Unite Group Reports Increase in Earnings for 2016

Posted by Richard Ward in

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Unite Group has reported a 24% increase in EPRA earnings for the year ending December 2016.

The group reported a 24% rise in adjusted EPRA earnings to £61.3 million versus £49.5m reported a year earlier.

Profit before tax was reported at £201.4 million for the 12-month period, which includes property revaluations of £136.3 million. This represents a decline on the previous year where profit before tax was recorded at £388.4 million, with £324.6 million attributed to property revaluations.

As a result, EPS came in at 101.3p versus 164.2p in 2015 due to the lower level of revaluation surplus as a result of yield compression in 2015.

During the period the group maintained a portfolio of 49,000 beds at a value of £4.3 billion, an increase on the 46,000 beds it held at the end of 2015.

For 2017 Unite is expecting its rental growth to be in the region of 3.0-3.5%, supported by its relationships with universities and student number growth. However, this represents a compression on the 3.8% growth in rental income which it recorded for the 2016-17 academic year.

The group has maintained a positive outlook, with 75% of its bed spaces being reserved for the 2017-18 academic year, up from the 67% reported at the same time a year earlier. For the 2016-17 academic year occupancy rates stand at 98%.

Unite has increased the proportion of beds let to Universities with 58% or rooms now under nomination agreements, up by 5,000 beds over the past three years. It expects this to remain around this level in the future. The company also noted that rents on nominations are around 5% lower than their direct let equivalents but sees opportunities to close this discount in the coming years.

With a development portfolio of 7,000 beds, in addition to its expected rental growth, the group expects it could add 15-20p to earnings over the next few years.

Despite UCAS recently reporting a fall in the number of EU domiciled students applying to study at university for the 2017-18 academic year, as of the January 15 deadline, Unite does not expect Brexit to significantly impact student numbers and will continue to focus on its relationships with high to mid-ranked Universities.

Commenting on the results, Chief Executive of Unite Group, Richard Smith, said: "These are another excellent set of results that reflect the quality of our people, properties and service execution that sets us apart in our sector. Looking forward, we will maintain the quality of our portfolio through development and also strategic acquisitions such as our recent purchase of Aston Student Village, our first on-campus. Students and Universities remain our core focus and we will continue to invest in our operational capabilities, providing excellent service and ensuring consistently high satisfaction levels. This strategy, plus the ongoing strength of UK Higher Education, student numbers and the demand for beds means we are confident in further growth."


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