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Highlights
- Robust Rental Growth: 8.2% rental increase and 97.5% occupancy for the 2024/25 academic year.
- Pipeline Expansion: £1.05 billion committed development pipeline, fully funded in Russell Group cities.
- Financial Strength: 9.6% Total Accounting Return (TAR) and 6% growth in EPRA NTA to 972p.
Unite Students (LSE:UTG), the UK’s largest provider of purpose-built student accommodation (PBSA), reported 8.2% rental growth and 97.5% occupancy for the 2024/25 academic year, significantly outperforming the sector average of 94%. The company’s robust performance was supported by nomination agreements with university partners, securing 57% of beds for 2025/26.
Adjusted earnings per share (EPS) rose by 5% to 46.6p, with guidance for 2025 EPS in the range of 47.5-48.25p. The company expects rental growth to normalize to 4-5% in 2025/26, alongside 97-98% occupancy.
Rising Demand Amid Housing Constraints
Student demand continues to surge, with UK university applications up 2% and international student visa issuances climbing 14% year-on-year. However, supply remains constrained — new PBSA development is 60% below pre-pandemic levels, while the competing House in Multiple Occupation (HMO) sector continues to decline.
Despite the normalization of reservation rates to 70% for 2025/26 (from 79% in 2024/25), Unite remains well-positioned to capitalize on market imbalances and partner demand from leading institutions.
Strategic Growth and Portfolio Expansion
Unite strengthened its portfolio through £281 million in acquisitions and £304 million in disposals, focusing on high-demand university cities. The company also invested £48 million in rental enhancements at a 10% yield on cost.
The £1.05 billion development pipeline is fully funded and concentrated in Russell Group cities, with an expected 6.8% yield on cost. Notably, the company launched its first university joint venture with Newcastle University, with discussions underway for a second partnership. The pipeline is set to add £71 million to net operating income (NOI) over the next four years.
Financial Strength and Sustainability Leadership
Unite’s portfolio valuation rose 4.8% to £6.0 billion, driving a 9.6% Total Accounting Return (TAR) and 6% growth in EPRA NTA to 972p. The company reduced its net debt-to-EBITDA ratio to 5.5x and lowered its loan-to-value (LTV) to 24%. While the cost of debt is expected to rise to 4.1% in 2025 (from 3.6% in 2024), the company’s disciplined balance sheet management provides ample flexibility for future growth.
On the sustainability front, over 99% of Unite’s portfolio holds an EPC rating of A-C, with a 9% reduction in energy intensity since 2019. The company also delivered its lowest-ever embodied carbon development at Bromley Place, Nottingham, reinforcing its leadership in sustainable living.
Outlook: Steady Growth and Continued Market Leadership
Looking ahead, Unite targets an 8-10% Total Accounting Return (TAR) in 2025, excluding yield movements.
