Home Builders Federation Annual Policy Conference - Mark Aedy Head of EMEA & Asia, Moelis & Company - House-Builder.co.uk
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Home Builders Federation Annual Policy Conference Confidence in the UK Housing Sector Mark Aedy Head of EMEA & Asia, Moelis & Company May 2021
Robust Sector Fundamentals Remain Intact
GROWING UK HOUSING SHORTAGE HIGH GROWTH IN UK HOUSEHOLDS
Cumulative housing shortage in England (thousands) UK Households (millions)
1,400 33
1,200
31
1,000
800
29
600
400 27
200
0 25
2007 2009 2011 2013 2015 2017 2019 2011 2014 2017 2020 2023 2026 2029 2032 2035 2038
CONTINUED HOUSE PRICE MOMENTUM MORTGAGE RATES NEAR ALL TIME LOWS
UK Nominal and Real House Prices UK Mortgage Rates
£300k 7%
£250k 6%
5%
£200k
4%
£150k
3%
£100k
2%
£50k 1%
£0k 0%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Real Price Nominal Price
Source: Analyst Research, ONS, Nationwide, Bank of England, UK Government [1]The Housing Sector Outperforms!
UK Referendum UK General Election UK leaves the
to Leave the EU (12 Dec 2019) European Union
(23 Jun 2016) (31 Jan 2020)
UK General UK General UK General UK Budget and UK announces
Announcement
Election Election Election Help to Buy Extension coronavirus lockdown
Help to Buy
(6 May 2010) (7 May 2015) (8 Jun 2017) (29 Oct 2018) (23 Mar 2020)
(20 Mar 2013)
Pfizer announces
800% positive vaccine trial
results
(9 Nov 2020)
700%
UK Housebuilders1
+665.5%
600%
500%
400%
300%
FTSE 250 +238.6%
200%
100%
FTSE 100 +54.1%
0%
(100%)
Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21
Source: Capital IQ as of 25 May 2021
Note: Chart shows share price performance from 1 January 2009 – 25 May 2021
1. Includes Barratt, Bellway, Berkeley, Crest Nicholson, Galliford Try (share price until sale of Linden Homes and Partnerships & Regeneration businesses transaction completion on 02 January 2020), MJ Gleeson, Persimmon,
Redrow, Taylor Wimpey and Vistry Group [2]All builders are up since the EU Referendum, but some more than others
Since Brexit
Referendum
UK General UK Coronavirus Pfizer positive
Election Lockdown vaccine results Housebuilders
195% (12 Dec 2019) (23 Mar 2020) (9 Nov 2020) Average: +97%1
170% Countryside +163.7%
145% Persimmon +128.1%
MJ Gleeson +117.4%
120% Redrow +110.7%
Vistry +100.3%
Barratt +97.8%
95%
Bellway +95.0%
Berkeley +94.0%
70%
FTSE 100 +44.8%
45% FTSE 250 +44.7%
Taylor Wimpey +39.5%
Crest Nicholson 27.4%
20%
(5%)
(30%)
(55%)
(80%)
Jun-16 Oct-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Apr-20 Aug-20 Dec-20 Apr-21
Source: Capital IQ as at 25 May 2021
Note: Chart shows share price performance from 28 June 2016 – 25 May 2021 [3]
1. Excludes FTSE 100 and FTSE 250Timing is Everything…
UK Coronavirus Pfizer positive vaccine
lockdown results Since Since
Since Jan-
announced Lockdown Pfizer 9-
2020
23-Mar1 Nov2
20%
Persimmon +12% +94% +17%
Countryside +6% +85% +34%
FTSE 250 +1% +72% +25%
0% Barratt (0%) +93% +39%
Crest Nicholson (0%) +130% +68%
Vistry (4%) +110% +108%
Berkeley (7%) +47% +6%
(20%)
FTSE 100 (8%) +41% +19%
Bellway (9%) +78% +38%
MJ Gleeson (10%) +63% +48%
(40%)
Redrow (13%) +96% +49%
Taylor Wimpey (14%) +49% +38%
Average3 (4%) +85% +44%
(60%)
(80%)
Jan-20 Feb-20 Mar-20 May-20 Jun-20 Jul-20 Aug-20 Oct-20 Nov-20 Dec-20 Feb-21 Mar-21 Apr-21
Source: Capital IQ as of 25 May 2021
Note: Chart shows share price performance from 2 January 2020 – 25 May 2021
