Unite Share Discussion Threads

[maddox] 01/8/2024 13:44

Excellent news - 0.25% base rate cut to 5% today. Hopefully this is the start of a series of cuts. The Base Rate moved up rapidly but one suspects they'll be brought down more gradually.

[maddox] 25/7/2024 14:50

Looks like UTG have another large partnership deal in gestation - similar in size and deal structure to the recent Newcastle deal - expect to make an announcement late 2H24.

The capital investment has historically been c. £250m p.a. now running at c. £300m but looking at £400m p.a. with Uni deals in the pipeline. Hence the fund raise - to keep the Loan-to-Value highly conservative at c. 30%.

Forecast total accounting return for FY24 is 12% - NAV growth + dividends, but excluding market yield movement. That is, ignoring a change in the interest rate environment. If and when the BoE starts to cut interest rates - there should be a positive effect on NAV valuations. I doubt what we're going back to near zero interest rates but cuts will certainly be beneficial.

[maddox] 10/7/2024 12:00

Excellent trading update from Unite indicating that rental growth has accelerated to 7%. This growth is driving property values up c.3% over the last six months. Unite also mention that the new Labour Govt should be more supportive of the University Education Sector - which is good to hear.

The economic environment remains highly supportive of PBSA with a widening gap between supply and demand. Unite are increasing their development pipeline in response. Add to this the prospect of more university partnership deals and the future is looking highly positive for the share price.

[speedsgh] 11/4/2024 09:37

As previously announced by UTG...

Unite Students receives planning permission for two major schemes in Bristol and London -

[maddox] 09/4/2024 10:59

Positive update this morning. Very strong demand such that UTG reaffirm guidance:

'Confident in delivering rental growth of at least 6% for the 2024/25 academic year'

and "We continue to progress the delivery of our record £1.3 billion development pipeline, securing planning approvals on two schemes in London and Bristol. These projects will deliver much needed new student homes in two of the UK's strongest university cities."

Looks a tad more certain we'll see another University deal landed:

'We are tracking further opportunities for development, university partnerships and acquisitions in London and strong regional markets at attractive returns and expect to add to our pipeline in H1 2024.'

So all looking very positive - just need Mr Market to take note.

[maddox] 25/3/2024 19:10

Cityam Report: MONDAY 25 MARCH 2024 3:41 PM
Almost 100,000 more student beds needed to meet London demand

'Almost 100,000 more student beds are needed to meet demand in London, according to new research from Savills, the highest across all of the UK.

Demand for purpose built student accommodation (PBSA) has risen in recent years as the capital battles low housing supply and property development, alongside the impact of inflation and interest rate hikes.

The student to bed ratio is in London also one of the largest across Britain, sitting at 3.6.

Jacqui Daly, director, residential research, Savills, said:: “A high student to bed ratio is a measure used to indicate a lack of supply in the student accommodation market. “The ratio in London is high at 3.6. Using the latest planning data, Savills estimate that the ratio will reduce to under 3 if all of the short-term supply pipeline is delivered in the capital. That’s sites [that are] under construction or with planning consent.”

She added: “This will increase the proportion of operational beds by 24 per cent but is still someway off the number of beds needed to bring the ratio down to an average of 1.5 students per bed.”

Outside of London, both Glasgow and Edinburgh also face a shortage, with a need for 22,000 and 17,000 additional beds, respectively.

Looking at the short-term pipeline, Bristol leads by some way with delivery set to increase PBSA in the city by 45 per cent of existing operational supply.

This will see the student to bed ratio reduce from 3.5 to 2.4.

Corranne Wheeler, research, Savills, said: “Ensuring cities have an adequate supply of suitable housing is key to balancing the needs of students and local communities.

“Many universities have recognised the need for more student housing to address the supply shortages and to mitigate against loss of housing in the private rented sector.

She added: “The next and perhaps even bigger challenge for universities is to secure both new supply and new private sector investment to upgrade their existing residences to meet government energy efficiency targets.”'

There is probably a Savills Report to go along with this but I can't find it?

[maddox] 28/2/2024 13:50

On a less optimistic note....

'UK universities hit by fall in overseas students taking up postgraduate places'

'Commercial data offers first broad snapshot of enrolment since government tightened migration policy'



International Students contribute £42bn to the UK economy each year and play an important role in subsidizing Undergraduate Courses. The Govt can't stop trying to put a spoke in the wheel of this highly successful and sizeable part of our economy and UK's Global soft-(super)-power.

