TIDMUTG
RNS Number : 2839B
Unite Group PLC
09 January 2018
Press release
9 January 2018
THE UNITE GROUP PLC
("Unite Students", "Unite", the "Group", or the "Company")
PRE-CLOSE STATEMENT FOR THE UNITE GROUP PLC AND QUARTERLY
VALUATION UPDATE FOR THE UNITE UK STUDENT ACCOMMODATION FUND AND
THE LONDON STUDENT ACCOMMODATION JOINT VENTURE
Unite Students, the UK's leading manager and developer of
student accommodation, announces a pre-close statement and the
quarterly valuation update for the Unite UK Student Accommodation
Fund ("USAF") and the London Student Accommodation Joint Venture
("LSAV") as at 31 December 2017.
Highlights
-- Occupancy secured at 99% for the 2017/18 academic year,
underpinned by 59% nominations agreements - demand for Unite
Students high quality and expertly operated, purpose built
accommodation has remained consistently high
-- The sales cycle for 2018/19 is well underway with 66% of all
rooms already sold with 56% being guaranteed by nominations
agreements (64% and 54% at the same time last year)
-- The level of 2018/19 sales made so far supports the outlook
for 3.0-3.5% rental growth on a like-for-like basis
-- The strong sales performance has been supported by further
efficiency gains and Unite remains on track to deliver its 75% net
operating income margin target and overhead efficiency target of
25-30 basis points in 2018
Quarterly valuation uplift driven by rental growth and yield
compression
At 31 December 2017, USAF's property portfolio was independently
valued at GBP2,233 million, representing a like-for-like increase
of 2.5% in the quarter and 5.6% over the full year. The portfolio
comprises 24,887 beds in 70 properties across 23 University towns
and cities in the UK.
LSAV's property portfolio was independently valued at GBP1,159
million, up 5.2% on a like-for like basis in the quarter and 9.2%
over the full year. LSAV's portfolio comprises 5,410 beds across 13
properties in London and 3,067 beds at Aston University student
village.
The increase in like-for-like valuations is driven by a
combination of rental growth and yield compression in the quarter.
Across the whole portfolio, rents have increased by 3.3% over the
year. The USAF portfolio is valued at an average yield of 5.5% and
LSAV's portfolio at 4.5% representing 15 basis points of
compression in USAF and 29 basis points of compression in LSAV
during the year.
The independent valuation for Unite's wholly owned portfolio,
comprising 12,325 beds across 31 properties, will be announced as
part of the Group's preliminary statement due to be released on 21
February. Rental growth and yield compression are expected to be in
line with the USAF portfolio.
As a result of the strong return in USAF during 2017, Unite
expects to earn a net performance fee of c.GBP3 million. The fee
will be paid in new USAF units in the first quarter of 2018.
Leeds development scheme acquisition increases pipeline to 7,500
beds
During the final quarter of 2017, Unite Students acquired a
1,000 bed development scheme in Leeds on a subject to planning
basis and secured planning on the 600 bed New Wakefield Street site
in Manchester. Unite's development pipeline now amounts to 7,500
beds which will be delivered over the next three years at an
average development yield of 8.2%, generating c.10-12p of earnings.
The delivery of these new beds, along with anticipated rental
growth, underpins the Group's outlook for continued earnings and
dividend growth.
Second University Partnership scheme announced
In addition to these core direct-let developments, Unite
acquired and secured planning on its second University Partnership
scheme in December 2017. The new scheme will provide a home to 885
students studying at Oxford Brookes University through a 25 year
nominations agreement. This builds on the acquisition of the Aston
Student Village in February 2017 and demonstrates that Unite's
brand in the Higher Education sector is opening up a growing number
of valuable partnership opportunities.
New S&P and Moody's credit ratings reflect the strength of
Unite's capital position
The Group has continued to maintain a disciplined approach to
managing leverage, with LTV at 31 December 2017 expected to be at
the lower end of our target range around 30-32%. The Unite Group
plc was assigned an investment grade corporate rating of BBB from
Standard & Poor's and Baa2 from Moody's, reflecting the
strength of Unite's capital position, cash flows and track record.
The credit rating underpinned the transition to an unsecured
capital structure with a new GBP500 million unsecured debt facility
that will reduce the average cost of debt to 3.9% when fully
drawn.
Outlook
The sustained business performance and the strength of the Unite
Students brand, together with the development pipeline and growing
number of University partnership opportunities means that the
business is well positioned to maintain momentum over 2018 and
beyond.
Richard Smith, Unite Students Chief Executive, commented:
"The business is performing well and remains well placed to
capitalise on its market-leading position in a sector that
continues to demonstrate structural growth. Our operational
platform continues to drive sector leading occupancy and rental
growth and our reputation and standing in the sector is
under-pinning long-term, meaningful partnerships with leading
Universities in the sector, allowing us to support the ongoing
growth of these institutions and continue to grow our
business."
ENDS
For further information, please contact:
Unite Students
Joe Lister (Chief Financial Officer) Tel: +44 117
/ 302 7005
Caroline Hall (PA to Chief Financial
Officer) Tel: +44 117
Allison Parkes-Norris (External 302 7177
Communications Manager) Tel: +44 20
Powerscourt 7250 1446
Justin Griffiths
Alison Watson
Mazar Masud
Notes to editors:
About Unite Students
Unite Students is the UK's largest manager and developer of
purpose-built student accommodation serving the country's
world-leading higher education sector. We currently provide homes
for almost 50,000 students in more than 140 properties across 24
leading university towns and cities in England and Scotland. Unite
also has a strong development pipeline, which will deliver a
further 8,000 beds in the next three years.
Our 1,450 people are driven by a common purpose: to provide the
students who live with us a 'Home for Success' and to be the most
trusted brand in the sector. We do this through great service,
great people and great properties, all designed on the basis of an
unrivalled insight into students' needs and preferences.
Unite's accommodation is high quality, safe and secure, and
located close to university campuses, transport links and local
amenities. Students live predominantly in en-suite study bedrooms
with rents covering all bills, insurance, 24-hour security,
fortnightly cleaning services and high-speed Wi-Fi. MyUnite, our
mobile app, provides practical support such as instant messaging
and maintenance requests.
Our commitment to customer service is powered by an innovative,
in-house operating platform. It provides a wide range of benefits
to our students, such as an optimised online booking process, as
well as providing us with a unique ability to drive value from our
portfolio through scale efficiencies and revenue management.
Alongside delivering great service, our other strategic priority
is delivering growing and sustainable earnings, underpinned by a
strong capital structure. A key part of this strategy is growing
the number of beds let though partnerships with mid and high tariff
universities which are experiencing record levels of student
demand. We currently partner with 60 higher education institutions,
guaranteeing that approximately 60% of our rooms are let under
multi-year, 'nomination agreements' providing high visibility of
forward occupancy and rental growth.
Unite is invested in and operates two specialist funds and joint
ventures with institutional investment partners: the GBP2 billion
Unite UK Student Accommodation Fund (USAF), and the GBP1 billion
London Student Accommodation Vehicle (LSAV).
Unite is the founder of and major donor to the Unite Foundation,
a charitable trust established to support talented students facing
challenging financial circumstances through the provision of free
accommodation annual scholarships. The Foundation has so far
provided scholarships for 250 young people working in close
collaboration with 28 universities.
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.
For more information, please visit Unite's corporate website
www.unite-group.co.uk, the student site www.unite-students.com or
the Unite Foundation www.unitefoundation.co.uk.
LEI: 213800BBUUWVDH9YI827
This information is provided by RNS
The company news service from the London Stock Exchange
END
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