Company Announcements


Source: RNS
RNS Number : 2529C
Unite Group PLC (The)
10 October 2022


10 October 2022


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



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 30 September 2022.



·    99.0% of beds sold for the 2022/23 academic year (2021/22: 94.1%)

·    Rental growth of 3.5% for the 2022/23 academic year

·    Increasing rental growth guidance to 4.5-5.0% for the 2023/24 academic year

·    Expect to deliver adjusted EPS at the top end of FY2022 guidance of 40-41p

·    Q3 like-for-like valuation increases of 0.7% and 1.8% in USAF and LSAV respectively

·    Pro forma LTV reduced to 29% at (30 June 2022: 30%), maintaining net debt to EBITDA within our target range of 6-7x

·  Interest rates 93% fixed at 3.4% weighted average cost of debt (30 June 2022: 3.2%) with a weighted average debt maturity of 4.4 years (30 June 2022: 4.5 years)


Richard Smith, Chief Executive of Unite Students, commented:

"We have delivered a very strong operational performance for the 2022/23 academic year, reflecting the appeal of our high-quality portfolio and affordable rents. Given healthy student demand and the need to offset inflationary cost pressures, we are targeting increased rental growth of 4.5-5.0% for the 2023/24 academic year. Our fixed-price, all-inclusive offer provides students with significant savings and certainty on their bills and represents value for money compared to alternative options in the PBSA and HMO sectors.


"Despite the challenging economic environment, the business remains well positioned thanks to increasing student numbers and a growing shortage of high-quality, purpose-built student accommodation across our markets. Our alignment to the strongest universities and best-in-class operating platform mean we remain confident of continuing to deliver strong operational results."


The Company will host a conference call for investors and analysts this morning at 8:30 a.m. UK time. 


Please find the dial-in details below: 



Unite - Q3 Trading Update 


+44 (0) 33 0551 0200 

0808 109 0700 (toll free) 




Current trading


2022/23 letting performance

Entering the final stages of the lettings cycle for the 2022/23 academic year, the Group has let 99.0% of beds across its total portfolio (2021/22: 94.1%, 2020/21: 87.9%, 2019/20: 98.5%), ahead of the previous expectation for 97% occupancy. In addition, the Group has significant waiting lists in many of its largest markets, where there remains a shortage of high-quality, purpose-built student accommodation close to university campuses.


The strong performance reflects nomination agreements with universities for over half the portfolio, high retention of existing customers and strong direct-let sales on the back of enhanced marketing content. Occupancy has also benefited from a partial unwind of the grade inflation witnessed during the previous two years, resulting in a more normal distribution of UK students between markets, and strong international demand given improved travel conditions.


This sales performance translates to rental growth of 3.5% for the 2022/23 academic year and reflects the impact of higher occupancy in lower priced markets. On a like-for-like basis, for beds sold in both 2021/22 and 2022/23, rental growth was 4.5%. This supports our rental growth outlook for 2023/24.


2023/24 outlook

Demand for the Group's accommodation has continued to strengthen through the second half of the 2022/23 sales cycle, supporting improved pricing. For the 2023/24 academic year, we will seek to offset operational cost increases through a higher level of income growth of 4.5-5.0% (previously 4-5%).


We recognise the cost-of-living pressures being faced by students and parents and are confident that our fixed price, all-inclusive offer will continue to provide value for money compared to alternative options in the purpose-build student accommodation (PBSA) and houses in multiple occupation (HMO) sectors. Our pricing is comparable in cost to HMOs once bills are included. This is before allowing for the price certainty on utilities and additional product and service features that we provide, such as on-hand maintenance teams and 24/7 security, in locations close to campus.


Operating costs

We are well protected but not immune from the impacts of inflation on our cost base. We have a high degree of visibility over our two largest costs, staff and utilities, which together account for around 60% of our combined operating costs and overheads.


Our utility costs are fully hedged through 2022 and 2023 and 61% for 2024. We will increase our utilities hedging for the remainder of 2024 and 2025 over the next 12 months, in line with our strategy to provide certainty over utility costs on a rolling 18-24 month forward basis. Given the benefit of our existing hedging at rates significantly below prevailing market prices, the Group does not expect to benefit from the Government's recently announced Energy Bill Relief Scheme.


