41061 Unite AR22 HI-RES WEB-READY - Flipbook - Page 86
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THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
PRINCIPAL RISKS AND UNCERTAINTIES continued
PRINCIPAL RISK
PROPERTY & DEVELOPMENT
Risk description:
Inability to secure the best sites on the right terms.
6 •
Objective
Deliver a suitable
development pipeline
Events that may
trigger the risk
• Challenging planning
environment
• Increased regulation in
construction design
• Land scarcity and increased
competition for the best sites
Potential impact
How we monitor
and negotiate
• Lost revenue where schemes
• Consult and lobby at a national and
are delayed whilst consents
are agreed
local level to promote the benefits
of student accommodation
• Reputation/brand damage
when works are late/ongoing
when students in occupation
• Inability to deliver the planned
growth
• Cautious control of external fees,
converting any STP deals to options
may allow sites and consents to
continue
• Comprehensive due diligence
is completed on unconditional
sites prior to purchase, including
seeking a pre-application
assessment from the relevant
local authority
• Clear planning and stakeholder
consultation programme
• Planning underway to ensure that
we are ready for impact of the
Building Safety Act
• Using mixed use sites strategically
to gain positive outcomes
7
Risk description:
Schemes are delivered late and/or over budget impacting our financial returns and
damaging our reputation with students.
•
Deliver schemes on
time and to budget
• Delays or failure to get
planning
• Construction risk – build cost
inflation due to increasing
development
• Construction execution risk
– delivery delays impacting
labour/materials coming from
outside the UK
• Inability to execute our
disposals programme
• Climate risk – physical,
regulatory and transactional
risks associated with climate
change and the environmental
impact of our development
activity
• NTA and EPS affected by
deferred schemes and/or
reduced financial returns, with
cash tied up in development
• Reputational impact of
delivering a scheme late,
leaving students without
accommodation
• Recycling our portfolio
through disposals is a critical
aspect of our development
strategy and failure to deliver
planned disposals may result
in a deteriorating net debt
position and negatively impact
our ability to commit to all our
planned development pipeline
• Potential increases in
construction costs as we
seek to reduce the carbon
intensity of our developments
and comply with building
regulations
• Experienced development team
with strong track record of delivery
• Strong relationships with
construction partners
• Group Board approval for
commitments above a certain
threshold
• Financial investment in schemes
carefully managed prior to grant
of planning
• Detailed due diligence before
site acquisition
• Build cost inflation regularly
appraised and refreshed
• Mid-sized framework contractors
used and longer-term relationships
established
• Engagement with our supply chain
regarding future reductions in
embodied carbon through our
development activity
