17 April 2015

Aberdeen

CAPITAL MARKETS DAY

1

09:30 Welcome Mark Allan

09:35 Operations in Aberdeen Richard Smith

09:50 Developing in Aberdeen Richard Simpson

10:00 Student accommodation and the new market Mark Corver

in HE: some evidence from UCAS

10:15 UK student housing market overview Philip Hillman

10:30 City tour introduction Ashley Gibbons

The Old Fire Station

Spring Gardens

Causewayend

AGENDA

Richard Smith, Managing Director of Operations

OPERATIONS IN ABERDEEN

3

Two strong and popular Higher Education

Institutions (HEIs): the University of Aberdeen (UoA) and Robert Gordon University (RGU)

UoA is ranked 44th and RGU 64th in the Times Higher Education UK ranking

Total number of full-time students across both HEIs

is 20,489

Both Universities are looking to increase international and British students with the removal of the cap in 2015

Unite Students operates c.1,300 beds with a team of 30 locally

We have achieved strong rental growth driven by:

- Asset investment

- University relationships

- Service culture

- Strong returning customer market

OPERATIONS IN ABERDEEN

Applicants vs acceptances for Aberdeen University

King Street Exchange

Mealmarket Exchange

Spring Gardens The Old Fire

Station

Year of opening 2003 2003 1992 2001

Build type Traditional

(modular shower

pods)

Traditional (modular shower

pods) Traditional Traditional

No. of bedrooms 178 360 490 273

No. of kitchens 37 76 96 56

No. of blocks 3 3 11 5

4

With an average age of 15 years, Aberdeen is 8 years older than the Unite Students estate

average

Our proactive approach to maintenance and lifecycle investment – Ageless Asset – ensures we are able to offer a quality product and a great level of service and satisfaction

We focus on creating buildings that are:

- Sustainable – environmentally, financially and physically

- Safe – for our students, employees and all

- Compliant – up to date with the latest regulations and best practice

MAINTAINING OUR ESTATE

5

OUR APPROACH TO MAINTENANCE – AGELESS ASSETS

Property 5 year Compound Rental Growth

King Street Exchange

4.8%

Mealmarket 4.9%

Spring Gardens 6.8%

The Old Fire Station 5.1%

6

Since 2013 we have seen an 18% reduction in

maintenance jobs. On average, jobs cost £48 and

take 45 minutes to complete

Our proactive approach ensures that building age

does not necessarily impact the maintenance

requirements / number of jobs (MRF):

Proactive lifecycle investment plan driven by our

detailed and robust condition surveys and rental

growth opportunities. Investments include:

- Kitchen upgrades

- Bed upgrades

- Flooring and decoration

INVESTING IN THE ESTATE – THE BENEFITS

Age does not impact rental growth

Spring Gardens 1992 2.5 MRF per bed

Mealmarket 2003 2.5 MRF per bed

The Old Fire

Station

2001 3.1 MRF per bed

King Street 2003 3.1 MRF per bed

All Unite Students 3.4 MRF per bed

7

Maintenance is a key factor influencing customer satisfaction. Customers rightly want a clean,

safe and well-maintained building

- 70% of our customers rate our maintenance standard as excellent, up 17% in three years

- Ease of logging and communicating faults improved materially, up c. 20% in three years

MAINTENANCE – A CRITICAL SERVICE FACTOR

Our scale drives efficiency:

Real financial savings

Management of all trades in-house excluding gas

Upskilled security for out-of-hours cover

Training delivered in-house by hands-on experts

Customers want:

Clear, appropriate SLAs

First time or clear timeline to fix

Easy route to log issues

8

Maintenance comprises P+L and capitalised (lifecycle) elements:

- P+L – replacement

- Capitalised – improvements, upgrading specification

P+L maintenance spend is c.20% of total operating costs

Opportunity to drive savings that will contribute to NOI margin improvements

Lifecycle investment (capital spend) is undertaken each year against a eight year cycle programme. This programme has been developed via extensive condition surveys and customer

feedback

Total investment of £11 million (c. £5m on see-through basis) per annum on lifecycle capex (£250 per bed) – capex is reflected in valuations

