Unite Group reiterates FY2026 earnings guidance as student reservations rise

Unite Group Plc (LON:UTG), the UK’s leading owner, manager and developer of student accommodation, has provided 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 June 2026.

Highlights

·    86% of Unite beds reserved for 2026/27 sales cycle (2025/26: 85%)

·    On track for 0-2% like-for-like income growth for 2026/27 academic year

·    Expect 94-96% occupancy and 1-2% rental growth for 2026/27 academic year

·    71% of Empiric beds reserved for 2026/27 (2025/26: 61%), cost synergies on track

·    Reiterating guidance for FY2026 adjusted EPS of 41.5-43.0p

·    Confident in delivering £300-400 million of disposals in 2026 (Unite share)

·    £165 million deployed through share buyback programme

·    Valuation decrease in Q2 driven by yield expansion and broadly stable rents (USAF: (2.2%), LSAV: (3.7%))

The Company will host a conference call for investors and analysts this morning at 08:00 BST. Joining details are:

Title                 Unite – Q2 Trading update

Weblink           https://brrmedia.news/UTG_Q2_26

A recording will be available on the Company’s website following the call.

Joe Lister, Unite Group Chief Executive Officer, commented:

“We have seen strong progress in reservations for the 2026/27 academic year since our last update in May,” said Chief Executive Officer Richard Smith. “This reflects our strong direct marketing and sales performance together with targeted adjustments to pricing in selected markets.

We are also making good progress on our strategy to increase alignment to the UK’s leading universities and are on track to deliver £300-400 million (Unite share) of disposals this year in support of this objective. Our transition to a higher-quality portfolio, serving the UK’s strongest universities, is accelerating, enhancing our ability to deliver future rental growth.”

Current trading

Across the Unite Students portfolio, 86% of beds are now reserved for the 2026/27 academic year (2025/26: 85%). This includes 53% of beds let to universities under nomination agreements and 33% of beds let through direct-let sales (2025/26: 58% and 27% respectively). We have seen strong direct-let sales over recent weeks, reflecting our focus on commercial performance and targeted pricing initiatives in some markets to drive overall income. We are also making progress with universities to finalise nomination demand following the main offer acceptance deadline for undergraduate students for the 2026/27 academic year.

Our guidance remains unchanged for 0-2% growth in like-for-like income for the 2026/27 academic year. Based on current leasing activity, we now expect this to be driven by occupancy of 94-96% and 1-2% growth in annual rents (previously: lower end of 93-96% occupancy and 2-3% rental growth).

Empiric (Hello Student) update

Across the Hello Student portfolio, 71% of beds are now reserved for the 2026/27 academic year (2025/26: 61%) following strong sales performance in recent weeks. This performance reflects the benefits of enhancements we have made to Empiric’s sales platform as well as targeted price reductions to drive income.

Based on sales progress and the outlook for the remainder of the cycle, we now expect Hello Student occupancy for the 2026/27 academic year to be at least 87% (previously: c.85%, 2025/26: 89%). We expect the Hello Student portfolio to deliver rental growth in line with the Unite Students portfolio.

The integration of Empiric is progressing well, and we have completed the transfer of Empiric’s city teams onto our platform and closed Empiric’s head office. We remain confident in delivering our targets for £9 million in cost synergies in 2026 and £17 million p.a. from 2027 onwards.

Renters’ Rights Act

On 1 May 2026, the Renters’ Rights Act came into effect, introducing new regulations for HMO landlords and rights for tenants. All new PBSA tenancies for the 2026/27 academic year will be exempt from the regulations.

As previously disclosed, our existing tenancies for the 2025/26 academic year are subject to transitional arrangements between May and September 2026, consistent with the wider residential sector. This enabled students for the 2025/26 academic year to serve notice to terminate their tenancy agreements with two months’ notice. This has resulted in some students exiting their tenancies early, which is reflected in our earnings guidance.

Earnings guidance

Trading through the first half of the year has been in line with expectations driven by successful short-term letting of vacant rooms for the 2025/26 academic year and strong cost control. Reflecting our first half trading and sales progress for the 2026/27 academic year, we expect to deliver adjusted earnings of 41.5-43.0p for FY2026.

Capital allocation

Disposal activity

We are on track to deliver our guidance for £300-400 million (Unite share) of disposals this year as we execute our strategy to increase our alignment to the strongest universities and enhance the quality of our portfolio.

To support the delivery of this target, we have either completed or are actively marketing a total of over £600 million of assets on a Unite share basis, comprising:

·    £130 million (Unite share) of completed disposals in the year to date, including St Pancras Way to USAF, at a weighted average yield of 4.8%; and

·    A further c.£500 million (Unite share) of assets are being actively marketed across over a dozen active processes. This includes lower-growth assets, non-PBSA properties, development land and planned disposals from Empiric. A number of these transactions are at an advanced stage, which we expect to complete during the second half.

We have made good progress with our advisers in determining options to further accelerate disposals and our repositioning towards a more focused, higher-quality portfolio aligned to the UK’s strongest universities. This process will position the Group to deliver predictable and growing earnings consistent with our long-term track record. We will provide a further update alongside our interim results.

Development update

Our 719-bed Hawthorne House project in London, which includes a new academy school, completed main construction in June as planned. We are working with the Building Safety Regulator to secure the necessary approval in advance of occupation at the start of the academic year. The property will be fully occupied on opening with half of the beds underpinned by a long-term nomination agreement with the University of the Arts London and a 25-year lease to the Government for the academic space.

Share buyback programme

We completed £165 million of share buybacks in the first half, acquiring 32.7 million shares representing c.6% of issued share capital, at an average cost of 505p.

Decisions around further share buybacks will be made in accordance with our capital allocation framework and funded out of surplus capital generated from our disposal programme.

Quarterly fund valuations

Our property valuations have reduced on a like-for-like basis over the first half of the year, principally driven by increases in property yields due to the higher interest rate environment and lower levels of transactional evidence in the investment market which is consistent with valuers’ benchmarks for student accommodation yields.

Based upon discussions with valuers, we expect the valuation deficit for the Group’s investment properties in H1 2026 (wholly owned properties plus share of JVs) to be 6.0-6.5%.

At 30 June 2026, USAF’s property portfolio was independently valued at £2,928 million, a 2.2% reduction on a like-for-like basis during the quarter. The valuation decrease reflects an income reduction of 0.1% and 10 basis points of yield expansion. USAF’s portfolio is now valued at a weighted average yield of 5.4%. The portfolio comprises 22,932 beds in 57 properties across 17 university towns and cities in the UK.

LSAV’s property portfolio was independently valued at £1,959 million, a 3.7% reduction on a like-for-like basis during the quarter. The valuation decrease in LSAV is driven by an income reduction of 0.5% and 16 basis points of yield expansion. LSAV’s portfolio is now valued at a weighted average yield of 5.0%. LSAV’s portfolio comprises 9,710 beds across 14 properties in London and Aston Student Village in Birmingham.

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