Purpose Built Student Accommodation Summit

PeterBatesChiefExecu1veOffice

UniLodgeAustralia

Presentation Contents

1.  UniLodge Snapshot 2.  UniLodge Current activity 3.  The Education Sector 4.  History of the PBSA Sector 5.  Issues for the PBSA Sector

•  Role of PBSA •  Affordability •  Supply vs demand •  Threats & Opportunity •  Economy

UniLodge – Snapshot •  Respected student accommodation

brand •  20+ years in operation – oldest private

operator in Australia •  60+ properties and 12,800 beds under

current management •  16,421 beds under contract –open by

2018 •  Locations - Adelaide, Auckland, Brisbane,

Canberra, Darwin, Melbourne, Sydney and Wellington

•  Independent, third party manager •  On Campus, Strata, Off Campus

properties •  Trusted relationships with universities,

education providers, education recruitment agents

•  Employ over 350 staff

UniLodge Managements by Ownership Type

Strata

OnCampusOffCampusSingleOwner

Locations

Adelaide 973 Brisbane 3,336

Canberra 3,975

Darwin 303

Melbourne 4,631

Sydney 1,890

AUSTRALIA

Locations

NEW ZEALAND

Auckland 1,047

Wellington 301

UniLodge - Our Strengths

•  Scale of operation –national business •  Depth of expertise in property openings and acquisitions. •  Strength of team - many with over ten years service •  Acumen - blue chip partners and shared learning - GPT, ANU, RMIT,

Uni of Auckland, UNSW, VU, UC, •  Global brand recognition •  Community Spirit Residential Life programme •  Large marketing distribution network in the country •  First class operating platform •  Independent Operator of choice for ALL ownership models •  Development / Feasibility expertise

Key Educational Partners

•  The University of Melbourne •  The University of Queensland •  The University of Sydney •  The University of NSW •  University of South Australia •  The Australian National University •  Monash University •  University of Canberra •  RMIT •  Victoria University •  Shafston College •  Taylor’s College •  Trinity College •  The University of Auckland •  Victoria University of Wellington •  Charles Darwin University

UniLodge Properties – Opened 2016 UniLodge @ RMIT Bundoora

•  Partnership with RMIT •  A first for the Bundoora Campus •  370 bedrooms •  Mix of 1 bed, studios, 4 bed multishare •  Central hub and zoned communal spaces •  High quality design and state of the art

UniLodge Current Activity

UniLodge @ VU – Footscray

•  Partnership with Victoria University •  508 rooms •  Studio, 2 bed and 6 bed multishare •  Roof terrace •  Communal areas and Study rooms •  Bright, airy design with great views

UniLodge on Whitaker - Auckland

•  Located in the heart of Auckland Uni precinct

•  Convenient •  300 studio rooms •  High quality finishes

UniLodge Properties – Opening 2017 ANU (SA5)

•  Partnership with the ANU •  5th Project for ANU and UniLodge •  Due to open January 2017 •  500 rooms •  Communal self catered (Burton

and Garran Hall style) •  Roof terrace •  Significant communal space •  Activation with the campus

UniLodge @ UC (next Stage)

•  Partnership with the University of Canberra (UC) •  4th Project for UniLodge and UC •  Due to Open in January 2017 •  Will operate under the NRAS scheme •  500 rooms •  Studio, and multishare rooms

UniLodge on Symonds - Auckland

•  Partnership with Uni of Auckland •  Located in the heart of the

Auckland University precinct •  Due to open in January 2017 •  343 studio rooms

UniLodge South Bank

•  Located in South Bank Brisbane •  Due to open in Feb 2017 •  850 rooms •  Studio, multishare mix •  Extensive common facilities •  Roof top terrace •  Near transport hubs servicing UQ,

QUT, Griffith

UniLodge Properties – Opening 2018

UniLodge @ Park Central, Buranda Brisbane

•  Located in Buranda Brisbane •  Central to all Brisbane Universities and on

major transport nodes •  Due to open in January 2018 •  1600 beds in a single development over

two towers •  Australia's largest student accommodation

property •  State of the art facilities

The Education Sector Landscape

Australia/New Zealand - in demand as an international student destination driven by:

ü  The ranking of our cities in top cities of the world to live ü  The excellent global ranking of our universities ü  Proximity to Asia ü  English language ü  Security ü  Immigration outcome potential

Current Focus from Government on Policy Increasing Competition between Universities for enrolments driving a focus on housing solutions

Top Cities in the World - 2016

Source: Economist Intelligence Unit

Rank City Country1 Melbourne Australia2 Vienna Austria3 Vancouver Canada4 Toronto Canada5 Calgary Canada5 Adelaide Australia7 Perth Australia8 Auckland NewZealand9 Helsinki Finland10 Hamburg Germany

6thConsecuCveYear

Top Universities in the World - 2016

Rank University

22 AustralianNa1onalUniversity

42 TheUniversityofMelbourne

46 TheUniversityofSydney

49 UniversityofNewSouthWales

51 UniversityofQueensland

65 MonashUniversitySource: QS World University Rankings 2016

Rank University

33 TheUniversityofMelbourne

52 AustralianNa1onalUniversity

56 TheUniversityofSydney

60 UniversityofQueensland

73 MonashUniversity

82 UniversityofNewSouthWalesSource: Times Higher Education – 2016

History of the PBSA Sector •  1990’s

–  Very little University accommodation privatisation –  Small entry level residential dressed up as student accommodation –  Broadway UniLodge Sydney first of its kind in 1996

