Roost with over 20 years experience in the sector

External

• Zachary Vaughan – Managing Partner of Brookfield Property Group and is Head of Brookfield’s European real estate investments group; 20

years’ experience in the real estate sector

• Kevin McCrain – Managing Director of Brookfield Property Group and is responsible for advising on all legal aspects of Brookfield’s real

estate platform, specifically focusing on European acquisitions and dispositions

• Brad Hyler – Managing Director of Brookfield Property Group and is responsible for leading Brookfield’s European real estate group’s

business development efforts in Europe

• Natalie Adomait – Vice President of Brookfield Property Group and is involved in the Asset Management for Brookfield’s European real estate

investments

• Jeannie Wong– Vice President of Brookfield Property Group and is involved in the Asset Management for Brookfield’s European real estate

investments

SECTION 3 – PORTFOLIO OVERVIEW

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3.1 Student Finance Plc Portfolio Overview

Newcastle

1 Property 371 Beds

• Newcastle University is co-investing in one of the UK’s

largest regeneration projects

• 24 acre, £350m Science Central site in construction
• £200m multi-use Kings Gate Building

Sheffield

2 Properties 1,512 Beds

• State of the art £81m Diamond building for engineering

students and staff

• UoS invested over £100m in a new Arts & Humanities

facility / other building refurbishments

Nottingham

2 Properties 1,796 Beds

• £200m investment in Jubilee Campus
• Plans for further £200m investment over next 10 years to

double the number of engineering students

• NTU invested over £250m over last decade

Leicester

7 Properties 1,849 Beds

• UoL invested £42m into their sciences facility, the largest

investment in medical teaching

• DMU undergoing £136m campus transformation including

new property and refurbishments

Wrexham

1 Property 156 Beds

• Glyndwr University have released a 5 year plan to double

the number of full-time graduate students

• Developing relationships with overseas HE partners to

forge stronger international links

Key Portfolio Overview

• 97.3% of beds located in

cities with at least two Universities, of which one is a top 30 ranked institution

• The properties are located on

average less than 15 minutes’ walk from either town centre

• r the nearest university

campus

• Note that the Student Finance

Plc portfolio is part of the wider Student Roost Group portfolio, which is currently sized at over 17,264 (1) beds to date

(1) Excluding developments and Collegelands

Total

13 Properties 5,684 Beds

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3.2 Student Finance Plc Portfolio Characteristics

Room Types

• Student Roost offers a wide range of room types for students, catering

to a broad spectrum of pricing points: ‒ Majority of rooms are ensuite or studios ‒ For 2018/19 the cheapest offering is £75 pw and the most expensive offering is £289 pw

Typical Tenancy Terms

• Tenancies marketed in the 2018/19 academic year have an average

length of c. 46 weeks (vs. 2017/18: 47 weeks)

• Rents are inclusive of utilities bills, internet and contents insurance
• Offering an “all-inclusive” price represents a substantial advantage
• ver the alternative HMO private sector

Annual Agreements

• In 2018/19, c.23% of beds within the portfolio are operated under

annual agreements with universities, education providers and other third parties ( vs. 2017/18: c.20%)

• Agreements are in place in all markets within the Student Finance Plc

portfolio

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3.3 Student Finance Plc Budgeted Performance

Budgeted Performance: Academic Year 2018/19

• The Student Finance Plc portfolio to operate at 96% occupancy
• Of the 13 properties within the Student Finance plc portfolio, 9 properties to be 100% occupied
• Weighted average bed rent was marketed at £130 per week (2017/18: £122)
• Average room tenure to be 46 weeks (2017/18: 47 weeks)
• Achieved calendar year to December 2018 annual gross rental income and net operating income of £33.5 million and £22.4 million, respectively
• Avg. Weekly
• Avg. Tenure

Asset Market

• No. of beds

Occupancy % Rent (£pbpw) (no. weeks) Eastern Boulevard Leicester 80 100% 133 51 Brookland Leicester 255 100% 132 48 Newarke Leicester 284 100% 132 48 Queens Court Leicester 143 100% 95 51 Regents Court Leicester 182 100% 99 48 The Summit Leicester 369 100% 139 54 Upperton Road Leicester 536 100% 134 50 Newcastle 1 Newcastle 371 74% 154 37 Nottingham Two Nottingham 1,096 100% 142 49 Trinity Square Nottingham 700 100% 149 45 Sheffield 2 Sheffield 520 85% 113 45 Sheffield 3 Sheffield 992 92% 114 42 Snowdon Hall Wrexham 156 99% 101 44 Total Student Finance Plc Portfolio 5,684 96% 130 46 AY 2018/19