We are seeing increased pressure on staffing costs for our frontline teams, driven by competition for staff in the hospitality and service sectors and increases in the Real Living Wage. This is partially mitigated by the restructuring of the Group's operational business during the first half of the year, which provides an annualised £2 million saving in staff costs. We recognise the cost-of-living challenges facing our staff and have provided financial support to our frontline property teams.


Funding and cost of debt

The impact on the Group of higher short and long-term interest rates has been mitigated through our interest rate hedging policy with 93% of debt at fixed rates or subject to caps which are now effective. The Group's average cost of debt has increased to 3.4% at 30 September 2022 (30 June 2022: 3.2%), reflecting increased costs on the floating rate portion of our debt.


The Group's weighted average debt maturity is 4.4 years with less than 10% of see-through debt maturing before November 2024.  The Group recently extended the maturity of its £450 million revolving credit facility to March 2026 at unchanged margins.


Capital recycling

The Group completed £288 million (Unite share: £245 million) of disposals in the third quarter focused on smaller and less operationally efficient assets. This completes the Group's planned disposal activity for the year, totalling £339 million (Unite share: £256 million) at an average yield of 5.7%. Proceeds will be used to reduce borrowings and provide funding for our secured development pipeline and investment activity, including our acquisition of a build-to-rent pilot property in Stratford, East London.


The Group maintains a disciplined approach to capital allocation with pro forma LTV now 29% (June 2022: 30%) after adjusting for completed property transactions, capital expenditure in the quarter and Q3 fund valuations. This supports our target of maintaining net debt to EBITDA at 6-7x.


The Group has successfully delivered 1,351 new beds for the 2022/23 academic year, alongside the refurbishment of 1,629 beds in Manchester. The schemes were delivered in line with budget and all are fully let for the 2022/23 academic year. The Group is currently on site for one development project in Nottingham for delivery in 2023, where costs are secured under a fixed-price build contract.


In light of rising funding costs for new debt, we are reviewing our future investment plans to ensure investment activity delivers earnings accretion and attractive total accounting returns, while maintaining a robust balance sheet.


Earnings guidance

Higher than expected rental income in term 1 of the 2022/23 academic year has more than offset the impact of higher interest costs in the second half of the financial year. As a result, we expect adjusted EPS to be at the top end of our guidance for 40-41p for FY2022.


The strong income performance for 2022/23 will also benefit our FY2023 earnings. However, the business also faces cost pressures in the form of rising utility and staff costs and a higher average cost of debt. Based on the Group's in-place hedging, forward interest rate expectations and planned refinancing activity in 2023, we expect the Group's weighted average cost of debt to increase from 3.4% in FY2022 to 3.8% in FY2023.


More detailed earnings guidance for FY2023 will be provided alongside our FY2022 preliminary results.


Quarterly fund valuations

At 30 September 2022, USAF's property portfolio was independently valued at £2,928 million, reflecting a 0.7% increase on a like-for-like basis during the quarter. The portfolio comprises 27,924 beds in 71 properties across 19 university towns and cities in the UK.


LSAV's property portfolio was independently valued at £1,976 million, reflecting a 1.8% increase on a like-for-like basis during the quarter. LSAV's property portfolio comprises 9,716 beds across 14 properties in London and Aston Student Village in Birmingham.


The valuation increase is driven by increased occupancy for the 2022/23 academic year and rental growth, which more than offset the impact of higher utility cost assumptions.


The USAF and LSAV portfolios are valued at weighted average yields of 4.9% and 3.9% respectively, unchanged from 30 June 2022.




Drivers of LfL capital growth (Q3)



Sep 2022

Rental growth

Utility cost deduction

Yield movement






















For further information, please contact:


Unite Students

Joe Lister / Michael Burt                                                        Tel: +44 117 302 7005

Unite press office                                                                   Tel: +44 117 450 6300



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 75,000 students across 169 properties in 25 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 also achieved a five-star British Safety Council rating in our last audit.

We are committed to raising standards in the student accommodation sector for our customers, investors and employees. This is why our new Sustainability Strategy, launched in 2021, includes a commitment to become net zero carbon across our operations and developments by 2030.

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 or the Unite Students' site

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