Unite Group Plc reports strong rental growth for 2024/25

Unite Group Plc (LON:UTG) has announced its results for the year ended 31 December 2024.

Joe Lister, Chief Executive of Unite Students, commented:

“The business performed strongly in 2024 and demonstrated resilience in a challenging market. We continue to deliver growth in our earnings over the year and our record development pipeline supports this into the medium term. This is underpinned by our strong university relationships, sustainable rental growth and substantial investment in our portfolio.

The outlook for 2025 is encouraging with growing momentum, driven by increasing demand and a more supportive policy environment for international students. Additionally, private HMO landlords continue to leave the sector, creating a shortage of student housing. We are well-positioned to respond, with a robust development pipeline and new university joint-venture partnerships. This not only provides students with high-quality homes but also frees up family housing in local communities. We are excited by the opportunities that lie ahead for the business.”

HIGHLIGHTS

Strong rental growth for 2024/25, demonstrating value of our platform

·      8.2% rental growth and 97.5% occupancy for the 2024/25 academic year (2023/24: 7.4% and 99.8%)

·      Occupancy significantly ahead of 94% sector average, underpinned by nomination agreements

·      +5% YoY growth in adjusted EPS to 46.6p (2023: 44.3p)

Growing student demand continues to outpace constrained housing supply

·      2% increase in university applications by UK 18-year-olds for 2025/26

·      More supportive environment for international students with most recent visa issuance up 14% YoY

·      70% reserved for 2025/26 (2024/25: 79%), reflecting a normalisation in demand

·      Strong demand from university partners with 57% of beds nominated for 2025/26 (2024/25: 57%)

·      New PBSA supply 60% below pre-pandemic levels and competing HMO sector in decline

Sustained earnings growth from our best-in-class platform

·      On-track to deliver rental growth of 4-5% for 2025/26 and 97-98% occupancy

·      Guidance for adjusted EPS of 47.5-48.25p in 2025

·      Targeting 8-10% Total Accounting Return (TAR) in 2025, before yield movement

Increasing alignment to the UK’s strongest universities

·      £281 million of value-add acquisitions in strong markets (Unite share: £210 million)

·      £304 million of disposals to enhance portfolio quality (Unite share: £161 million)

·      Rental portfolio enhanced through £48 million of investments at a 10% yield on cost

Development pipeline adding scale in the strongest markets

·      £1,048 million committed pipeline fully funded, 100% in Russell Group cities at 6.8% yield on cost

·      Debut university JV with Newcastle University, with public consultation underway for second JV

·      Committed pipeline adding £71 million to NOI (Unite share) in next four years

Strong balance sheet underpinned by growing portfolio valuation

·      4.8% like-for-like portfolio valuation increase to £6.0 billion (Unite share) (2023: 1.2% and £5.5 billion)

·      TAR of 9.6%, reflecting 6% growth in EPRA NTA to 972p (2023: 2.9% and 920p)

·      Net debt: EBITDA reduced to 5.5x (2023: 6.1x), with LTV of 24% (2023: 28%)

·      Cost of debt expected to increase to 4.1% in 2025 (2024: 3.6%)

Leading the living sector in sustainability

·      Over 99% of portfolio EPC A-C rated (2023: 99%) with 9% reduction in energy intensity since 2019

·      Delivery of our lowest ever embodied carbon development at Bromley Place, Nottingham

1. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). These financial highlights are based on the European Public Real Estate Association (EPRA) best practice recommendations and these performance measures are published as they are intended to help users in the comparability of these results across other listed real estate companies in Europe. The metrics are also used internally to measure and manage the business and to align to the performance related conditions for Directors’ remuneration. See glossary for definitions.

2. Excludes IFRS 16 related balances recognised in respect of leased properties. See glossary for definitions.

3. Adjusted earnings and adjusted EPS remove the impact of SaaS implementation costs from EPRA earnings and EPRA EPS. See glossary for definitions and note 7 for calculations and reconciliations.

PRESENTATION

A live webcast of the presentation including Q&A will be held today at 08.30am GMT for investors and analysts, and is available here. Slides and a replay of the event will be available via Unite Group’s website at https://www.unitegroup.com/.

To register for the event or to receive dial-in details, please contact unite@sodali.com.