TIDMUTG
RNS Number : 7046H
Unite Group PLC (The)
08 April 2022
PRESS RELEASE
8 April 2022
THE UNITE GROUP PLC
('Unite Students', 'Unite', the 'Group', or the 'Company')
TRADING UPDATE AND Q1 FUND VALUATIONS
Unite Students, the UK's leading owner, manager and developer of
student accommodation, today announces 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 March 2022 .
Current trading
2022/23 reservations
We have seen strong progress in sales since our preliminary
results, materially closing the gap to our record pre-pandemic
reservations level. Across the Group's entire property portfolio,
77% of rooms are now sold for the 2022/23 academic year
(2021/22:69%, 2020/21:79%). We expect strong student demand for
2022/23 from both domestic and international students with UCAS
applications up 7% compared to pre-pandemic levels and reduced
disruption from travel restrictions and grade inflation.
This is supportive of our guidance of 97% occupancy for the
2022/23 academic year and further increases our confidence in
achieving rental growth of 3.0-3.5%.
Development pipeline update
We recently received planning approval for our 595-bed Temple
Quarter development in Bristol. We intend to acquire the site in
time for delivery in the 2024/25 academic year. The completed
development will be fully let on a 15-year nominations agreement to
the University of Bristol, further strengthening our relationship
with the university.
In early March, our planning application for our development in
Paddington, London was rejected by Westminster City Council. We are
currently reviewing our options for the best route to securing
planning consent for the site, however this delay now means that we
will no longer deliver the scheme for the 2024/25 academic
year.
We continue to see inflationary pressure on build costs for our
development pipeline, which typically account for 50-70% of our
total development costs. This reflects ongoing supply chain
disruption created by the pandemic as well as rising energy and
materials prices, which have been exacerbated by the war in
Ukraine.
Our 2022 and 2023 schemes are secured under fixed price build
contracts and remain in line with budget and on track for their
scheduled delivery dates. However, we are seeing cost increases for
schemes yet to be procured for delivery in 2024 and 2025. As a
result, we now expect the yield on cost for our 2024 and 2025
schemes to be reduced by up to 20 bps, compared to our initial
assumptions (previously 10-20bps). These schemes remain attractive
and we will seek to mitigate the impact of increasing build costs
through design efficiency and increased rental levels where
possible.
Quarterly fund valuations
At 31 March 2022, USAF's property portfolio was independently
valued at GBP2,865 million, a 1.7% increase on a like-for-like
basis during the quarter. The valuation increase in USAF is driven
by rental growth of 0.7% and a 6 basis point reduction in property
yields. The portfolio comprises 28,929 beds in 71 properties across
19 university towns and cities in the UK.
LSAV's investment portfolio was independently valued at GBP1,868
million, a 2.7% increase on a like-for-like basis during the
quarter. The valuation increase in LSAV is driven by rental growth
of 1.1% and a 7 basis point reduction in property yields. LSAV's
investment portfolio comprises 9,716 beds across 14 properties in
London and Aston Student Village in Birmingham.
The USAF and LSAV portfolios are now valued at weighted average
yields of 5.1% and 4.0% respectively.
Joe Lister, Unite Students Chief Financial Officer, commented
:
"We continue to make good progress with bookings for the 2022/23
academic year with 77% of rooms already sold, demonstrating the
strength of student demand and our success in increasing the
retention of existing customers. This supports our guidance for a
return to 97% occupancy and increases our confidence in delivering
3.0-3.5% rental growth for the 2022/23 academic year. In the
current environment, headwinds from build cost inflation are
impacting our medium-term development pipeline, but we will seek to
mitigate these effects where possible."
ENDS
For further information, please contact:
Unite Students
Joe Lister / Michael Burt Tel: +44 117 302 7005
Unite press office Tel: +44 117 450 6300
Powerscourt
Justin Griffiths / Victoria Heslop Tel: +44 20 7250 1446
About Unite Students
Unite Students is the UK's largest owner, manager and developer
of purpose-built student accommodation, serving the country's
world-leading Higher Education sector. We provide homes to 74,000
students across 172 properties in 25 leading university towns and
cities. We currently partner with over 60 universities across the
UK.
Our people are driven by a common purpose: to provide a 'Home
for Success' for the students who live with us. Unite's
accommodation is safe and secure, high quality and affordable.
Students live predominantly in ensuite study bedrooms, with rents
covering all bills, insurance, 24-hour security and high-speed
Wi-Fi. We also achieved a five-star British Safety Council rating
in our last audit.
We are committed to raising standards in the student
accommodation sector for our customers, investors and employees.
This is why our new Sustainability Strategy, launched in 2021,
includes a commitment to become net zero carbon across our
operations and developments by 2030.
Founded in 1991 in Bristol, Unite Group is an award-winning Real
Estate Investment Trust (REIT), listed on the London Stock Exchange
and a member of the FTSE 250 Index. Unite is invested in and
operates two specialist funds and joint ventures with institutional
investment partners: the GBP3 billion Unite UK Student
Accommodation Fund (USAF) and the GBP2 billion London Student
Accommodation Vehicle (LSAV).
For more information, visit:
Unite's corporate website www.unite-group.com
The student site www.unitestudents.com
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END
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