LFL rental growth is stated after lifecycle capex (0.3% impact)

TOTAL MAINTENANCE SPEND

£m £ per bed

Reactive 7.3 167

Planned 2.8 64

Lifecycle 1.3 30

11.4 261

% of revenue 4.2%

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HOME FOR SUCCESS

Digital

c.667,000 unique visitors year on year, up 88% mostly driven by organic SEO

27% of visitors using mobile devices, up 58%

76% increase in visits to our new site from China, driven by organic rather than paid

searches

Almost a 100% increase on bookings completed via mobile devices

45% of all maintenance jobs logged via our maintenance app, up 100% on last year

Coming soon: dedicated city level welcome guides and package to support clearing, help steer potential customers to available rooms and drive conversion

Physical – Aberdeen LED

Saving in energy usage (kWh) – 8%

Saving per bed – c.£40

Reduction in lighting related maintenance

jobs – 74%

Scalable operating platform can support substantial

growth in beds under management

Current overhead per bed £439

Marginal overhead per bed £82

Marginal benefit per head £357

Marginal benefit equivalent to c.50bps on yield

Marginal overhead is principally IT infrastructure / licensing costs

Completion of PRISM operating platform creates capacity to accommodate growth in beds under

management of at least 50%

Upgrading our overhead efficiency target

- Achieved 60bps of see-through GAV target in 2014

- Updated target to 35-45bps over time at FY14

results

- Now targeting 25-30bps by 2017 due to planned USAF acquisitions

1. Source: Unite annual accounts (based on total number of beds). Efficiency measure calculated as total

operating expenses less management fees as a proportion of Unite's share of gross property asset value

2. Source: Unite annual accounts (based on Unite NOI divided by see-through number of beds)

£3,000

£3,250

£3,500

£3,750

£4,000

£4,250

£4,500

£50m

£60m

£70m

£80m

£90m

£100m

2011 2012 2013 2014

NO

I p

er

Be

d

NO

I

NOI (£m) NOI per Bed

50 bps

60 bps

70 bps

80 bps

90 bps

100 bps

£450

£475

£500

£525

£550

2011 2012 2013 2014

Eff

icie

nc

y m

ea

sure

Ove

rhe

ad

s p

er

be

d

Overheads per bed Efficiency measure

SIGNIFICANT ECONOMIES OF SCALE AVAILABLE

Unite gross overheads per bed1

Unite NOI per bed2

10

Mealmarket Exchange, Aberdeen

Richard Simpson, Managing Director of Property

DEVELOPING IN ABERDEEN

THE MARKET AND PROPERTY TRENDS

The student accommodation market in Aberdeen:

Shortage of good quality, affordable, well-

located accommodation for students in

Aberdeen

UoA and RGU enjoying record demand for

places

Both Universities offer an accommodation

promise to all 1st year and international students

University and corporate PBSA accounts for only

30% of student accommodation provision

International students account for 23% of the

UoA and 11% of RGU student population

49%

22%

15%

14% Private Residential Sector

University Purpose Built

Student Accommodation

Parental/Guardian home

Corporate Purpose Built

Student Accommodation

12

Where students live in Aberdeen

Source: HESA

PBSA competitive landscape in Aberdeen

THE MARKET AND PROPERTY TRENDS

PBSA yields in the city have tracked

the wider UK PBSA market

Other commercial real estate sectors broadly tracked the national NIY average too

13

Source: Knight Frank

Aberdeen Real Estate NIY movement

THE MARKET AND PROPERTY TRENDS

Buoyant residential market

- Long standing supply / demand imbalance

- Annual shortfall of 350-800 homes per annum for the last five years

- 2,300 new homes required annually for the next 25 years

- Current annualised supply ratios equate to 18% to 53% shortfall of new supply (Source: Government Demographic projections)