1. Based on FTSE100 lowest point on 23 March 2020
2. Based on market close on Friday 6th November; Pfizer announced interim vaccine trial results on Monday 9 th November [4]
3. Excludes FTSE 100 and FTSE 250ROCE is the Key Driver of Valuation in the Sector
EV/TGAV
(21E)
5.0x
4.5x
4.0x
3.5x
3.0x
2.5x
2.0x
1.5x
1.0x
0.5x
0.0x
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
R² = 0.93
ROCE (21E)
Source: Broker research, Capital IQ, Company information, Thomson Estimates
Note: Calendarized for December year-end
[5]Unprecedented Corporate Activity – A Vote of Confidence
Moelis advised process
Acquisition of Recapitalization in Acquisition of Acquisition of
Partnership with
Acquisition of
Living
Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21
Joint venture
with
Separation of
Acquisition of Potential Offer for
Homes division
[6]Lone Star’s Acquisition of McCarthy & Stone Plc
RELATIVE SHARE PRICE PERFORMANCE (2020)
Lone Star
January 2021
25% offer
0%
£630m
(25%)
Acquisition of
McCarthy & Stone plc
(50%)
(75%)
McCarthy & Stone
UK Housebuilders1
(100%)
Lead Financial Advisor Jan-20 Apr-20 Jul-20 Oct-20 Dec-20
Jan-21
Source: Capital IQ
Note: Chart shows share price performance from 2 January 2020 – 31 Dec 2020 [7]
1. Excluding McCarthy & Stone; includes Barratt, Bellway, Berkeley, Crest Nicholson, MJ Gleeson, Persimmon, Redrow, Taylor Wimpey and Vistry GroupMorris Homes’ Recapitalization in Partnership with Atlantic Park
March 2021
▪ Refinancing of the GSO unitranche loan established in 2013
£140m
Capital Raise in Partnership with Atlantic
Park Strategic Capital Fund
Financial Advisor to the Company
[8]Avant Homes’ Sale to Berkeley De Veer in Partnership with Elliott
AVANT HOMES LOCATIONS
April 2021
Sale by Scotland
Yorkshire
To
North East Central
Midlands
In partnership with
Financial Advisor
[9]Reasons To Be Cheerful…?
HBF Conference 2018 HBF Conference 2021
Land Market Remains Benign ✓✓✓ ✓✓✓
Management and Capital Discipline ✓✓✓ ✓✓✓
Historic Underbuild ✓✓✓ ✓✓✓
Supportive Government Policy ✓✓? ✓✓✓
Macroeconomic Environment Positive ✓? ✓✓✓
Positive Demographics ✓ ✓✓
Housing Affordability ✓ ✓✓
[ 10 ]Important Notice
Moelis & Company UK LLP (“Moelis”) prepared this presentation based on publicly available information and other information you have provided to us.
Moelis has not and does not intend to verify independently any of such information, all of which Moelis assumes is accurate and complete in all material
respects. If this presentation contains projections, forecasts or other forward-looking statements, Moelis assumes that they were prepared based on the best
available estimates of the future events underlying such statements. This presentation speaks only as of its date and Moelis assumes no duty to update it or
to advise any person that its conclusions or advice has changed.
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personnel may make statements or provide advice that is contrary to information contained in this material. Our proprietary interests may conflict with
your interests. Moelis may from time to time have positions in or effect transactions in securities described in this presentation. Moelis may have advised,
may seek to advise and may in the future advise or invest in companies mentioned in this presentation.
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