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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Unite Group Plc | UTG | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
|
|---|---|---|---|---|
| -5.00 | -0.51% | 975.00 | 11:00:03 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 979.50 | 972.50 | 983.00 | 980.00 |
| Industry Sector |
|---|
| REAL ESTATE INVESTMENT & SERVICES |
| Top Posts |
|---|
Posted at 29/12/2023 11:52 by maddox Investors Chronicle Feature - Britain's three best REITS - IC's 'Mitchell Labiak selects three property companies with outstanding attributes for the long-term investor.'Essentially, the market cycle (interest rates) is turning back in favour of property REITS but rather than solely rely on this ML looks at the fundamentals. He selects Unite, along-side Segro(SGRO) and Shaftsbury Capital (SHC) as the REITS with the highest quality fundamental characteristics to deliver the best long-term investment performance. |
Posted at 01/9/2023 13:34 by maddox The Chronic Investor asks:'Is the student accommodation market in a bubble?' I find the IC increasingly journalistic rather than analytic - so despite the click-bait title - it cites plenty of evidence that the supply/demand imbalance is set to further widen. Specifically, it quotes research 'Student accommodation website StuRents calculates that there is currently a shortage of 283,000 student beds in the UK, and forecasts that this will rise to 621,000 by 2026 based on the number of PBSA buildings in the planning stages and further surges in student numbers.' And IC concludes 'But the size of the gap between the number of beds and the number of students looks high enough to carry the sector for at least a few years.' Unite recently reported that the supply of new PBSA beds had fallen from c. 27-32k per annum over the previous four years to 19k in 2022 and projected 12k in 2023. So, I'd suggest that their conclusion is somewhat an understatement. |
Posted at 12/4/2023 10:44 by maddox Highly positive Q1 trading update today:Richard Smith, Unite Students Chief Executive Officer, commented: " We continue to make strong progress with bookings for the 2023/24 academic year with 90% of rooms already sold, demonstrating the strength of student demand and the attractiveness of our fixed-priced all-inclusive offer. Reservations are significantly ahead of recent sales cycles, reflecting strong demand from both new and existing students as well as new nomination agreements with universities. This progress reinforces our confidence in delivering rental growth of 6-7% for the 2023/24 academic year. Rental growth also continues to support our property valuations as the market adjusts to a higher funding cost environment. The supply of purpose-built student accommodation cannot keep pace with growing student demand at the same time as HMO landlords are leaving the sector. We are therefore tracking a number of new development opportunities at attractive returns, which we are uniquely positioned to deliver through our university relationships and development capability. " Picking-out the key points: >> Demand is out-stripping supply: the implication is full-utilisation can be anticipated looking at the forward bookings. >> Pricing power: UTG is able to increase rents to mitigate inflation and interest rate rises. Despite the rises UTG is very competitively priced due to wider market rental price acceleration. Pricing power is extremely important for investors in an inflationary economic environment. >> Development Pipeline: IMHO the pressure is mounting on Unis to resolve the growing accommodation crisis. This will provide the long-anticipated partnership opportunities for UTG. Something to keep an eye on. Hopefully, with the development cost-pressures ameliorating we will see a further acceleration in the development pipeline - to meet the evident demand. Whilst pressures on yield cause property valuations to pause - new development and partnership deals are the likely pathway to growth. |
Posted at 23/3/2023 09:21 by speedsgh Excerpt from IC article...Beds and sheds Speaking of Unite, its 2022 was markedly different from its peers in the Reit world. While others swung to losses due to valuation hits, it managed to grow its profits and revenue thanks to a valuation bump and increased rental income. The student accommodation sector is seen by investors as somewhat immune to the real estate market downturn due to the surging demand and the continued dearth of supply. Unite’s results show it is confident about being the company to fill this supply shortage. It is currently committed to four development schemes, totalling 2,123 beds at a cost of £339mn, and says it “expects to commit to further development activity during 2023”. Some of this could come out of the ‘development pipeline’, which it is sitting on but hasn’t yet committed to building out by breaking ground. When you pool this uncommitted and committed development pipeline together, it amounts to a total of 4,863 beds, with a total development cost of £850mn. A sizeable amount for a Reit with a completed portfolio of 29,585 beds. To turn to a third sub-sector, warehouses – or sheds in industry parlance – started last year as commercial real estate’s hottest asset class due to investor excitement about their role in the rise of online shopping, before the deflating of that speculative bubble was followed by the wider real estate downturn. As such, sheds lost