Capital Markets Day

5 November 2019

Accelerating Growth in our

Core Markets

Creating the Future of Living

• 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

2

Duncan House – Health & Safety

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

3

Duncan House, Stratford

Investment Case

4

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

3500PBSA

beds

1000BtR

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

5

2723 beds delivered

in 2019

0 units delivered

in 2019

utilising the established capital light,

forward sale model

Market leading track record throughout the UK

17,721 Total Units Under Management

50,179 Total Units Developed and In Build

357 Staff

512BtR Units

17,209PBSA Beds

2,500 Homes for

Sale

1,518BtR Units

46,161 PBSA Beds

60PBSA

Schemes

4BtR Schemes

c. £1.7bnAssets under

Management

90Developments

for Sale

7BtR Schemes

135 PBSA

Schemes

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

Investment Case – Established Track Record

6

(1) since 1999 to date

(2) since 2010 to date

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

Fin

an

cia

l Pe

rfo

rma

nc

eO

pe

ratio

na

l De

live

ry

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)

7

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 HomesInvestment

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

8

• 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

0

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

0

200

400

600

800

1000

1200

FY20 FY21 FY22 FY23

# u

nit

s

159

782818

1136

* Assets owned by WJ and under offer to sell

** WJ in legals to acquire the site

WJ BtR Pipeline Delivery

# b

ed

s

Investment Case – Ready for Growth

‘

9

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 workResourced for growth with detailed plans in place

Business model minimises exposure

RiskMitigation

Investment Case – Risks to Growth

10

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 11

Hollis Croft, Sheffield

Investor Perspective –

Brookfield’s Student Accommodation

12

Nathan Goddard

Chief Executive Officer

Student Roost

13

Student RoostPortfolio Overview

14

Nottingham 1 / 22

Sheffield 3

Snowdon Hall

Trinity Square

Oct-132,495

Nottingham 32

The Summit

Queens Court

Regents Court

Sheffield 2Brookland Road

Newarke Street

Upperton Road

Eastern BoulevardNewcastle 1

Total beds operational, managed and under development

Dec-132,944

Apr-143,638

Sep-144,158

Dec-144,697

Feb-155,313

Oct-155,684

Apr-165,684

Brookfield completes

acquisition of Student

Roost and the Portfolio

Sep-166,837

Collegelands

St James’ House

St James’ Point

Oct-168,949

St Mungo Avenue

Swanson House

Great Patrick Street

Hollis Croft

Mar-1713,121

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-1820,759

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-1714,943

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-1920,846

Calton Road

Student Roost Brief History

Company history and evolution

15

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%

54PROPERTIES

20 1,500CITIES 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

16

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

17

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?

18

Granary Studios, Chester

Residential for Rent - Sector Overview

19

• 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

ownership

• 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 2035To-date Projection

UK

Po

pu

latio

n (

‘000

s)

Student Accommodation PRS

2015£31bn

2019£51bn

Forecast 2025

£65bn

2015£15bn

2019£35bn

Forecast 2025 £75bnSource: 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

20

Source: ONS

BtR growth

PBSA obsolescence of existing stock

140k → 1.7m unitsc.£35bn → c.£544bn

Current Market Size At maturity

PBSA growth

620k → 910k bedsc.£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

21

PBSA Sector - Strong Student Demand Trends

• Long-term growth in demand; favourable underlying UK student demographics &

overseas 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, HESA22

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

0

500

1000

1500

2000

Applicants Acceptances Full time students

Applications vs Acceptances

Stu

de

nts

00

0s)

Students and supply

1728 1730 1771 1827 1875 1878

682 699 713 727 731 739

487 503 527 553 580 603

0

500

1000

1500

2000

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Stu

de

nts

(0

00

s)

Total students 1st years (UG) + International (UG + PG) PBSA BedsSource: UCAS, HESA

23

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)

2xNumber 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

24

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 ratePBSA Av. UK NIY BtR Av. UK NIY

25

• 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

(£b

n)

Source: CBRE

0

100

200

300

400

500

600

700

800

900

1000

1100

Q1

20

15

Q2

20

15

Q3

20

15

Q4

20

15

Q1

20

16

Q2

20

16

Q3

20

16

Q4

20

16

Q1

20

17

Q2

20

17

Q3

20

17

Q4

20

17

Q1

20

18

Q2

20

18

Q3

20

18

Q4

20

18

Q1

20

19

Q2

20

19

Q3

20

19

Inve

stm

en

t (£

m)

