Unite Share Discussion Threads

[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.

[its the oxman] 14/5/2020 13:25

Oh dear , not very well timed

[maddox] 13/5/2020 12:37

Hi Oxman,

Yes, very probably. UTG was hit along with Commercial Property on the Brexit Vote - the apparent rationale being that demand for office space would be hit. As UTG is in a completely different and uncorrelated sector - this is just bonkers. Mr Market sometimes gets it very wrong - which presents good opportunities if you are buying.

Well done.

[its the oxman] 12/5/2020 20:56

Down in sympathy with Land Secs poor results I guess.

[its the oxman] 12/5/2020 15:58

Added a few more 756p.

[maddox] 11/5/2020 19:10

Hi Oxman,

If you look through my previous posts you'll see that I've dealt with very many of the relevant issues - such as the market dynamics, demographics, market under supply,etc.
Happy to discuss any issues you can think of?

Online learning - definitely has an important role to play and is - products like Canvas, Moodle and Blackboard were in extensive use by Unis before Covid. However, after their Covid Lockdown online learning experience I suspect 6th formers and students will be desperate to get back into the class room and lecture theater. Not to mention the socialising and partying.

[its the oxman] 11/5/2020 15:14

Esp might of offered more sub 60p (when I looked at it first) but decided not to chase it nearer 70p.

[its the oxman] 11/5/2020 15:13

Thx. Have purchased some utg and digs. Seems student demand is certainly only going to grow looking out as far as we can. I don't buy distance learning for the majority and doubt students or uni/lecturers would opt for it unless forced. Questions over start to next term, cut to divs and nav , so might take a short term hit but so much of that is in price now.

[maddox] 11/5/2020 12:27

Hi Oxman,

Clearly, I'm biased. In the short term ESP could be the better investment - but longer term Unite will recover due to key strengths:

>> Excellent long-term relationships with leading Universities:

>> Scale - always an advantage;

>> Financing capability - it's financial fire power is unique.

In the longer-term Covid will be a dip on the chart.

Regards, Maddox

[its the oxman] 11/5/2020 10:07

Empiric now touching 70p and this sinking below 800p. Hmm.

[its the oxman] 10/5/2020 17:26

Soon as we get confirmation uni students to return I guess this will motor. Anyone see this as the better buy given nav is only 850 ish. Arguably Empiric has more upside to its latest nav.

[maddox] 25/4/2020 11:17

One point I forgot to highlight is that Unite are not furloughing any of their staff.

Furlough is providing a new metric to understand the impact of Covid-19 on a business.
The proportion of staff a firm furloughs and what business areas affected.

Regards, Maddox

[maddox] 24/4/2020 22:55

Hi Roch,

Some Universities may go bust - which will favor the remaining higher ranked Universities with which Unite is aligned. Some might have to sell their student accommodation to see them through the crisis. Who might be a prime candidate to buy it?

Yes uncertainty is definitely at a maximum at the moment - and if you can't take the risk then selling out is an option. I don't know the future anymore than you do, we have to make our own decisions.

Lets hope we make the right ones,

Regards, Maddox

[novision] 24/4/2020 01:36

Pressure on Unis discussed here (gift link)

[rochdae] 24/4/2020 00:18

Yes, Maddox, I don't disagree with your analysis and I concur that UTG is a good, well managed business etc..

My point is that the disruption to business is an unknown really. Overseas students don't do 3 year degrees. They do postgrad for a year or courses over the summer. Why would someone from China stay in student accommodation when everything's going online?

What we have here, as with many other stocks, is a bet on the virus situation. In fact, that's the whole gamble with the markets in general.

I'm more pessimistic than you with the education sector. I think many universities will go to the wall this year, and the Government won't be there to help.

But I hope not..

Roch

[maddox] 23/4/2020 08:25

Good news from UTG on their Covid-19 response.

UTG were very quick to respond positively to the predicament that both Universities and Students faced as a result of Covid. By waiving their contracts they will have given great relief to Students that will have been facing major stresses. However, at that point there was huge uncertainty as to what this and Covid would cost Unite.

Today's update provides a much clearer picture, albeit uncertainty remains, and guess what - the impact isn't as bad as first estimates, or anyway near as bad as the share price appears to reflect. Also, the mitigation measures that Unite are taking are producing results:

>> Cost-savings measures of £12 - £15m (on-top of £6m Liberty synergy savings);
>> Pay cuts of 30% for Directors and bonuses deferred (20% cuts for Snr Mgrs);
>> Development pipeline deferred to save cash; and
>> Switching focus on recruiting UK Students to displace the anticipated fall in new Intl. Students in 20/21 academic year.

This accompanied by reassuring comments from Richard Smith, CEO:

"We are committed to doing the right thing for our customers, colleagues and other stakeholders, despite the unprecedented times we face." and "We will emerge stronger from this challenging time, building on our enhanced reputation with students and Universities."

Having confidence in the management team is an absolute must for me as an investor. How a team responds to an unforeseen crisis is an 'acid test' moment as it reveals whether they can make the right often difficult decisions quickly and implement them effectively.

Unite have risen to the challenge and are clearly managing the crisis effectively and communicating well. This is an excellent confidence builder in the midst of this awful crisis.

Hope you all are staying safe, well and Covid-free.

Maddox

[maddox] 15/4/2020 10:23

Hi rochdae,

Agreed, and that's the opportunity. Mr Market is pretty myopic - he has a tendency to over estimate short-term risk impacts and is unable to look beyond them. The current uncertainty and climate of fear gives plenty of cause to focus on the worse case scenario.

I originally scaled-up my investment in Unite in 2008 - 2009 in the midst of the GEC (Global Economic Crisis)at prices as low as 55p. Back then Purpose Built Student Accommodation was a new novel asset class without its own abbreviation (PBSA).

I'm hopeless at timing - and I can't say when the Covid-19 Crisis will end but I'm pretty confident that it will and that Unite will still be standing.

Unite has University nomination agreements covering 55% of its beds - these last on average 6 plus years. Of those foreign students you mention one can assume two thirds of them will have completed one or two years of their course and will be pretty intent on completing their degree.

So yes, everything looks pretty black at the moment. Warren Buffett's adage comes to mind "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." This quote from the Oracle of Omaha is often repeated but very difficult to abide by when one is truly fearful.

That's the challenge and the opportunity.

Regards, Maddox

[rochdae] 14/4/2020 20:05

Maddox,

I think the market is just uncertain about the effect of the virus. The assumption that everything will be OK in September for the start of term is a risky bet. I know the LSE are thinking of starting the term now in January. The effect on overseas student numbers is going to be huge in the short term at least.

Unite is a good business. But when you don't have many customers there's a problem.

The market is banking on a return to normality soon. I think the university sector is going to face more problems, personally. Some universities will fold even.

So the risks are quite high, I feel.