Unite Share Discussion Threads

[maddox] 24/6/2020 18:17

Very interesting trading update and fundraising announced after market close today. The timing of the release is usually an alarm signal. However, the trading update is highly positive in the circumstances:

'UK student demand is expected to be robust, reflecting the clear desire of young people to attend University, weaker employment prospects and fewer gap year opportunities for school leavers. The Company has growing visibility over 2020/21 income through 80% of beds either contracted or reserved. The Company is targeting occupancy of 90% for 2020/21, supported by nomination agreements expected on over 50% of beds.'

And every cloud has a silver lining, the £300m funds to be raised will be used to take advantage of opportunities created by Covid - and with enhanced returns.

'The Net Proceeds will allow the Company to pursue three additional schemes in central London and prime provincial cities for 2023/2024 delivery at a total development cost of approximately £250 million. They consist of two developments and one forward funded acquisition, which are currently under offer at yields on cost 50-75bps above pre-Covid-19 levels. The Company is targeting enhanced returns on new developments with yields on cost of 7.5% in London and 8.5% in provincial markets and 100 basis points lower for University partnerships. This reflects the Company's expectations for reductions in land and construction prices.'

No doubt, the share price fall today will have been driven by FIs selling to raise funds to purchase new shares in the book-building.

It would appear that Unite are going to emerge from this Covid Crisis stronger than they entered it.

[maddox] 20/6/2020 11:13

More on the risk of Covid-19 to students:

BBC Radio 4 Today Programme interview with David Spiegelhalter, Statistician and Chair, Winton Centre for the People’s Understanding of Risk, Cambridge.

“If we look at school kids there has been three deaths, fewer than die of flu each year. If we look at fifteen to twenty four year olds, there is about seven million of them, thirty two deaths nearly all of those people with pre-existing medical conditions. So there is about one in a million healthy people that have died from Covid.” “This is that same risk that everyone faces every day from dying from non-natural causes, and we find that quite tolerable.”

“we have to distinguish between the risk to young people, that is extraordinarily low, and the risk to others."

1:54:00 right at the end to the programme.

The focus should be on creating a big campus bubble and then protecting the staff that might be vulnerable and those that might spread the virus outside of the uni bubbles. Let the students have a normal university experience and normal tuition they are at virtually zero additional risk from Covid unless they have pre-conditions.

[maddox] 15/6/2020 12:47

Jo Johnson Con MP, former UK Universities Minister(and Bojo's bother)interviewed on BBC Radio 4 Today Programme 15 June - he sees a 'hostile environment' for foreign students coming to the UK, listen 2:34:00 in:



"there is a lot of red tape and off-putting regulations that reduce our competitiveness in the market for international students, we should remove that because international students are good for our universities, good for our economy and also good for the learning environment of our domestic students - there really isn't anything not to like."

"As a country we should be going all-out to attract them, they are one of the strongest elements of soft power we have as a country, and if we're serious about Global Britain, we should be seeking to maximise the number of Intl students in our system not try and put them off."

He's written a report published by the Policy Institute at the University of London and Harvard Kennedy School:



A sensible move last year reversed "the frankly disastrous decision" (made in 2012 by then-Home Secretary Theresa May - also responsible for the shameful Windrush Scandle) that forced overseas students to leave four months after finishing a degree. He argues that the Post-Study Work Visa should be doubled from the current two years to four to make us competitive again against Canada, Australia and others.

"This would be a total game-changer, this would be sensational for the ability of our Universities to go an market UK higher education."

JJ sites his brother as a supporter and he has received his report.

[maddox] 08/6/2020 10:15

Thx again Chucko, that's very good news.

I suspect the difference is that the students are not impressed by the online learning, social distancing measures and term delays being contemplated by some Unis. These are probably more a concern than Covid-19?

[chucko1] 08/6/2020 09:55

Agreed. Also, I know that Chinese schoolkids are NOT deferring their places at UK public schools. A lot went back to China, paying extremely high air fares, in March/April at the time China infection rates were trending far lower and the UK rates were exponential. But they are all coming back in September, or at least those are their current plans. Unsure why undergraduates would be markedly different.

[maddox] 08/6/2020 09:51

thx Chucko - amended the post.

[chucko1] 08/6/2020 09:43

"Campus style Universities should find segregation a particularly difficult task."

Or not?

[maddox] 08/6/2020 09:40

Further info on the prospects for the 20/21 Academic Year.

'A new survey of international students by the British Council has found that nearly 14,000 fewer students from eight countries – including China, Singapore and Malaysia – are likely to come to the UK in 2020/21 in the wake of the coronavirus pandemic.

The decline of 20% in students from east Asia would amount to a 12% fall in overall international student numbers, causing a £460m loss of income from tuition and living expenses such as accommodation.

While the fall in student numbers appears smaller than some institutions are anticipating, one worrying sign from the survey is that nearly 40% of those coming from China – the UK’s biggest source of overseas students – have yet to decide.

“Prospective international students are facing a lot of uncertainty, but many are clearly trying to find a way to keep their overseas study plans,” said Matt Durnin, the author of a report for the British Council.

“There is a window of opportunity over the next two months to create a greater sense of certainty about the upcoming academic year. If responses are clear and quickly communicated to prospective students, UK higher education will face a much more manageable scenario.”

