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Debt Investors

Our level and cost of borrowing is carefully monitored. A disciplined approach ensures we have access to sufficient financial resources to achieve our business strategy.

Debt summary

The level and cost of borrowing is monitored on an ongoing basis. We maintain a disciplined approach to manage leverage and target a loan-to-value (LTV) ratio of 35% and net debt to EBITDA of 6-7x over the medium term.

At 31 December 2020, LTV was 34%, reduced from 37% by the acquisition of Liberty Living, through rental growth and planned disposals.

The company has an investment grade corporate rating of BBB from Standard & Poor’s and Baa2 from Moody’s, reflecting the strength of our capital position, cash flows and track record.

The following key principles guide how we look to structure and manage our debt:

  • We seek to reduce our cost of debt by maximising low interest environment.
  • We have published Sustainable Finance Framework (April 2021) to enable future sustainable debt.
  • We manage our maturity profile to ensure no more than 25% debt matures in any one year.
  • We diversity funding sources to reduce reliance on any single lender.
  • We maintain flexibility for the business through our unsecured debt portfolio for the Group.
  • We protect against potential interest rate volatility by maintaining our fixed/hedged ratio at 75% to 95% of total debt.

Sustainable finance framework

In April 2021, we launched a sustainable finance framework. This links the company’s financing strategy with our wider sustainability strategy.

The framework sets up the criteria for financing projects through sustainable bonds, loans and other debt products. Projects will also have a positive environmental and/or social impact, aligning with the United Nations’ Sustainable Development Goals and supporting the company’s business strategy. These include green buildings, projects aimed at improving our properties’ energy efficiency and use of renewable energy, as well as social initiatives, including affordable housing, financial support for students through the Covid-19 pandemic, and projects aimed at widening participation in post-18 education.

ISS ESG has assessed the framework to make sure it aligns with principles published by the International Capital Markets Association and the Loan Markets Association. ISS’s opinion is available on the investor relations section.

NatWest acted as the sole sustainability structuring advisor while we developed the framework.

Key debt statistics

(Unite share as at 31 December 2020)

Key debt statistics (Unite share basis)
31 December
2020
31 December
2019
Net debt
£1,742m
£1,884m
LTV
34%
37%
Net debt: EBITDA ration
10.1
6.8
Interest cover ration
2.5
3.5
Average debt maturity
4.2 years
5.4 years
Average cost of debt
3.1%
3.3%
Proportion of investment debt at fixed rate
75%
93%
1. 2019 calculation based on average net debt, pro rata for completion of Liberty Living acquisition in late November 2019.

Loan-to-value ratio and cost of debt

Debt maturity profile (drawn debt as at 31 December 2020)

DEBT FACILITIES

Unite Group plc bonds

Liberty Living Finance plc bonds

Unite Group revolving credit facility

USAF bonds

USAF term loan

LSAV term loans