PRESS RELEASE
9 April 2024
THE UNITE GROUP
PLC
('Unite
Students', 'Unite', the 'Group', or the 'Company')
TRADING UPDATE AND Q1 FUND
VALUATIONS
STRONG DEMAND
AND RENTAL GROWTH
UNDERPINNING 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
March 2024.
Highlights
·
Continued strong demand with 86% of beds sold for
the 2024/25 academic year (2023/24: 90%)
·
Confident in delivering rental growth of at least
6% for the 2024/25 academic year
·
Planning approvals for 1,450 new beds in London
and Bristol
·
Property values stable in Q1 (USAF: (0.5%), LSAV
0.8%) with rental growth offsetting the loss of Multiple Dwellings
Relief
Joe
Lister, Unite Students Chief Executive Officer,
commented:
"Student demand is strong
for the 2024/25 sales cycle, reflecting the
continued appeal of our fixed-priced, all-inclusive offer and a
growing shortage of high-quality student homes. Together with our
alignment to the UK's strongest universities, this supports a
positive outlook for rental growth for the 2024/25 academic year
and underpins our property valuations.
"We continue to progress the
delivery of our record £1.3 billion development pipeline, securing
planning approvals on two schemes in London and Bristol. These
projects will deliver much needed new student homes in two of the
UK's strongest university cities."
Current trading
2024/25 lettings performance
Demand for the Group's accommodation
remains strong, with good progress in sales since our preliminary
results. Across the Group's portfolio, 86% of rooms are now
reserved for the 2024/25 academic year, ahead of our typical
leasing pace and slightly below the record reservation rates last
year (2023/24: 90%). Demand from universities continues to grow
with a further 1,000 beds secured via nomination agreements since
our preliminary results. Demand from international students remains
robust despite recent changes to UK visa rules for dependents of
postgraduate taught students. International direct-lets for 2024/25
currently account for 13% of rooms, broadly in-line with the 15%
let at the same stage last year.
The ongoing strength of student
demand supports our confidence in delivering rental growth of at
least 6% and full occupancy for the 2024/25 academic year. Our
balanced approach to rental growth will ensure sustainable returns
over the long term, while also remaining good value for
students.
Property update
We have achieved planning approvals
on two development projects in recent weeks. Our 500-bed Freestone
Island project in Bristol, which is located close to the University
of Bristol's new Temple Quarter Enterprise Campus, has now received
full planning consent. We expect to acquire the land in the coming
weeks, which supports delivery of the scheme in time for the
2026/27 academic year.
Meridian Place, Stratford has
received resolution to grant planning permission at committee and
we anticipate securing full planning consent in the coming months.
We now expect to deliver the 952-bed project for the 2028/29
academic year, following delays in our planning
timetable.
At Castle Leazes in Newcastle, our
joint venture with Newcastle University, a planning application has
now been submitted to demolish the existing buildings. We expect to
submit a planning application for around 2,000 new beds in April,
which supports entry into the joint venture in Q4 this
year.
We are tracking further
opportunities for development, university partnerships and
acquisitions in London and strong regional markets at attractive
returns and expect to add to our pipeline in H1 2024.
Disposals update
We continue to recycle capital to
improve the quality of our portfolio and provide funding for
reinvestment in new growth opportunities. We are in the advanced
stages of selling a £180 million portfolio (Unite share: £75
million), which is expected to complete during Q2.
Multiple Dwellings Relief (MDR)
As part of the Spring Budget, the
Government announced the abolition of MDR for residential property
transactions in England with effect from 1 June. MDR provided
relief for Stamp Duty Land Tax when purchasing two or more
dwellings valued at £250,000 or less, which benefitted a number of
our properties.
Our independent valuers have fully
reflected the increase in purchasers' costs in the 31 March fund
valuations, which has resulted in a £61 million (2.0%) and £6
million (0.3%) reduction in value for USAF and LSAV respectively.
USAF is more significantly impacted due to the lower average value
of dwellings (cluster flats or studios) for its
portfolio.
Valuations for the Wholly Owned
portfolio at 30 June will also reflect the loss of MDR. In
isolation, we expect removal of MDR to reduce the Group's EPRA NTA
by around £70 million (16p) in the first half, equivalent to a 1.3%
reduction in asset values at Unite share.
Quarterly fund valuations
At 31 March 2024, USAF's property
portfolio was independently valued at £2,982 million, a 0.5%
reduction on a like-for-like basis during the quarter. The
valuation loss reflects the one-off impact of MDR being abolished,
partially offset by quarterly rental growth of 1.7%. Property
yields were unchanged over the quarter at 5.3% . The portfolio
comprises 27,922 beds in 71 properties across 19 university towns
and cities in the UK.
LSAV's property portfolio was
independently valued at £1,938 million, a 0.8% increase on a
like-for-like basis during the quarter. The valuation increase in
LSAV is driven by quarterly rental growth of 1.3%, partially offset
by the abolition of MDR. Property yields were unchanged over the
quarter at 4.5%. LSAV's investment portfolio comprises 9,716 beds
across 14 properties in London and Aston Student Village
in Birmingham.
|
|
|
Drivers of LfL capital growth
(Q1)
|
|
Valuation
Mar 2024
|
Rental
growth
|
Loss of Multiple Dwelling
Relief
|
Yield
movement
(bps)
|
Capital
growth*
|
|
USAF
|
£2,982m
|
1.7%
|
(2.0%)
|
-
|
(0.5%)
|
|
LSAV
|
£1,938m
|
1.3%
|
(0.3%)
|
-
|
0.8%
|
|
|
|
|
|
|
|
|
|
*
Capital growth presented net of capital
expenditure
ENDS
For
further information, please contact:
Unite Students
Joe Lister / Mike Burt / Saxon
Ridley
Tel: +44 117 302 7005
Unite press
office Tel:
+44 117 450 6300
Powerscourt
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 70,000 students across 157 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 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 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 www.unitegroup.com
or the Unite Students'
site www.unitestudents.com