Average 1/4ly investment volume

2019 PBSA investment volumes YTD Institutional investment volume into the PRS

3.86

PBSA & BtR – Investor Demand

26

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

0

500

1000

1500

2000

2500

3000

# u

nits

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

0

500

1000

1500

2000

2500

3000

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

# b

ed

s

27

Kyle Street, Glasgow

Delivering Growth - Business units deep dives

28

Alex Pease

Group Investment Director

29

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

30

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

31

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

opportunities 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

32**C&W *** WJ Management

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

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

Recognising key value chain

Investment and land

procurement

Technical / design

developmentPlanning

Structured for Growth

Hubs are the engine room of growth

Strategic Planning

Transaction Lead

Transaction Analyst

Technical Lead

Technical Manager

HUB

34

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

35

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

-122015 2016 2017 2018 2019

0

Annual change in average land values (%)

Residential development land prices

Land Availability

Source: Knight Frank

Source: Knight Frank

36

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

38504903

5531

22551089

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)

37

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

38

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

39

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

40

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

41

Jim Davies

Director

Watkin Jones Group

42

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

43

Rebecca Hopewell

Chief Executive Officer

Fresh Property Group

Connecting WJ with the Customer

44

Delivering Growth

-

2

4

6

8

10

12

14

16

18

20

Un

its

(00

0s)

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 units45

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

46

31 clients 7 take overs 2018/19

Av. 7.4schemes 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

our 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 WeekDelivering 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

47

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

48

Phil Byrom

49

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 over 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

50

Financials

Albion Way, London51

£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

52

Group Adjusted PBT

Group Net Cash

Earnings per share (adjusted)

Dividend per share

ROCE excluding net cash

0

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%

6.6p7.6p

£0

£10

£20

£30

£40

£50

£60

FY16 FY17 FY18

£0

£20

£40

£60

£80

£100

FY16 FY17 FY18

pe

nc

e

£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 FY1853

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%+

54

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

55

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

56

Illustrative Cost Value Margin for Developments

SOUTH EASTRent: £175/wkNet income: £5,600 paNIY: 5.5%Capital value: £105kLand: £25kBuild costs: £60kTarget margin: 22-24%

LONDONRent: £230/wkNet income: £9,070 paNIY: 4.75%Capital value: £184kLand: £60kBuild costs: £85kTarget margin: 26-28%

OTHER UK REGIONSRent: £140-165/wkNet income: £4,500-5,600 paNIY: 5.5-6.0%Capital value: £60-90kLand: £10-15kBuild costs: £55-60kTarget margin: 18-22%

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

PBSA

SOUTH EASTRent: £1.3k/mthNet Income: £11.5k paNIY: 4.0%Capital value: £280kLand: £65kBuild costs: £170kTarget margin: 15%+

LONDONRent: £1.4k/mthNet Income: £12.5k paNIY: 3.75%Capital value: £325kLand: £95kBuild costs: £188kTarget margin: 15%+

OTHER UK REGIONSRent: £1.1k/mthNet Income: £10k pa

NIY: 4.5%Capital value: £210kLand: £23kBuild costs: £155kTarget margin: 15%+

BtR

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

57

Growth Profiling

Identify siteNegotiation

of site purchase

Obtain planning consent

Marketing of opportunity

Negotiation of land sale &

development agreement

Completion of land

purchase & sale

Constructionof 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

58

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

0 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

59

The Future of Living – In Summary

Kelaty House, London60

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 gearing61

Q&A

62

Tour Duncan House

63

Duncan House

Entered contract

(off market)

Topping out Ceremony

Construction commenced

Planning submission

Discussions commenced with University

of London

Practical Completion

Forward fund to UPP / University

of London

Planning granted

Jan 2015

Jun 2015

Nov 2015

Aug 2016 Dec 2016

Nov 2016 Sept 2018

Aug 2019

64

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

opportunities.

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

65

• Glossary of terms

• Presentation team – biographies

• Projects – list and scheduled completion dates

• Financial track record of Group

Appendices

66

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

67

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

68

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 Pending69

2024

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Unless expressly stated otherwise, no statement in this presentation is intended as a profit forecast or estimate forany period and no statement in this presentation should be interpreted to mean that cash flow from operations, free cash flow, earnings or earnings per share for Watkin Jones for thecurrent or future financial years would necessarily match or exceed the historical published cash flow from operations, free cash flow, earnings or earnings per share of Watkin Jones.Statements of estimated cost savings relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, any cost savingsreferred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. By attending thepresentation to which this document relates and/or by accepting this document you will be taken to have represented, warranted and undertaken that you have read and agree tocomply with the contents of this notice. This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Watkin Jones.All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectationsthat are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance orevents to differ materially from those expressed or implied in these statements. 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Watkin Jones does not undertake any obligation topublicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from thosestated, implied or inferred from the forward-looking statements contained in this presentation. Certain financial data has been rounded. As a result of this rounding, the totals of datapresented in this presentation may vary slightly from the actual arithmetic totals of such data.

Disclaimer

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