Unite Students Release Q4 Trading Update

Unite Students, the UK's leading owner, manager and developer of student accommodation, have released their latest trading update.

The group have reported a strong start to the 2023/24 lettings cycle, with 70% of its rooms already booked. This is up from both 2022/23 and 2021/22 which were 60% and 58% booked at this point in the season.

The Unite UK Student Accommodation Fund (USAF) portfolio was valued at £2,888 million, representing a 1.4% decrease during the quarter and a 4.6% increase for the year. This was driven principally by an increase in property yields of 13bps to a weighted average of 5.0%, which more than offset the positive impact of rental growth. Over the year, valuation growth was driven by rental growth and a 7bps reduction in property yields on a like-for-like basis.

Meanwhile, the London Student Accommodation Joint Venture ('LSAV') investment portfolio was valued at £1,921 million, reflecting a 2.8% decrease in the quarter and an increase of 5.6% for the year. The valuation decrease in the quarter was attributed to an increase in property yields of 18bps to a weighted average of 4.1%. Over the past 12 months, valuation growth was driven by rental growth with yields broadly stable.

Chief Executive of Unite Students, Richard Smith. commented: "We have seen a strong start to the 2023/24 sales cycle, reflecting the appeal of our high-quality portfolio and fixed-price, all-inclusive offer, which provides students with significant savings and certainty on their bills. Reservations are significantly ahead of recent sales cycles, reflecting strong demand from new and existing students as well as new nomination agreements with universities. We now expect to deliver rental growth of at least 5% for the 2023/24 academic year, which will help offset the cost pressures we are facing through higher utility and staff costs. Growing income also offers support to our property valuations as the market adjusts to an environment of higher funding costs.

"Despite the challenging economic environment, the business remains well positioned thanks to increasing student numbers and growing demand for high-quality, purpose-built student accommodation across our markets. Moreover, our alignment to the strongest universities and the capabilities of our best-in-class operating platform mean we remain confident of continuing to deliver strong operational results."