However, Unite will not be effected as it isn't catering to mature International Students with families and is focussed primarily on the Undergraduate market.

[maddox] 28/2/2024 13:41

Thanks speedsgh,

Please to hear that on the Uni JVs - we have six meaningful discussions in progress.

The -1% decline in EPRA NTA is reflective of the higher interest rate environment - which I think it's safe to assume will grow again once rates normalise.

We are extremely conservatively financed with a Loan-to-Value of 28%. I'd suggest that this might be expanded to accommodate a more ambitious development pipeline (hopefully with Uni JV deals).

[speedsgh] 27/2/2024 10:57

Final dividend: 23.60p
Payment date: 24/5/24
Ex-div: 18/4/24

We are proposing a final dividend payment of 23.6p per share (2022: 21.7p), making 35.4p for the full year (2022: 32.7p) and representing an 8% increase compared to 2022. This represents a payout ratio of 80% of adjusted EPS. The final dividend will be fully paid as a Property Income Distribution (PID) of 23.6p, which we expect to fully satisfy our PID requirement for the 2023 financial year.

Subject to approval at Unite's Annual General Meeting on 16 May 2024, the dividend will be paid in either cash or new ordinary shares (a 'scrip dividend alternative') on 24 May 2024 to shareholders on the register at close of business on 19 April 2024. The last date for receipt of scrip elections will be 2 May 2024.

[speedsgh] 27/2/2024 10:56

920p as at 31/12/23 EPRA NTA
928p as at 30/6/23 EPRA NTA
927p as at 31/12/22 EPRA NTA
940p as at 30/6/22 EPRA NTA
882p as at 31/12/21 EPRA NTA
837p as at 30/6/21 EPRA NTA
818p as at 31/12/20 EPRA NTA
828p as at 30/6/20 EPRA NTA
847p as at 31/12/19 EPRA NTA
812p as at 30/6/19 EPRA NTA
790p as at 31/12/18
761p as at 30/6/18
720p as at 31/12/17
669p as at 30/6/17
646p as at 31/12/16
620p as at 30/6/16
579p as at 31/12/15
521p as at 30/6/15
434p as at 31/12/14

[maddox] 19/2/2024 07:20

Unite have landed a sizeable Uni deal - a joint venture with Newcastle University to develop 2000 beds.

Unite will act as developers and ongoing asset manager with a 51% ownership, putting in 51.2% of the £250m capital. The 51% share is all important in ceding overall control of the jv to Unite; this signifies the trust that Newcastle Uni is placing in Unite. Unite's strong reputation places them in pole position to secure such deals with Unis - deals which will be long-term and upon which the Uni's students' well-being will be dependent.

This is a nice Uni partnership deal that will hopefully be a model for others; the effect of which will be to accelerate development in a hugely under-provided market.

[maddox] 19/1/2024 12:14

The immediate fall-back in UTG's share price suggests that it's responding to the influence of the inflation rate/interest rate figures. The 'surprise' slight rise in inflation in December will perhaps cause interest rate cuts to be postponed.

The consensus remains intact - that interest rates have peaked - so it's perhaps just a matter of timing.

[maddox] 29/12/2023 11:52

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.

[speedsgh] 21/12/2023 12:29

Unite Students to build 600-bed student accommodation at Temple Quarter, Bristol -

[maddox] 19/12/2023 13:50

UTG appears to be breaking out of the channel we've been in since around March 2023. As I post 1040p and trailing yield of c.3%.

The outlook for UTG in 2024 is IMHO on-balance looking very positive.

The handover from Richard Smith CEO to Joe Lister current CFO, following a Board managed selection process, will undoubtedly be smooth. They have worked together for 13 years in their respective roles. Joe has been very impressive as CFO and is an excellent choice.

The market environment couldn't be more positive. Demand for PBSA is growing at the same time as private student landlords are exiting the market - such that the undersupply is widening. The effect of course is to drive up rents and make PBSA the lower cost option further supporting demand and occupancy levels.

It appears that we have hit peak UK interest rates and thus the attraction of Gilts will wane in 2024. Switching into assets with a growing yield will look increasingly attractive. However, there is a wide spectrum of opinion about when we'll see cuts to interest rates, how fast they'll come down and where they will rest.