Growing demand for housing

driven by strong local economy

Historically oil price shows greater

volatility compared to house

prices that have typically stayed

between plus or minus 10%

Aberdeen has growing reputation

as an energy, training and

knowledge hub for the energies

sector

14

QoQ price change oil vs avg Aberdeen property prices

Source: Rettie & Co

CAUSEWAYEND: THE DEVELOPMENT STORY

Exchange Jan 14

Planning Nov 14

Completion Summer 16

Customer Acquired 399 student bed site from

Aberdeen City Council

Longstanding operational presence

in the city helped the selection

process

Site forms a derelict listed school

building in city centre close to

Aberdeen University

Partnering Strong partnerships with the Council

Competitive build cost secured

through early contractor

engagement using a vested

relationship approach

Engagement Planning value add

15

CONSTITUTION STREET: THE DEVELOPMENT STORY

Customer Site secured off-market and

unconditionally in a market where

barriers to entry are high

Subject to planning, the scheme will

provide a home for c.650 students

Opportunity A well-located development site in

central Aberdeen at a competitive

underlying land cost

The immediate area is one of the

favoured addresses by students

because of its proximity to the city

centre and the Universities

Enhanced communal and amenity

space incorporated within the

scheme design

16

Exchange Sep 14

Planning Oct 15

Completion Summer 17

BUILD COST INFLATION

17

Strength of Aberdeen economy is driving

higher than average build cost inflation

Land price a small proportion of TDC

(typically 15%-20%) so land inflation and

planning related land costs such as CIL less

sensitive to project viability

Build cost most important input – currently

running at 4%-5% pa inflation

Partnering with main contractors and

supply chain is key

60% of build cost items on pre-agreed rates

with supply chain, minimising disruptive

impact of increasing contractor activity

Secured pipeline on track to deliver in line

with target returns

Further selective development

opportunities still available and good

progress being made

2015 2016 2017 2018 Total

London 5.0% 5.0% 5.0% 4.5% 19.5%

Aberdeen 4.0% 4.5% 5.0% 4.5% 18.0%

UK average

(excluding London)

3.7% 4.1% 4.3% 4.0% 16.1%

YoY construction cost inflation

Presentation link:

18

20

UK Student Housing Market Philip Hillman

Overview

19

2015 Market Overview

• Q1 has seen record investment volumes and has been dominated by large portfolio

transactions in the market with overseas investors accounting for the majority of

purchasers.

• 2015 will see unprecedented transaction volumes, ruled by the trading of large

operational portfolios

• Portfolio premiums are having a real impact on pricing of such opportunities and can

range between 25-50 basis points on a net initial yield basis.

• UCAS applications continue to rise steadily with a total number of applications in

excess of 608,000 reflecting a 2% year on year increase

• The potential outcome of the general election does not appear to be significantly

influencing investment decisions and underlying confidence in the sector

Unprecedented investment activity

20

Significant Increase In Transactions Record transaction levels with Q1 having a higher volume of transactions than the whole of 2014

JLL predict over £5bn of student housing to transact in 2015

21

Transactions Overview Portfolios have dominated the investment landscape in Q1 2015

Date Property Town/ City Size

(beds)

Operational/

Development Sale Price

Price Per

Bed NIY Vendor Purchaser

Jan-15 Mansion Hive London 203 Operational £37.75m £185,961 5.50% Frogmore LaSalle IM

Jan-15 Stonebridge

House Bristol 58 Operational £5.5m £94,828 6.50% Urban Creation

Private South

African investor

Feb-15 Liberty Fields London 79 Operational £17.25m £218,354 TBC Brandeaux Empiric

Feb-15 ISL London 347 Operational Confidential Confidential 5.00% Loftus Trust Round Hill

Feb-15 Eastside Locks Birmingham 625 Forward Funding £43.6m £69,760 5.40% Alumno Developments LaSalle IM

Mar-15 Paris Gardens London 253 Operational £61m £241,107 4.50% McLaren/Apache JV Letter One

Mar-15 Union Portfolio National Portfolio 839 Forward Funding £83m £98,927 n/a McLaren Letter One

Mar-15 Pure Portfolio London 2,170 Operational Confidential Confidential 4.50% Pure Student Living Letter One

