REG - Unite Group PLC - Q4 Trading Update

UniteAnnouncement

09/01/2025 07:00

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RNS Number : 6581S  Unite Group PLC (The)  09 January 2025

PRESS RELEASE

9 January 2025

THE UNITE GROUP PLC

('Unite Students', 'Unite', the 'Group', or the 'Company')

TRADING UPDATE AND Q4 FUND VALUATIONS

 

STRONG DEMAND WITH RENTAL GROWTH DRIVING PROPERTY VALUES

 

Unite Students, the UK's leading owner, manager and developer of student
accommodation, today announces an update on current trading and quarterly
property valuations for the Unite UK Student Accommodation Fund ('USAF') and
the London Student Accommodation Joint Venture ('LSAV') as at 31 December
2024.

 

Highlights

·    Positive start to the 2025/26 sales cycle with 66% of beds sold
(2024/25: 70%)

·    Expect 97-98% occupancy and 4-5% rental growth for the 2025/26
academic year

·    Guidance reiterated for adjusted EPS at upper end of 45.5-46.5p for
FY2024

·    Rental growth driving valuation increases in Q4 (USAF: 0.3%, LSAV
0.7%) and FY2024 (USAF: 4.5%, LSAV 6.0%)

 

Joe Lister, Unite Students Chief Executive Officer, commented:

"We have seen a strong start to the 2025/26 sales cycle, highlighting the
continued demand for our high-quality accommodation from both students and
universities. The outlook for student numbers remains positive with a growing
UK 18-year-old population and improving trends in international student
recruitment given a more settled policy backdrop in recent months. This
supports our confidence in delivering full occupancy and rental growth of 4-5%
for the 2025/26 academic year.

 

We have also continued to make good progress with the delivery of our
development pipeline and have acquired eight investment properties, with
value-add potential, in recent weeks. These transactions grow our presence in
some of the UK's leading university cities where demand for accommodation is
strongest."

 

Current trading

2025/26 lettings performance

Demand for the Group's accommodation has again been strong, reflecting the
continuing shortage of high-quality student accommodation. The outlook for
student numbers in 2025/26 is encouraging with domestic demand underpinned by
a 2% larger population of UK 18-year-olds. We also see improving trends in
international student demand thanks to a more settled policy backdrop after
the uncertainty created by changes to student visa rules and the review of the
Graduate Route in the first half of 2024. Positively, the latest recruitment
data indicates a 14% increase in international student acceptances for courses
starting in January 2025.

 

Across the Group's portfolio, 66% of rooms are now reserved for the 2025/26
academic year, in-line with long-term leasing rates and slightly below the
exceptional levels seen in the last two years (2024/25: 70%). We observed a
normalisation in leasing trends over the course of 2024, which we expect to
continue for the 2025/26 sales cycle with more bookings made later in the
cycle. We have been encouraged by the strength of demand from our university
partners, with 700 extra beds reserved through nomination agreements compared
to the same stage of the 2024/25 sales cycle.

 

The positive start to the sales cycle supports 97-98% occupancy and 4-5%
rental growth in the 2025/26 academic year. We remain focussed on offering
value-for-money accommodation, while also delivering sustainable rental growth
to mitigate future cost increases linked to the Real Living Wage and higher
National Insurance contributions and support the significant ongoing
investment into our properties.

 

Investment and development activity

We have continued to make good progress in deploying the proceeds of our £450
million equity raise, in line with our investment targets. During the quarter
we completed the acquisition of seven assets from USAF, part funded by the
sale of two assets, and acquired the land at our Central Quay development
project in Glasgow. Following these transactions, we have now deployed around
50% of the proceeds from our July 2024 equity raise.

 

In November, we acquired the freehold interest of a 260-bed property in London
for £37 million which the Group had previously sold and leased back from the
freeholder. The property was acquired at below replacement cost and has
value-add investment potential upon expiry of a nomination agreement in 2026.

