Unite Students reiterates FY2025 earnings guidance, launches £100m share buyback

Unite Group plc (LON:UTG), Unite Students, the UK’s leading owner, manager and developer of student accommodation, has announced 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 December 2025.

Joe Lister, Unite Students Chief Executive Officer, commented:

“Sales progress to date is consistent with our guidance for occupancy of 93-96% and rental growth of 2-3% for the 2026/27 academic year (2025/26: 95.2% and 4.0%). Our conversations with our university partners show continued demand for our high-quality, value-for-money accommodation, notwithstanding a slower start to the 2026/27 sales cycle.

Consistent with the revised capital allocation policy set out at our recent investor event, we are today launching a £100m share buyback programme to return surplus capital to shareholders. This will initially be funded through reduced off-campus development activity, which maintains our high-quality balance sheet. We will continue to invest where we see the strongest risk-adjusted returns and expect to generate further surplus capital over the year ahead as we make progress with planned disposals.

We are focused on delivering on our strategic priorities, namely driving operational excellence and optimising capital allocation. These underpin our medium-term outlook and our path to return to earnings growth from 2027.”

Highlights

·    Reiteration of FY2025 guidance for adjusted EPS of 47.5-48.25p

·    Continued demand with 64% of beds sold for the 2026/27 academic year (2025/26: 67%)

·    Funding complete and construction underway at Newcastle University joint venture

·    Launch of share buyback programme of up to £100 million given high-quality balance sheet

·    Modest reduction in Q4 valuations (USAF: (0.7%), LSAV: (1.4%), FY2025: +0.7% and +0.5%)

Unite Group will host a conference call for investors and analysts this morning at 08:30am GMT. Dial-in details are:

Title                 Unite – Q4 Trading update

Weblink            https://brrmedia.news/UTG_TU

Dial in              +44 (0) 33 0551 0200 (please join 5-10 minutes before start)

Password          Unite Trading Update

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

Current trading

2026/27 lettings performance

Having launched our sales cycle in late October, 64% of rooms are now reserved for 2026/27, slightly behind the prior year (2025/26: 67%). This comprises 56% of beds let to universities under nomination agreements and 8% through direct-let sales (2025/26 59% and 8% respectively).

Ahead of the main UCAS application deadline, we have seen a slower rate of sales as universities adopt a more cautious approach to renewing single year or expiring multi-year nomination agreements. The UK 18-year-old population will grow by 4% this year, supporting demand for university education, and we continue to see good engagement from our university partners. Based on these discussions, we anticipate further demand for beds from universities later in the sales cycle.

Our focus on securing income through price adjustments in markets with lower occupancy in 2025/26, including Nottingham, Sheffield and Leicester, has encouragingly led to reservations being slightly ahead of last year in those cities. We will continue to be proactive in our sales and marketing approach for both direct-let and nominations beds.

The sales progress to date is consistent with our target for 93-96% occupancy and rental growth of 2-3% for the 2026/27 academic year (2025/26: 95.2% and 4.0%). We will provide a further update, following initial UCAS applications data for undergraduate students, at our Preliminary results on 24 February.

University partnership and development update

We have made good progress on our university joint ventures with Newcastle University and Manchester Metropolitan University. Construction is underway at Castle Leazes in Newcastle with the first phase on track for delivery in 2028 and we will recognise c.1p of non-recurring management fee income in FY2025. We are also in the advanced stages of finalising our joint venture with Manchester Metropolitan University, which we expect to complete in the coming weeks.

Our 719-bed Hawthorne House scheme in Stratford, which also includes a new academy school, is on track to complete in June. The building is subject to transitional approvals under the Building Safety Act, required for the occupation of the building for the start of 2026/27 academic year. We are actively engaging with the Building Safety Regulator to enable the building to welcome students from this September.

We have deferred delivery of our 500-bed Freestone Island project in Bristol while we explore options to secure best value from the project. This deferral releases approximately £55 million of capital which was previously allocated to the development.

We have also decided to not proceed with our TP Paddington development in London. This follows the grant of planning permission on appeal, which fulfilled our contractual commitment to the landowner. The 605-bed project is not financially viable based on our target return requirements and an extended delivery programme. We expect to recognise a c.£10 million exceptional write-off of planning costs in FY2025 which we expect to be excluded from adjusted earnings.

Share buyback programme

At our investor event in November, we set out our revised capital allocation framework focused on increasing our portfolio weighting to high-tariff universities while driving earnings growth and attractive total accounting returns. Under this approach, surplus capital will be deployed at the strongest risk-adjusted returns into university partnerships and share buybacks.

We are today announcing a share buyback programme to purchase up to £100 million of Unite shares, reflecting confidence in Unite’s long-term prospects and our high-quality balance sheet. This initial tranche will be funded through surplus capital from deferred development activity. Further capital allocation will be kept under review as we progress with our target disposal programme of £300-400m p.a..

Acquisition of Empiric Student Property (‘Empiric’)

The CMA announced that it had conditionally cleared our acquisition of Empiric in late November following its phase 1 investigation. The Court Sanction Hearing for the scheme of arrangement has been scheduled for 26 January 2026 and the Effective Date of the Scheme is expected to be 28 January 2026 with completion shortly thereafter.

We look forward to delivering on our business plan for Empiric, as part of our wider focus on operational excellence and a return to grown from 2027.

Earnings guidance

Performance through the fourth quarter has been in-line with the Board’s expectations and supports reiterated guidance for adjusted EPS of 47.5-48.25p for FY2025. This includes c.1p of non-recurring fee income from our Newcastle University joint venture in the second half.

We remain proactive in reducing costs to improve our operational efficiency and completed a restructuring before the year end to deliver a c.20% saving in our head office staff costs. There are further opportunities for cost savings over the next 12 months through cost efficiencies from technology investment and the realisation of cost synergies from the acquisition of Empiric.

We will provide more detailed guidance for FY2026 adjusted EPS, incorporating the acquisition of Empiric, with our Preliminary results on 24 February.

Quarterly fund valuations

At 31 December 2025, USAF’s property portfolio was independently valued at £2,844 million, a 0.7% reduction on a like-for-like basis during the quarter and a 0.7% increase for the year. The valuation increase reflects quarterly rental growth of 0.5%, offset by 4 basis points of yield expansion. USAF’s portfolio is now valued at a blended 5.3% yield. The portfolio comprises 22,361 beds in 56 properties across 17 university towns and cities in the UK.

LSAV’s property portfolio was independently valued at £2,083 million, a 1.4% reduction on a like-for-like basis during the quarter and 0.5% increase for the year. The valuation increase in LSAV is driven by quarterly rental growth of 2.4%, offset by 16 basis points of yield expansion. LSAV’s portfolio is now valued at a blended 4.7% yield. LSAV’s portfolio comprises 9,710 beds across 14 properties in London and Aston Student Village in Birmingham.

Based upon discussions with valuers, we expect the yield movement at Unite share for FY2025 (wholly owned properties plus share of JVs) to be broadly in-line with the 12 basis point increase for USAF in the year.

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