Unite Share Discussion Threads

[maddox] 08/10/2020 22:27

Yep, on a like for like basis their income is down 12% which is due primarily to the rent foregone as a result of Covid-19. The 88% stacks up against 98% let in the prior year so a 10.2% decline. There will also be additional costs involved in the Covid-Safe regime.

So far it's hardly disastrous - accepting the fact that we're not yet out of the woods. I'm ignoring the property write-down which is a direct consequence of the loss of revenue and is a non-cash item - that will bounce-back as soon as were back to normal.

I still think it would be better to treat each University like one big bubble - isolate it from the surrounding town or City and focus on protecting the staff and ancillary workers; and any vulnerable students. Northumbria Uni have reported c. 770 students have tested positive with only 78 having symptoms. It will have run its course in a couple of weeks and then we'll be off the front pages.

[its the oxman] 08/10/2020 08:48

88% let with scope to nudge up from further sales. In line but no better. Had hoped for more but decent enough, will take longer for things to normalise and anybody's guess when vaccine news will break, though when it does could see a big rebound here.

[thruxie] 27/9/2020 16:58

I'm concerned they can actually achieve 90%+ occupancy in the current climate. I'm still holding but half expecting more buying opportunities soon.

[bothdavis] 27/9/2020 14:28

Wonder how these will react on Monday after all the Uni chat on TV and in the papers regarding COVID flair ups!?

Tricky investing times in this stock at the moment and for a while I should think?

[maddox] 19/9/2020 09:46

University Clearing has all but finished and course places allocated - so we can expect to have an update from Unite soon. Unite have been seeking to encourage UK students away from their often shoddy HMOs (homes of multiple occupation) to replace the predicted drop in International Students. So we will learn whether this has been a successful endeavour and they have achieved their targeted 90% occupation.

The update should arrive before the end of September - so any time now.

[maddox] 08/9/2020 11:05

Hi Oxman,

You're not alone in your thinking:

'Exam U-turn provides opportunity for student sector growth'
'Student accommodation 'most resilient asset class'

htTps://www.investmentweek.co.uk/opinion/4019800/exam-turn-provides-opportunity-student-sector-growth

regards, Maddox

[its the oxman] 28/8/2020 17:50

Target of 90% occupancy looks very likely to be beaten. 98% last year and demand could be just as high now this year. Hope to see the 90% upgraded and an easy beat could give the shares and sector a nice lift.

[bothdavis] 08/8/2020 11:23

Wondering how Unite will cope if/when a scond wave of COVID hits/

Its a big worry, thinking of getting out....long-term it is problematic for Unite I feel?

[rambutan2] 30/7/2020 20:42

As of today:

Jefferies International today reaffirms its buy investment rating on Unite Group PLC (LON:UTG) and raised its price target to 1070p (from 1028p).

[rambutan2] 29/7/2020 20:18

Presentation and webcast links:

htTp://www.unite-group.co.uk/sites/default/files/2020-07/Unite%20Group%20Interims%20Presentation%202020.pdf

hTtps://webcasting.brrmedia.co.uk/broadcast/5f10225d4c167c1215796959

[maddox] 13/7/2020 10:05

Unite has acquired a new 300-bed development site in central Edinburgh 'delivering a development yield in line with the Company's enhanced 8.5% target for provincial markets'.

It appears that Unite are taking full advantage of the Covid-19 impact on the wider-Commercial Property Sector to pick-up prime sites at a reduced prices.

Unites' existing development pipeline of 5000+ beds will be delivered on a target initial yield of 6.8%. Whereas they are now 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. The Covid cloud may thus have a silver lining for Unite.

[bothdavis] 08/7/2020 22:53

I hope so, still not convinced all students who said they will take up Uni places will do so...

[maddox] 08/7/2020 15:48

Unite (UTG) also provided today a further market update along with the fund valuation RNS. The deadline for accepting an offer of a university course was the 18 June. As you will be aware there has been much speculation as to students deferring due to Covid-19 and likely social distancing disruption to their ‘student experience’. However, this appears not to have occurred, the key points being:

>> UCAS data showed a 1% increase in the number of applicants with an offer to start University this Autumn compared to 2019/20;

>> This reflects a 3% increase in acceptances by UK 18-year olds as increased participation rates more than offset the demographic impact of fewer young people in the population.