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3.4 Student Roost Group Portfolio

Highlights

• 4th largest operator of student housing in the UK with

currently over 17,000 operational beds with plans to increase this to 20,000 beds

• 49 operating assets and 4 properties currently under

development

• Academic Year 2018/19: ~95% occupancy
• All assets freehold or leasehold (>100 years)
• Led by a seasoned management team with over 50

years of experience in the student housing sector

• Approximately >350 full-time property employees

running day-by-day operations of these properties (management, front house, housekeeping, facilities, security)

(x) No. of assets in city Aberdeen 976 beds (3) Edinburgh 331 beds (3) Newcastle 936 beds (3) York 356 beds (1) Glasgow 2,390 beds (6) Belfast 2,332 beds (5) Sheffield 2,869 beds (5) Liverpool 1,557 beds (5) Wrexham 156 beds (1) Nottingham 1,960 beds (3) Leicester 1,849 beds (7) Poole 308 beds (1) Birmingham 1,392 beds (2) Bath 104 beds (1) Bournemouth 454 beds (1) Southampton 283 beds (1) Chester 736 beds (2) Durham 200 beds (1) London 527 beds (1) Swansea 722 beds (2)

SECTION 4 – FINANCIAL COVENANTS

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4.1 Financial Covenants

* LTV is calculated based on the aggregate principal amount outstanding of the Net Senior Debt bears to aggregate market value of the properties calculated by reference to the most recent valuation. Net Senior Debt means the aggregate amount outstanding of the senior debt minus cash deposits held in the Defeasance Account, the Cure Account, all of the Disposal Accounts and the Lock-Up account

• All financial covenants are currently in compliance and no trigger events have occurred

Historical NOI Interest Cover

• Historical ICR is calculated based on an annualised basis using 12 months of actual NOI from November 2017 to

October 2018 and actual finance costs incurred Projected NOI Interest Cover

• Projected ICR is based on the 12-month forward looking operating budget to October 2019

Loan to Value

• Current LTV based on the external valuation completed as of 31 December 2017
• External desktop valuation as of March 2019 is currently in progress

Actual Covenant Trigger Event Historical NOI ICR 3.62x ≥ 1.50x < 1.75x Projected NOI ICR 3.88x ≥ 1.50x < 1.75x Loan to Value 51.4% N/A > 70.0%

SECTION 5 – OPERATIONAL UPDATE

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5.1 Operational Update

Facilities Management (“FM”) Provider

• In early 2018 FM and letting services, including sales and marketing, were brought

in-house from Derwent Facilities Management, with the exception of the Leicester properties (sales and marketing continued to be provided by SuLets)

Corporate Internalisation

• In late 2018 the back office function internalisation project was completed
• Benefits of internalisation will include improved process efficiency and reduction in
• verall corporate costs

Capital Investments

• Management has employed a robust lifecycle capital expenditure programme
• Strategy implemented to ensure funds are spent across all areas of the portfolio

against “Value Add”, “Cyclical” or “Defensive” criteria

• Lifecycle capex supported by a Sinking Fund, sized at 3% of Rental Income
• In addition to the capex supported by the Sinking Fund, c.£1.2 million was invested

across two of the assets during the year to ensure best-in-class facilities and a student-focused service

Safety Review

• Following a detailed review of all properties, two require work to be undertaken on

the cladding

• An independent safety, fire and risk report concluded that the interim fire measures

put in pace are acceptable for continued occupation of the properties

• Student Roost continues to work with all relevant parties to enable the cladding to be

rectified as soon as practically possible

SECTION 6 – SUMMARY

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6.1 Summary

Strong historical performance – occupancy of 99% in year to September 2018 Excellent progress on business initiatives – developing strong team, internalisation and capex development Future opportunity to add newly acquired assets to future bond issuances

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Current performance – expected occupancy of 96% in academic year to September 2019

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APPENDIX - CONTACTS

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Contacts

Nathan Goddard Chief Executive Officer Tel: 0121 726 5072 Email: nathan.goddard@studentroost.co.uk Jon Hire Chief Financial Officer Tel: 0121 726 5086 Email: jon.hire@studentroost.co.uk