Mar-15 Brandeaux

Portfolio National Portfolio 16,748 Operational £1.15bn £68,665 5.50%

Brandeaux Student

Accommodation Fund CPPIB

Total 21,322 £2bn*

* Excludes Nido portfolio

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Transactions Overview Opportunities under offer or coming to market

Status Property Town/ City Size

(beds)

Operational

Development

Sale Price/

Marketing Price Vendor Purchaser

Under Offer Nido Portfolio London 2,526 Operational Confidential Round Hill Capital Confidential

Under Offer Westbourne

Portfolio National Portfolio 5,867 Operational Confidential

OCM Luxembourg

Unicity Holdings Confidential

Under Offer Assam Place London 346 Operational Confidential Alternative Developments

Guernsey Limited Confidential

Under Offer AUB Portfolio National Portfolio 2,099 Operational Confidential AUB UK Student

Accommodation Fund Confidential

In Market Holly Court Bristol 45 Operational £5.6m RBS n/a

To Be Marketed Mansion

Portfolio National Portfolio 5,500 Operational

TBC - expected to be

c.£500m

Mansion Student

Accommodation Fund n/a

23

Regional Yield Curve The past 12 months has seen yields hardening, and further expected upon completion of other portfolios

4.00%

4.50%

5.00%

5.50%

6.00%

6.50%

7.00%

7.50%

Jan-14Opal 3,

Notingham

Mar-14Opal/PWCPortfolio

May-14Tramworks,

Glasgow

Jul-14Cordea Savills

Portoflio

Aug-15Printworks,

Exeter

Oct-14King Square

Studios,Bristol

Oct-14IPG Portfolio

Mar-15BrandeauxPortfolio

24

London Yield Curve In London, the curve has been much more aggressive

4.00%

4.50%

5.00%

5.50%

6.00%

6.50%

Mar-14The Curve,

Whitechapel

May-14Canto Court,

Old Street

May-14OCB Portfolio,Central London

May-14Scape,

Greenwich

Jan-15Three Colts

Lane, London

Feb-15ISL, London

Mar-15Pure Portfolio,

London

Mar-15Paris Gardens,

London

25

Investor Demand vs Supply

• Significant weight of capital continuing to look to deploy in the sector

• Still unsatisfied demand from unsuccessful bidders on recent portfolios who are

looking for scale

• Continued demand from successful purchasers who are looking to aggregate further

• Scale being driven by successful bidders is a competitive driver for other investors

not wanting to get left behind

• Limited supply of ‘best in class’ portfolios to satisfy existing demand

Increasing demand, limited supply

26

Investors in UK PBSA The below outlines the breakdown of investors in Q1 2015

61%

34%

5%

Pension Funds

Russian Investors

Other

9%

91%

Established

New Entrant

Types of Investors in UK PBSA in Q1 2015

(£2bn)

27

Investors in UK PBSA Recent investors in the sectors

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Strategic Objectives of Investors

• Creation of an operational platform to benefit from management efficiencies and to

build more scale

• Placement of capital in a stable economic environment with robust legal rules and

strong currency

• Purely return driven investment, with the attraction of annual rent reviews

• Opportunistic investment

• Development and/or aggregation of portfolios to strategically dispose upon a

specified investment horizon

Investors in the market are currently doing so for a variety of reasons

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Increasing capital

flows

Increased competition in conventional real estate

sectors

Changing

demographics

Reasons for Investing in PBSA

Higher returns,

with diverse drivers

of income growth

Good

demand/supply

dynamics

Maturing, becoming

more institutionally

acceptable Diversification –

Counter cyclical

sectors

Stable, long term

income stream

30

Threats

• Effects of unstable States on the world economy

• University funding uncertainty

• Election outcome

• Investment Horizon (some of these portfolios/assets being bought are unlikely to

come back to market in the short term)

• Increase in build costs and the effect on regional development

• Regional planning changes – if the 30% ‘affordable rent’ provision is adopted as in

London

Investors in the market are currently doing so for a variety of reasons

31

• Key transactions and mandates

- Hotels – 144 Travelodge portfolio sold to US

consortium made up for private equity groups and an

investment bank for £520m

- Student Housing – c. £500m Pure Student Living

portfolio sold to Letter One

- Student Housing – marketing c. £500m Westbourne

Portfolio

Student Housing

from £166m in 2009

to c£2bn last year

Increased capital flows

in alternatives – from £691m

in 2009 to £8.3bn in 2013

Hotels

88% rise in 2013 to £3.3bn

and YTD 2014 at £4bn

Healthcare

YTD 2014 at £2bn

Alternative Investments Investment volumes and key transactions

32

Alternative Investments

33

Why Student Housing and Healthcare are ‘in vogue’?

