Student Finance Plc Annual Investor Call 24 April 2019
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 2
SECTION 1 – EXECUTIVE SUMMARY
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 4
SECTION 2 – BOARD OF DIRECTORS
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 6
SECTION 3 – PORTFOLIO OVERVIEW
3.1 Student Finance Plc Portfolio Overview Key Portfolio Overview • Newcastle University is co-investing in one of the UK’s Newcastle largest regeneration projects • 97.3% of beds located in 1 Property • 24 acre, £350m Science Central site in construction cities with at least two 371 Beds • £200m multi-use Kings Gate Building Universities, of which one is a top 30 ranked institution • State of the art £81m Diamond building for engineering Sheffield • The properties are located on students and staff 2 Properties average less than 15 minutes’ • UoS invested over £100m in a new Arts & Humanities 1,512 Beds walk from either town centre facility / other building refurbishments or the nearest university campus • £200m investment in Jubilee Campus Nottingham • Plans for further £200m investment over next 10 years to 2 Properties • Note that the Student Finance double the number of engineering students 1,796 Beds Plc portfolio is part of the • NTU invested over £250m over last decade wider Student Roost Group portfolio, which is currently • UoL invested £42m into their sciences facility, the largest Leicester sized at over 17,264 (1) beds investment in medical teaching 7 Properties to date • DMU undergoing £136m campus transformation including 1,849 Beds new property and refurbishments • Glyndwr University have released a 5 year plan to double Wrexham the number of full-time graduate students 1 Property • Developing relationships with overseas HE partners to 156 Beds forge stronger international links Total 13 Properties 5,684 Beds 8 (1) Excluding developments and Collegelands
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 over 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 9
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 AY 2018/19 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 10
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 Aberdeen increase this to 20,000 beds 976 beds (3) Glasgow 2,390 beds (6) • 49 operating assets and 4 properties currently under Edinburgh development 331 beds (3) • Academic Year 2018/19: ~95% occupancy Belfast Newcastle 2,332 beds (5) 936 beds (3) • All assets freehold or leasehold (>100 years) Durham 200 beds (1) • Led by a seasoned management team with over 50 years of experience in the student housing sector Liverpool York 1,557 beds (5) 356 beds (1) • Approximately > 350 full-time property employees running day-by-day operations of these properties Sheffield 2,869 beds (5) (management, front house, housekeeping, facilities, Chester security) 736 beds (2) Nottingham Wrexham 1,960 beds 156 beds (1) (3) Leicester Swansea 1,849 beds 722 beds (2) (7) London 527 beds (1) Birmingham 1,392 beds (2) Bournemouth 454 beds (1) Bath Southampton Poole 104 beds (1) 283 beds (1) 308 beds (1) (x) No. of assets in city 11
SECTION 4 – FINANCIAL COVENANTS
4.1 Financial Covenants 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% • 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 * 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 13
SECTION 5 – OPERATIONAL UPDATE
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