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Highlights:
- Unite Group PLC reported an 8.2% like-for-like rental growth for the new 2024/25 academic year, surpassing prior guidance of 7%.
- Current occupancy stands at 97.5%, driven by strong demand for university places, though slightly below last year’s levels.
- The company projects rental growth of 4-5% for the 2025/26 academic year and maintains its full-year outlook for adjusted earnings per share at the upper end of the 45.5-46.5p range.
Unite Group PLC {LSE:UTG}, a prominent developer of student accommodation, has reported robust rental growth for the upcoming 2024/25 academic year, despite a slight decline in occupancy rates compared to the previous year. The company achieved an impressive 8.2% like-for-like rental growth, exceeding its earlier guidance of 7% provided during the interim results.
Occupancy rates are currently at 97.5%, reflecting strong demand for university places. Unite Group noted that this demand has been characterized by record numbers of UK school leavers and resilient international interest, despite changes to visa policies over the past year. The group reported a 3% increase in undergraduate acceptances for its core demographic of UK 18-year-olds, driven by population growth and a higher acceptance rate.
Looking ahead, Unite Group anticipates a rental growth of 4-5% for the 2025/26 academic year. The company also highlighted that the growth in rents is contributing to valuation increases for its portfolio of student accommodation. The Unite UK Student Accommodation Fund (USAF) and the London Student Accommodation Joint Venture (LSAV) have both seen valuation increases of 1.5% and 1.6%, respectively. Additionally, capital growth for the year to date stands at 4.4% and 5.3%.
Despite these positive indicators, Unite Group’s shares fell by 0.55% to 911.5p in early trading on Tuesday, marking a decline of over 12% for the year thus far. Analysts at Peel Hunt noted that this share price drop positions Unite as one of the weaker performers in the sector, with the stock currently trading at approximately 20 times earnings and offering a dividend yield of 4.0%. The company has reiterated its full-year outlook for adjusted earnings per share at the higher end of its previously stated range of 45.5-46.5p.