On the risk side there are a few areas to keep an eye on:

Build cost inflation is likely to remain a dampening factor on the economics of new build. This may equilibrate as this is passed on to lower land prices assisted by less competition from other uses such as office and retail. Although we might anticipate Build to Rent (BtR) demand to grow in response to attractive rental yields to add competition for development sites. So, quite a dynamic picture may unfold - that might itself make investment decisions more difficult.

Thankfully, the Govt appears not to be acting against international students to any meaningful extent - despite the continuing stupidity of including students in ONS immigration figures. Nevertheless, with immigration remaining politically sensitive International Students are a soft target, so this risk remains to the fore.

Another pandemic I'm completely discounting - this is the most serious risk as we have witnessed first-hand but is extremely unlikely.

Substitution risk, from on-line learning - Covid-19 has proven this to be unattractive as a replacement to in-person teaching.

Up-side risk: A large Uni deal is a possibility but whilst much mentioned by mgt - doesn't seem to materialise.

I’d be very happy to be contradicted on any of the above – always better to have alternative views to avoid missing obvious risk factors or overly optimistic (a particular fault of mine).

[maddox] 24/10/2023 22:59

Ha Ha I assume your post is aimed at Blackhorse-down strawberry. I doubt he'll see your post as he's posted widely and indiscriminately to try and support his latest trade.

I follow WJG as operating in PBSA, as I also follow ESP and DIGS, but not invested. He started ramping around 20 Sep, WJG share price c. 41p so about 12% down currently.

Unlike UTG, WJG are solely focussed on property development which is suffering due to high interest rates that means no one wants to buy their developments. If WJG can pull through into a more benign interest environment then they are probably a steal at the moment - but too risky for me.

[maddox] 05/10/2023 08:30

Trading Update for Q3

Highlights

>> 99.7% occupancy for the 2023/24 academic year (2022/23: 97.9%)

>> Rental growth of 7.3% for the 2023/24 academic year

>> Property values broadly stable in Q3 (USAF: +0.2%, LSAV -0.2%)

>> Development pipeline 5,600 beds.

Market back drop is highly supportive as under-supply of student accommodation is growing, exacerbated by private HMO owners leaving the market. With rental sector experiencing huge demand and above inflation rental increases PBSA offers a better value and high quality choice.

As a REIT all this should flow through to yield. A huge amount of capital has flowed out of the market and into Gilts but as interest rates approach their peak - the attraction should be waning.

[blackhorse23] 05/10/2023 07:14

Moving to WJG , better value

[speedsgh] 13/9/2023 12:14

New 800-bed development in Glasgow -

Unite Students, the UK's leading owner, manager and developer of student accommodation, today announces that it has entered an option agreement to acquire a new 800-bed development scheme in central Glasgow, subject to planning.

The new development will help address the acute shortage of student accommodation in Glasgow, which is home to three institutions within the UK's top 75 universities, and increases Unite's portfolio in the city to 3,000 beds. The Group expects to deliver the scheme as a university partnership with at least half of the beds to be let on a multi-year nominations agreement to a leading university.

The scheme has a total development cost of £95 million and is expected to deliver a yield on cost of around 7.5%. Planning approval is targeted during H1 2024, enabling delivery for the 2026/27 academic year. The Group expects to fund the project from capital recycling through disposals.

Development pipeline update

We have continued to make good progress on delivery of our committed development pipeline since our interim results. Morriss House in Nottingham reached practical completion in August and is fully let for the 2023/24 academic year.

Following our £300 million equity issue, work has started on-site at our Temple Quarter development in Bristol. The planning process for Meridian Square in Stratford is also progressing in line with expectations with approval targeted in Q4 2023.

Michael Burt, Unite Students Group Investment Director, commented:

"Our latest development will create new supply of high quality, affordable student accommodation in Glasgow to support the continued growth of our university partners. We are also making good progress in delivering the two new developments funded from the proceeds of our recent capital raise. Our development pipeline now totals 5,600 beds in the strongest university cities, as we work to address the urgent need for new student housing at a time when the private rental sector is in retreat."

[maddox] 01/9/2023 12:34

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.

[speedsgh] 29/7/2023 06:08

LGIM provides landmark £400m facility to Unite -

[maddox] 26/7/2023 06:19

If you missed the Results presentation yesterday, here is the recording:



Loads of great insight into the market in addition to the financials etc.