The survey of prospective students found that 29% said they were likely to delay or cancel their plans to study. A majority of postgraduate applicants said they would rather postpone the start of their studies until January 2021 than begin with online teaching in autumn, while 46% of undergraduate applicants agreed.'



A few points to highlight:

>> Universities need to get their act together if they want their foreign students to turn-up; and

>> Students find online learning unappealing.

>> A 12% fall in foreign student numbers is bad but a lot better than some previous estimates.

This is a survey however and students' attitudes and intentions might change rapidly for better or for worse. Hopefully, Unis will wake up and smell the coffee soon. Students are at very little risk from Covid-19, they don't need extreme social distancing measures. The measures that are needed are to shield other vulnerable people that might interact with them, such as elderly lecturers, administrators, wardens, cleaners etc. Campus style Universities shouldn't find segregation a particularly difficult task.

Regards Maddox

[maddox] 04/6/2020 00:24

Interesting discussion on Radio 4 Today 1:34:00 in:



Clear divergence of opinion, on the one hand Julia Buckingham Brunel Chancellor, speaks on behalf of Universities UK "wonderful digital education being introduced, very exciting ... have wanted to do this for a long time." Whilst others clearly recognise what prospective students really want Richard Taylor, COO Loughborough Uni "student life must be enjoyable, they want to socialise, the campus university experience".

I think the students will dictate the outcome - mass deferral will spell financial distress for universities.

[its the oxman] 02/6/2020 11:25

Nice to see this over 900p but still well off its high.

[maddox] 28/5/2020 18:16

Thanks thruxie,

Mr Market is pretty myopic and can't see beyond those current uncertainties. Students are very unlikely to surcumb to Covid and far more likely to die cycling around their University town. I note that we're encouraging cycling not banning it. At some point a realistic appraisal of the Covid risk to students will occur.

What it does do is provide a short term opportunity to pick up stock at really good prices. One classic mistake is to get focused on a specific price 'I bought some of these at 750p i'll wait until they are back down there before i pick up more.' This usually ends up costing you a lot of money.

55% of Unite's beds are under nomination agreements with the Universities. They'll thus be putting students in those beds whether or not the foreign student numbers reduce. UK students pay the same as foreign students - they are all the same to Unite.

What Covid has done is highlight the limitations of online learning. Yep, great in some circumstances - the Open University is a fantastic institution. The response of many students to the news that Cambridge was going online until summer 2021 was to consider deferring for a year. Great, so what are they going to do instead? Go travelling? Hmm doesn't look feasible. Get a job? Hmmm with millions furloughed and more redundancies announced every day.

All in all, and thinking it through I'm very happy with my holding in Unite. Just my opinions of course and welcome opposing views and contradictory evidence.

Regards Maddox

[thruxie] 28/5/2020 09:36

Yesterdays JPM view :-

(Sharecast News) - JPMorgan Cazenove upgraded its rating on shares of student accommodation provider Unite to 'overweight' from 'neutral' on Wednesday, highlighting four reasons to buy the stock.

JPM said that having fallen 42% year to date, the premium has now moved out of Unite shares and noted a number of reasons to buy the stock "looking through Covid-19 lockdown disruption".

The bank said the shares are as cheap as at any time since 2013. In addition, it said universities are very early on in the disruption cycle and there are no imminent structural impacts from online learning.

JPM also pointed to the fact that a rise in the population of 18 year olds is expected through to 2030 after several years of decline. Finally, it said purpose-built student accommodation "is a rare winner from changes to UK immigration".

[thruxie] 28/5/2020 09:30

Back in February I was sitting on 140% profit on these. Still holding and have topped up on the recent lows but I guess the main concerns are will foreign students be returning in September and how much will online learning effect us in the future? On the other hand I feel students are still wanting to come to the UK for the "experience" but possibly more of a hold rather than a buy for me with current uncertainties.

[maddox] 27/5/2020 23:51

Agreed Richard, however i find it difficult to understand how the share price got so low. Mr Market is indiscriminate in a crash but quality bounces back.

[richard195] 27/5/2020 19:15

I must admit that I am finding it hard to understand the market at the moment. Everything suggest to proceed with caution over UTG shares and then they jump over the past few days.

[its the oxman] 27/5/2020 12:27

In the money and wish I bought more now. Mind this has been strangely volatile so may get another chance.

[maddox] 19/5/2020 19:32

In sharp contrast to Unite's exempilary behaviour very many student accommodation landlords are refusing to waive their contracts. One can foresee Unite's reputation significantly enhanced coming out the other side of this Covid-19 nightmare.

One such example:

[maddox] 18/5/2020 15:08

Hmmm, Sept 2021 would mean a whole year of students will miss-out on university - it'll be impossible to double-up to catch up. Also, universities will go bust - the UK's universities are already very stressed by fewer foreign students turning up next term as they contribute a lot of fee income.

The future is uncertain - anything is possible, this could be the end of capitalism. However, I think that there will be enormous effort to minimise the impact of Covid on universities.

On a brighter note - we appear to be seeing negotiations on a return to school in June.

[bothdavis] 15/5/2020 10:07

Tempted to buy at these levels, but, will the student market recover?

Not sure for Septembers intake, can Unite survive until Sept 2021?

[its the oxman] 15/5/2020 09:23

Yes , hopefully in 12 months time it won't matter.

[maddox] 15/5/2020 00:04

Yep, predictable - you have to be extremely lucky to get the absolute bottom. I average in and out - no point in worrying about it.