34

36

Thank You

35

CITY TOUR INTRODUCTION

Ashley Gibbons, Area Manager – Scotland

OPERATIONS IN ABERDEEN

Ashley Gibbons, Area Manager – Scotland

HOME FOR SUCCESS

A £40 million investment over two years to

strengthen our brand

16 signature commitments channelled into four key

areas: physical, digital, service and people

New visual identity

£21 million investment in LED lighting across the

estates

31 properties complete

Showing 22% energy saving to date

25 receptions and common rooms refurbished in

2014 with the rest on track to be complete this year

Launched a new student website and two student

apps

Customer satisfaction at all time high

Occupancy at 99%

Paying Living Wage

38

HOME FOR SUCCESS ROLL OUT COMPLETE IN ABERDEEN

Physical Digital Service People

LEDs – latest lighting

technology to help

students sleep, relax and

have fun

Information the way

students want it

Services available when

students need them

A brilliant place to work

Vibrant, multi-functional

spaces for every student

and every need

Digital community –

connect with other

students from across the

UK

All shared areas cleaned

at least fortnightly – for

free

Tailored career paths

Personalisation of space Website experience like

any other top youth

brand

Support and opportunities

to help students grow

Flexible benefits (inc.

Living Wage)

Clear identity, modern

and youthful feel of

‘home’

20Mb free Wi-Fi

everywhere, with annual

upgrades

Buildings are full of life

and fun

Great communication

Outside of the Physical elements we have seen tangibles benefits:

Improved interaction with teams

Study rooms booked out in advance

Increased engagement

Creating a community through organising events and bringing people together

LED savings, reduced carbon energy savings – meeting business plan

39

The University of Aberdeen

44 in the Times Higher Education ranking

11,699 full-time students

Nearly one third of students are Scottish and 23% of students are international

Working in partnership for 13 years, over 400 beds on nominations agreement

First property in Aberdeen, Spring Gardens, bought from University in 2002

The second most over subscribed University - 11.7 applicants to places

Contributes £400 million to the local economy

Robert Gordon University

64 in the Times Higher Education ranking

9,207 full-time students

The top University for graduate jobs in 2013 – 97.7%

Voted the ‘Best modern University in the UK’ by The Times Good University Guide 2012

First nomination with Unite Students in 2013, now over 400 beds secured over

five years

Growing relationships with five-year nominations agreement in place

UNIVERSITY PARTNERSHIPS

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Aberdeen

Occupancy at 98-100% for the last seven years

Sold out for 2015/16 academic year

Strong forecast growth

Revenue management

Strong sales growth in 2015/16

We use revenue management techniques to driver pricing, working through pricing tiers dependent on the pace of sales

From 2016/17 we will have established a new ‘automated’ revenue management capability

to ensure we maximise revenue

STRONG SALES PERFORMANCE

Aberdeen direct-let sales by price

41

SPRING GARDENS REBURBISHMENT

Spring Gardens

Built in 1992

Purchased in 2002 from the University of

Aberdeen

Located opposite Aberdeen College in the city

centre

Refurbishment

9 week delivery programme

Refurbishment of 410 bedrooms over the summer

Total project cost of £3.3 million (£8K per bed)

Target uplift of £14 per bed (£113 per week)

Achieved £40 per bed, (£139 per week)

42

SPRING GARDENS PRE-REFURBISHMENT

Shared kitchen Bedroom Shared living area

SPRING GARDENS POST-REFURBISHMENT

Shared kitchen En-suite bedroom Shared living area

43