>> The number of students with a deferred start date was down 1% compared to 2019/20 as of 18 June.

This clearly demonstrates the resilience and contra-cyclical nature of the market on which the PBSA sector depends.

Unite are targeting a 90% occupancy for next academic year (2019/20 was 98%). Currently, bookings stand at 81% whereas they were 90% booked at the same time last year. However, the cancellation of A-Level exams and additional uncertainty over the awarding of results (appeals process and re-sit exams) that there is likely to be a last minute rush for accommodation.

IMHO I think Unite will get closer to the previous 98% occupancy - whilst there is a greater risk that they don’t I’m sure they will be doing their level best to beat the 90%.

[maddox] 08/7/2020 15:21

in addition to Unite’s wholly owned student digs Unite runs two student property funds of which they own a percentage. Unite report their independent quarterly valuations of their funds today - there has been virtually no change in value since the last quarter. The two funds are:

USAF – Unite own 22% - like-for-like asset value decline of 2.2% for the half year; and,

LSAV – Unite own 50% - like-for-like asset value decline of 1.5% for the half year.

The decline being driven by the loss of rental income as a result of Covid-19. There is clearly a read across to Unite's directly held PBSA. This decline of 1.5% - 2.2% is in contrast to the magnified c. 30% decline in Unites share price (1325p to 924p).

[maddox] 29/6/2020 13:21

I really should have also mentioned Unite's management - which are clearly excellent.

It's when a crisis strikes that you can really gauge the quality of the management team. Unite acted quickly and decisively in response to Covid-19, taking the lead in the market, and 'did the right thing' in releasing students from the rent obligations. They took sensible steps to conserve cash and de-risk the business to weather the uncertain conditions. Further, they have taken the lead again in gaining a 'Covid Secure' designation for their properties.

Having taken stock, conducted some market research, reassessed the market have now taken advantage of the attractive opportunities Covid has made available. 10 out of 10, perfect.

In uncertain times it is immensely reassuring to have such competent managers in control.

[maddox] 27/6/2020 11:19

Hi Oxman,

Unite certainly has the advantage of scale - being the largest player in a market always confers some competitive advantage, say price setting and scale economies. However, Unite has some other significant advantages, specifically:

> Capital Structure: The two off-balance sheet funds give it access to substantial fire power for development funding and takeovers; and

> University Relationships: The 52% of their portfolio covered by nomination agreements bears witness to this, Universities see Unite as a trusted partner that they can do long-term deals with.

This last point is going to become far more significant for London development.

The London Plan will require that proposed developments have pre-agreed University backing(nomination agreements)and that 35% meet an affordability requirement (Draft London Plan, Dec 2019 p79). The plan runs out to 2041.

hTtps://www.london.gov.uk/sites/default/files/intend_to_publish_-_clean.pdf

The plan also envisages a need for 3,500 PBSA beds per annum. So Unite is thus in an extremely advantageous position to develop a strong PSBA London pipeline.

Regards, Maddox

[its the oxman] 26/6/2020 10:42

Hi Maddox, just wish I bought more here at 700p and less empiric, probably short term thinking as the others are at more significant nav discounts, surprised all have not bounced similarly. Guess there is something to being the market leader.

[maddox] 25/6/2020 10:29

Hi Oxman,

Yep, Unite would normally find it impossible to get London developments on a 7.5% yield on costs, previously 5.5% would have been attractive. The fact that they are able to take advantage speaks volumes. The PSBA market is negatively correlated with Commercial Property and Unite's capital structure gives them access to the financial resources they need in the midst of a crisis.

All very positive.

[its the oxman] 25/6/2020 09:51

If unite can achieve 90% occupancy for this coming year that looks very positive , and subsequent years should improve further. Investment case looking out over the next 5 years looks compelling, improved returns from todays money raise just makes it better.

[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.