proportionately more value than any other asset class in 2022. Despite this, the two largest UK-listed shed shifters, Segro (SGRO) and Tritax Big Box (BBOX), have both signalled in their most recent results that they are going full steam ahead with development. Over the course of 2022, the former invested £1.5bn into its already sizable £2.73bn development pipeline, which accounts for 18 per cent of the total value of the portfolio. Tritax is similarly bullish – if not more so. Its “near-term development pipeline” comprises “the potential to deliver around 10.8mn square feet within the next 36 months, with the potential to add £87.6mn to contracted annual rent”. When you consider that Tritax’s current contracted annual rent stands at £224mn, you begin to get an idea of how much revenue it is looking to add to the company over the next three years. Will these bets pay off? On the one hand, even with the recent pullback from Amazon on warehouse expansion, leasing data shows that warehouse demand is still near record highs while supply is still near record lows. On the other hand, 36 months is a long time. The question is whether the ecommerce need for warehouse assets will still be as acute in 2025. The same questions could also be asked of Unite’s rampant student accommodation development. Still, as a general rule, we rate the Reits who are bullish enough to build for markets where there is demonstrable demand as better investment cases than those sitting on their hands during this downturn. |
Posted at 20/3/2023 08:44 by maddox Just thought I'd point out as we are amid a banking crisis: Back in 2008/9 Purpose Built Student Accommodation (PBSA) was a relatively new and novel asset class. It then became the best performing real estate asset class through the Global Economic Crisis (GEC).PBSA is in huge demand and undersupply so highly resilient and also has a key strength in being uncorrelated with the general economy. That is not to say that the share price will reflect this - the huge share price volatility UTG exhibits is in stark contrast to its resilient qualities. I've concluded that this more reflects its investors than UTG as a business. In 2008/9 I was thus able to buy at that time at around 50% of Net Asset Value. |
Posted at 04/3/2023 20:40 by maddox I'd recommend any browsers to look at the UTG results webinar, lots of great background:Despite the current prevailing market gloom there is a very reassuring positive note in this webinar. For a start the accompanying presentation is titled 'Positioned for Growth': As mentioned the market demand is very supportive and UTG sees opportunity of growth across three areas: >> Internal investment: Up-grading and segmenting the existing portfolio delivering a target 7% on investment; >> Pipeline of new development: 2123 beds (committed) and 2740 beds (not yet committed) and with additional Uni partnerships; and >> New Buy-to-Rent(BtR)init Based on this UTG are guiding to delivering an 8-10% accounting return. I'd suggest that UTG are very confident of being able to achieve that based on the core opportunities. If they do well and manage to land a few additional Uni opportunities and I'm sure they'll be aiming to beat that. A few other observations: The Uni. of Manchester has appointed three professional services consultancies to consult on a major investment and development strategy for its student accommodation. Real Estate Advisors CBRE will be supported by law firm Pinsent Masons and corporate finance advisors QMPF will advise on finance. Seems like a fairly comprehensive strategic review. Incidentally, UTG has just refurbished three sites in Manchester tailoring them for different customer groups. The BtR Sector looks attractive - Spareroom.co.uk CEO Matt Hutchinson is reporting that rents are rising faster than they've ever seen: 'we've been running Spareroom for nearly 20 years now. And we've never seen the rental market like it's been in the past 18 months. There's a sort of perfect storm of dwindling supply, incredible demand. And as a result, rents are going up and so paying record highs everywhere across the UK'. (BBCR4 Money Box 4Mar23) This probably explains UTG's new initiative in this area. Readers of Chronic Investors need to be careful of their sloppy analysis. A highlight bullet point states that UTG's 2022 revenue has fallen on 2021. Correct but not fully explained - 2021 revenue included a £42m performance fee from their fund management activities - whereas rental revenue grew 15.6% y-o-y and adjusted earnings attributable to shareholders +48% and dividends also +48%. |
Posted at 19/2/2023 17:57 by maddox Hi bd,There are two dynamics at play firstly there is the business performance and prospects, which all look supportive, and secondly, the institutional demand for shares. I'll just post Investors' Chronicle's Simon Thompson recent views on the PBSA sector: 'There is a long-term demand-supply imbalance for PBSA, too. This imbalance is expected to increase, with the predicted annual increase in the number of students exceeding the supply of new beds. Privately owned PBSA accounts for more than half of the 698,000 PBSA beds in the UK, but one quarter is unrefurbished, first-generation stock, built pre-1999. A number of these beds are reaching the end of their operational lives and will need replacing. However, only 24,600 new beds were delivered in the 2021-22 academic year, a modest 3 per cent rise on the prior year. These dynamics explain