•  Early 2000’s –  Sydney Uni Village privatisation –  More Strata being built (Melbourne, Sydney, Brisbane)

•  Mid to Late 2000’s –  Pre GFC - PPP’s on University land (ANU, UNSW, Macquarie, UC) –  Banks getting tight on strata lending –  First institutional “speculative” one-line owned properties appear –  GFC and the fall off in non recourse PPP’s –  Banks and Equity looking more for Uni support –  Very few “property” (as opposed to PPP) investors investing without lease

or income support –  PBSA sector still not widely understood in the property market

•  2010 onwards –  NRAS. Studio model –  Capital starting to pour into the sector on a speculative basis –  Property investors chasing yield in non core assets –  UK sector buoyant and providing launching pad for investors in Australia –  Demand driven funding model for Universities also driving on campus

activity –  Some Universities investing their own capital needing accommodation to

attract students –  Strata model now defunct

•  Current ─  Multiple private players invested and more entering ─  Offshore investors, pension funds, sovereign wealth funds ─  Massive pipeline of beds coming ─  University awareness of importance of student accommodation is

increasing

Issues for the PBSA Sector 1.  Role of PBSA

2.  Affordability

3.  Supply vs Demand

4.  Threats / opportunities

5.  External booking portals.

The Role of PBSA

Lead Questions for this conference: 1.  What is /should be the role of PBSA in making the total package

of an Australian / New Zealand education even more attractive globally (and domestically)?

2.  As an (PBSA) industry do we have a strategy or is the current activity opportunistic driven by a diminishing pool of availability of property investments that actually provide a decent yield.

3.  Do investors in the space really understand what makes this sector tick?

Attributes of Successful PBSA •  Well located properties for convenience and

amenity •  “Affordable” •  Safe and Secure properties •  University recommended •  Quality management •  Residential Life Programmes •  Extent of common facilities and amenities provided

in-property

The Role of PBSA

Partnership with Universities •  PBSA exists only because there are Universities •  The sector must align with the interests of Universities •  Universities should be clear on what they expect and want from

the private sector •  What roles do each play in these relationships? Should be

symbiotic…..

The Role of PBSA

Universities – What is important to them?

•  Protection of brand •  Services provided to students •  Protection of balance sheet •  Investment of their precious resources into:

–  areas which impact world ranking and therefore their appeal to attract students

–  Growth of their education business

The Role of PBSA

How UniLodge is delivering successful PBSA for Universities

•  Assisting the University use their world class student accommodation assets to strategically position themselves in a demand driven world

•  Time invested in helping universities with change management •  Applying a flexible model to suit individual University needs. No one

University is the same •  Developing Quality Residential Life programmes •  Property Openings expertise •  Input from early design right through to residential life programmes

–  Design. Testing boundaries. Looking for the next best practice? –  Affordability. How can we make it cheaper for students? –  Marketing and leasing. Getting buildings full, quicker –  Operational processes. Measurable, improvement –  Brand reputation

The Role of PBSA

Residential Life and Wellbeing Program •  Internationally first class •  Creation of University and country brand ambassadors •  Providing a true Australian experience •  Promotes learning outcomes for residents •  Teaches life skills

The Role of PBSA

Pastoral care – mental health

Philanthropy/Community Giving

The Role of PBSA

Affordability Feasibilities

•  Land prices in all capitals driving rents up •  Sydney circa $100,000+ per room key •  Delivered prices of each bed in Sydney, circa $250k per bed •  Need rents circa $500 per week to get a return •  Ok for the higher socio-economic students •  The middle and lower demographic are currently forgotten in the

mix •  There needs to be a circuit breaker or something has to give •  Question: Are features, location, quality and amenity more

important than affordability to students? •  Workshops conducted by UniLodge to truly understand the drivers

and the priorities for students

•  Projects further and further out of the hubs chasing cheaper land. More reliance on public transport?

•  More innovation in design? •  More rooms built for less Gross Floor Area (GFA). ie greater bed

efficiency. Efficiency equals cheaper rent •  Less room amenity. Lower build

cost: ü  Smaller College model rooms

but communal self catered. ü  Micro rooms ü  Twin rooms

•  More focus on the services provided in property than the real estate

Affordability

The Future

Supply vs Demand

•  There is a huge supply of PBSA hitting the market over the next 5 years •  While macro enrolment figures look great, property ramp ups will be

challenged •  As an industry we need to do more to create demand for PBSA by:

–  Educating the public on the virtues of the PBSA product –  Educating students and parents –  Partnering with Universities –  Education agents

•  Industry needs to work together so that it does not become a rental “race to the bottom”

•  Maintain control of our product and brand and not cede this control to generic booking portals

Threats & Opportunities

•  US post election - Opportunity ü  Rising $US dollar ü  International students perception of the

US ü  More protectionist under Trump

•  Brexit - Opportunity ü  UK less accessible to EU students ü  Will this drive more demand from Europe

into Australia?

•  University Funding Model - Threat ü  When will it be resolved ü  Future focus on international students ü  Domestic mobility

Threats & Opportunities

•  Australian Housing Market –Threat

ü  Where will rents move to in markets where housing is overbuilt

ü  The rental gap from Housing to PBSA needs to be watched

ü  Desperate residential investors will potential target students for occupancy

ü  Available land sites for student accommodation

Threats & Opportunities

•  External Booking Portals – Threat

ü  Has the potential to commoditised and homogenise the industry

ü  Reference to the Hotel industry ü  Devalue brands ü  Manipulate reviews…..pay for ratings ü  Lose rent pricing integrity ü  Buying occupancy

Thank You