 

Our committed development pipeline of eight projects totals 6,600 beds. We are
focussed on delivering these projects with our construction partners and, for
the schemes subject to the Building Safety Act (BSA), the Building Safety
Regulator (BSR). Our development programmes reflect the expected impact of the
BSA, which will add around six months to delivery timelines for new student
accommodation due to new approval gateways. As with any new regulation, this
presents risks of delay due to capacity constraints at the Building Safety
Regulator. We will continue to work closely with the BSR to deliver safe and
secure homes for students in line with our target delivery timetable.

 

A planning application for our Newcastle University joint venture was
submitted in the summer and we expect the application to go to committee early
this year. We are making good progress with a second University joint venture,
which we expect to announce within the next 3-6 months.

 

2024 guidance

Trading in the fourth quarter has been in-line with expectations and we
maintain our previous guidance for adjusted EPS at the upper end of our
45.5-46.5p range.

 

Quarterly fund valuations

At 31 December 2024, USAF's property portfolio was independently valued
at £2,881 million, a 0.3% increase on a like-for-like basis during the
quarter and 4.5% for the year. The valuation increase reflects quarterly
rental growth of 1.0%. Property yields were broadly stable over the quarter at
5.2%. The portfolio comprises 24,326 beds in 61 properties across 19
university towns and cities in the UK.

 

LSAV's property portfolio was independently valued at £2,058 million, a 0.7%
increase on a like-for-like basis during the quarter and 6.0% for the year.
The valuation increase in LSAV is driven by quarterly rental growth of 1.0%.
Property yields were unchanged over the quarter at 4.5%. LSAV's portfolio
comprises 9,710 beds across 14 properties in London and Aston Student
Village in Birmingham.

 

       Drivers of LfL capital growth (Q4)
       Valuation       Rental growth  Yield movement  Capital growth*

       December 2024                  (bps)
 USAF  £2,881m         1.0%           +1              0.3%
 LSAV  £2,058m         1.0%           -               0.7%

 

                       Drivers of LfL capital growth (FY2024)
       Valuation       Rental growth  Loss of Multiple Dwelling Relief  Yield movement  Capital growth*

       December 2024                                                    (bps)
 USAF  £2,881m         7.7%           (1.9%)                            +1              4.5%
 LSAV  £2,058m         7.8%           (0.3%)                            +2              6.0%

 

 

* Capital growth presented net of capital expenditure for property maintenance
and improvement, but excludes fire safety spend

 

 

ENDS

 

 

For further information, please contact:

 

Unite Students

Joe Lister / Mike Burt / Saxon
Ridley
Tel: +44 117 302 7005

Press office
                                Tel: +44 117 450 6300

 

Sodali & Co

Justin Griffiths / Victoria
Heslop
Tel: +44 20 7250 1446

 

 

About Unite Students

Unite Students is the UK's largest owner, manager, and developer of
purpose-built student accommodation (PBSA) serving the country's world-leading
higher education sector. We provide homes to 68,000 students across 151
properties in 23 leading university towns and cities. We currently partner
with over 60 universities across the UK.

Our people are driven by a common purpose: to provide a 'Home for Success' for
the students who live with us. Unite Students' accommodation is safe and
secure, high quality, and affordable. Students live predominantly in en-suite
study bedrooms with rents covering all bills, insurance, 24-hour security and
high-speed Wi-Fi.

We are committed to raising standards in the student accommodation sector for
our customers, investors, and employees. Our Sustainability Strategy includes
a commitment to become net zero carbon across our operations and developments
by 2030. It includes our Sustainable Construction Framework, which outlines
our approach for reducing embodied carbon.

Founded in 1991 in Bristol, the Unite Group is an award-winning Real Estate
Investment Trust (REIT), listed on the London Stock Exchange. For more
information, visit Unite Group's corporate website www.unitegroup.com
(http://www.unitegroup.com/) or the Unite Students'
site www.unitestudents.com (https://www.unitestudents.com/) .

 

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