why institutional investors remain attracted to UK PBSA as a mature, stable and income-producing asset class. Knight Frank reported £6.9bn of transactions in 2022, the highest investment volume on record.' IC 25 Jan Review of Watkin Jones (WJG) Hold 102p The 10 Jan UTG Trading Update was highly positive despite the property fund valuations taking a hit as a consequence of the higher yield expectation - reflecting the macro-economic backdrop rather than the Institutional demand mentioned by Simon Thompson. On the second factor - demand from institutions - I'm still of the opinion that the Kwarteng/Truss LDI shock to pension funds is still influential. We've seen some recovery (995p as I post) but the demand to have higher levels of liquidity (by the Pensions Regulator amongst others) will have tempered demand for equities. Hopefully, the results due on 28 Feb will draw in some new investors. |
Posted at 08/7/2022 09:19 by maddox Lots of positives in todays' trading update from Unite but first we have the Quarterly Fund Valuation Report as at 30 June 22 for the two funds that Unite manages. These are in addition to Unite’s wholly owned student accommodation portfolio.The two funds are: USAF – Unite own 28.2% (up from 22% due to recent investment) - like-for-like asset value increased 3.5% during the quarter; and LSAV – Unite own 50% - like-for-like asset value increased 4.0% during the quarter. Just to emphasise those above jumps in valuation are quarterly not annual rises. This is reflecting the strong demand for this asset class by Institutional Investors - the RNS mentions the acquisition of Student Roost by GIC and Greystar announced in May. It also points out that we can expect to see a similar uplift to Unite's own portfolio of property. Student Accommodation is uncorrelated with the wider economy and is thus highly attractive in the face of a potential recession. It was the best performing property asset class during the 2008/9 Global Economic Crisis (GEC). Outlook is highly positive based on the forward bookings for 2022/23 academic year an UTG are confident in achieving 97% occupancy. Much of the portfolio's rental rates are inflation linked and there is strong demand for the other direct-let beds; so the 3 - 3.5% rental rate growth guidance might be beaten. UTG are highly exposed to utility costs and wage inflation - but have hedged their utility costs out to a 'substantial proportion' of 2024. Hopefully the current price pressures will wain before their protection winds-out. They have shown great foresight here and similarly they have locked-in their finance at the pre-fiscal tightening rates. Clearly, Covid is still a risk, not least in China, but accepting that, UTG is emerging from the Covid-19 disruption in a strong position. |
Posted at 01/6/2022 08:14 by maddox Huge purchase of student property in prospect as Brookfield Sells Student Housing Portfolio to GIC and Greystar. The deal values the Student Roost business at about £3.3 billion. GIC is the Singaporean wealth fund that is already in a 50/50 investor in Unite's LSAV - one of their two off balance sheet student accommodation funds. The jv was extended last year out to Sept 2032. So GIC's appetite for investment in the Sector was not sated.Student Roost operates in more than 20 cities across the UK. Its portfolio comprises over 23,000 beds, and there are plans to develop about 3,000 more. It drew interest from private equity and strategic bidders, including Blackstone Inc. and Unite Group Plc, Bloomberg News has reported. The sale of the business is one of the largest deals in the sector since Blackstone agreed to buy the iQ Student Accommodation business from Goldman Sachs Group Inc. and the Wellcome Trust for about $6 billion in 2020. Student housing continues to draw in financial investors as it presents a resilient asset uncorrelated with the wider economy. The severe undersupply of purpose-built student accommodation will offer pricing power in the face of rising inflation. It is thus a perfect strategic investment for pension funds with long-term liabilities to finance. |
Posted at 09/3/2022 20:35 by maddox Anyone reading my stream of consciousness on Unite will be familiar with my puzzlement as to why the share, which I regard as the most resilient, exhibits so much volatility? (Accepting Covid ofc which has obviously presented real tangible challenges)The explanation I have been offered is that I'm confusing the rationale for the seller with the fundamental attraction of the shares. Essentially, when the market collapses and investors in funds decide to exit the Fund Manager has to quickly find cash to redeem investors' holdings. In such circumstances the Fund Manager needs to sell a share that is liquid and has potential buyers prepared to pick-up the stock in large quantity - albeit at an attractive price. Unite's quality and resilience thus counts against it at such times - it's the ideal share to shift to raise cash quickly. OK, this is unproveable, I cannot look into the heads of those selling out of UTG because, for example, Russia invades Ukraine. Nevertheless, I can see the logic and it fits with a wider trend I've observed - the higher quality stocks fall furthest in a crash. (They also rise quickest and then perform more strongly.) So, a useful working hypothesis that I'll take onboard until a better explanation appears. Can you offer one? Regards, Maddox |
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