Trading Update and Q3 Fund Valuations

Source: RNS
RNS Number : 4297O
Unite Group PLC (The)
08 October 2021


8 October 2021


('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. We also provide quarterly property valuations for the Unite UK Student Accommodation Fund ('USAF') and the London Student Accommodation Joint Venture ('LSAV') as at 30 September 2021.


Richard Smith, Chief Executive of Unite Students, commented:

"We have seen record demand for UK universities from UK school leavers and non-EU students, particularly for the strongest universities to which we are strategically aligned, although higher grade attainment and restrictions around international travel as a result of the pandemic have impacted occupancy in a small number of cities. There remains a strong outlook for student demand driven by demographic growth, rising participation rates and increasing demand from non-EU markets. This underpins our confidence in a rapid recovery in earnings and total returns, driven by sustainable rental growth, our substantial development pipeline and further opportunities to deploy capital."


Current trading

Higher Education sector update

Latest UCAS data shows a total of 508,000 students placed at UK universities for the 2021/22 academic year, 1.6% below the same stage in 2020/21. The number of placed students from the UK increased by 1.4%, driven by a record entry rate for UK 18 year olds (37.9%). Non-EU student numbers have increased by 5% but this has been more than offset by a 56% reduction in EU students impacted by Brexit and Covid-19 travel restrictions.


More students have attained the entry requirements for their first choice universities than in a normal year, reflecting the 44% of students awarded A* or A grades in this year's A levels, compared with 25% in 2019 (Source: Ofqual). This has resulted in acceptances becoming more concentrated at leading universities, particularly benefiting higher tariff universities who have seen acceptances increase by 3% compared to 2020/21. The sharp increase in grade attainment has seemingly disrupted the normal distribution of students between universities. This has contributed to an increase in the number of unplaced applicants to 145,000 (2020/21: 117,000), which together with a higher number of students deferring places to next year, is expected to support demand for the 2022/23 academic year.


Letting performance

As we enter the final stages of the lettings cycle for the 2021/22 academic year, 94% of bed spaces are now let across our total portfolio (2020/21: 88%, 2019/20: 98%), slightly below management's previous expectations for 95-98% occupancy.


A record level of university applications has not translated into higher student intake as expected with higher grade attainment distorting the distribution of students among our cities. We are sold out in the majority of our markets with significant waiting lists in a number of key cities for students struggling to find suitable accommodation. However, we have seen a concentration of voids in cities where we expect universities to have lost market share of students or which are adjusting to new supply.


Our waiting lists equate to an additional c.1-2% in potential occupancy, which we would expect to be re-distributed among our other cities as disruption from higher grading unwinds. The Government has confirmed that grade boundaries will return to pre-pandemic levels over the next two years. This year's strong undergraduate intake in higher-ranked cities will also support student numbers and rental growth prospects in these markets over the next three years.


UK direct-let sales have been particularly strong this cycle, accounting for 21% of available beds (2020/21: 16%) and reflecting our proactive efforts to target re-bookers and customers who might otherwise stay in houses of multiple occupancy. International direct-let sales have increased slightly compared to 2020/21 with an increase in non-EU demand, partially offset by a greater than expected reduction in EU sales following removal of home-fee status and access to tuition fee loans.


International travel restrictions continue to have an effect on demand from China, where record numbers of new undergraduate students have not yet translated into bookings. For students needing to self-isolate on arrival in the UK, we are continuing to offer them the opportunity to arrive at their accommodation up to three weeks early at no extra cost.


Occupancy by type and domicile by academic year


































Pricing activity remains disciplined in the market with only limited discounting in specific markets with higher availability. As a result, we expect to deliver rental growth of 2.3% for the 2021/22 academic year


Financial impact

The reduction in occupancy and rental income for the 2021/22 academic year is expected to result in EPRA EPS at the lower end of guidance for FY2021 of 27-30 pence (excluding the LSAV performance fee). The impact of lower rental income in terms two and three of 2021/22 will also reduce rental income for the 2022 financial year by £8-10 million (Unite share) compared to management's previous expectations, equivalent to around 2 pence of EPRA EPS.


We will seek to mitigate this impact on 2022 EPRA EPS through ongoing sales activity by targeting international students who may delay their arrival to the UK until the new year and the reintroduction of summer business in 2022. In addition, we are targeting cost savings from operational efficiencies resulting from lower occupancy. We are fully-hedged for our FY2022 energy costs, which represent c.5% of rental income, protecting earnings from rising wholesale prices.


Rent collection and check-in

We have now collected 96% of rent due for the 2020/21 academic year, excluding the impact of the 10-week rental discount offered to customers for the second semester. There remains 1% of rent still to be billed for the 2020/21 academic year.


Check-in of students is progressing well for the new academic year and early rent collection is in line with expectations.


Quarterly fund valuations

At 30 September 2021, USAF's property portfolio was independently valued at £2,825 million, reflecting a 1.1% increase on a like-for-like basis during the quarter. The portfolio comprises 29,627 beds in 76 properties across 20 University towns and cities in the UK.


LSAV's property portfolio was independently valued at £1,764 million, reflecting a 3.7% 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 2021/22 academic year and rental growth. In addition, the USAF and LSAV portfolios have seen 2 bps and 8 bps of yield compression respectively during the quarter. The USAF and LSAV portfolios are valued at weighted average yields of 5.2% and 4.2% respectively.



The Company will be hosting a Capital Markets Day on 19 October.







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, serving the country's world-leading Higher Education sector. We provide homes to 73,000 students across 173 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's accommodation is safe and secure, high quality and affordable. Students live predominantly in ensuite 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.


Founded in 1991 in Bristol, Unite Group is an award-winning Real Estate Investment Trust (REIT), listed on the London Stock Exchange and a member of the FTSE 250 Index. Unite is invested in and operates two specialist funds and joint ventures with institutional investment partners: the £3 billion Unite UK Student Accommodation Fund (USAF) and the £1 billion London Student Accommodation Vehicle (LSAV).


For more information, visit:

Unite's corporate website

The student site

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