Unite Share Discussion Threads

[sabzahmed] 20/9/2022 13:49

UTG taking a beating today.I was hoping it would be like Friday when it very quickly recovered, but that doesn't seem to be the case today.Assume it's just jitters before Thursday BoE interest decision. Hopefully we get calmer and better days after that.Or are there any other risks/issues anyone is aware of?

[maddox] 17/8/2022 15:34

Estate Agents Knight Frank have conducted a survey with UCSA that finds that Purpose Built Student Accommodation is better value than renting a room in HMO (house in multiple occupation). The gap was most extreme in London where it was found that students pay 33% less.

Students in HMOs are also going to be directly exposed to further gas and electricity price rises which must be a further concern.

[bothdavis] 27/7/2022 22:27

Would appear to be the usual market reaction to a company that is not a 'star', 'flashy' or 'tech' company. They don't really want to understand it.

[maddox] 23/7/2022 00:37

It's just over a month since UTG joined the FT100 and we are currently ranked at number 88. Which is a pretty solid position to have establish in such a short time.

Being an FTSE 100 stock; asset-backed; conservatively financed; uncorrelated with the general economy and with supportive market dynamics should be characteristics attractive to larger Financial Institutions. Also, as a Reit it will offer a growing dividend as their post-Covid-19 bounce-back is reflected in revenue generation.

1200p was breached for the first time today since Sept 2021 showing strength in a risk-off market. So, the stars are becoming aligned for UTG to break-out of its side-ways trading pattern and move back to higher ground.

[maddox] 08/7/2022 09:19

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.

[beltd] 13/6/2022 14:32

Universities facing new China cash crackdownhttps://www.thetimes.co.uk/article/e8776bac-ea90-11ec-b47a-cf598c451bbb?shareToken=de161146fc4a0d1ea68d843ac627a853

[maddox] 10/6/2022 13:09

Unite joins the FTSE 100 index on 20 June.

'FTSE Russell, a leading global index provider, confirms today Centrica and Unite Group will be joining the FTSE 100 Index as a result of the June 2022 annual review. In the rebalance, ITV and Royal Mail will leave the FTSE 100 index and enter the FTSE 250 index.'



This was announced on Wed 1 June after the market close. In theory, this should mean that index tracking or FTSE 100 mandated investment funds should increase demand for the shares. We'll see.

[maddox] 10/6/2022 13:07

Good to see Marcus Phayre-Mudge still backing Unite - good spot speedsgh.

The point about the 21,000 additional beds in 2020/21 - is that it is in no way keeping up with the number of new students requiring accommodation.

According to HEPA first year higher education student enrolments increase by 117,670 (10.3%) in 21/20 over 19/20. This is driven by demographics - a growth in 17/18 year olds and a greater proportion participating in higher education.



All of this increases the pricing power of PBSA providers as we enter a higher inflationary period.

[speedsgh] 08/6/2022 11:41

Interesting comment on the sector by Marcus Phayre-Mudge, the highly-rated fund manager of TR Property Investment Trust (TRY) in their recent results...

Purpose built student accommodation (PBSA) has fared better as students clearly want the campus experience and value for money. The structural fundamentals remain sound; the combination of the growing numbers of students (post the recent demographic dip) coupled with the desire to live in better quality accommodation than previous student generations. According to UCAS, 30% of first year students live in PBSA and this has increased from 22% five years ago. An encouraging growth rate. Another 40% start their university life in halls of residence but that percentage has remained static over the same period, reflecting the lack of capacity or capability for universities to add to their own residential real estate portfolios. Cushman Wakefield have identified 681,000 student accommodation beds across the UK with a net increase of just 21,000 over 2020/21. Q1 2022 data has also revealed a marked slowdown in planning applications for new PBSA units. Importantly, quality is a key priority with prices up by 17% since 2019/20 for those with en suite bathrooms.

We continue to hold Unite (UK) and Xior (Belgium, Spain) and note the recent takeover of American Campus Communities, an $8bn market cap US student accommodation REIT by Blackstone. Yet another privatisation.

[maddox] 01/6/2022 08:14

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.

[maddox] 23/3/2022 18:08

It would appear that the police has arrested a suspect - a boyfriend, x-boyfriend by the looks of it. Very sad.

[...]

[bothdavis] 20/3/2022 13:52

Sad to see the death of a student at one of Unite's buildings.

Probably going to have to up security I would suggest.

[beltd] 09/3/2022 21:51

Well who knows Maddox. Is the market rationale? I see Unite more and more as a growth dividend stock. Like a McDonalds or Coke or such like. Investors will happily accept a lower yield as the company will likely deliver year on year dividend growth. When that yield looks higher on the dips, add more.

[maddox] 09/3/2022 20:35

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

[speedsgh] 08/3/2022 13:55

Unite Students to dispose of 11 properties -

... The disposals are priced in line with prevailing book value, which reflects an NOI yield of 5.7%. The properties were treated as held for sale in the balance sheet as at 31 December 2021 and the disposal is incorporated into the Company's guidance for EPRA EPS of 41-43p for the 2022 financial year, which remains unchanged.

Completion will occur on 15 March on four of the properties in the portfolio for £51 million (Unite share: £11 million). The completion of the remaining properties will occur on 31 August 2022. The disposals reduce see-through LTV to 25% on a pro forma basis, providing the Group with capacity to fund its £1 billion development pipeline and explore additional growth opportunities.

Richard Smith, Chief Executive of Unite Students, commented:
" We have now completed the disposal programme set out at the time of our acquisition of Liberty Living in 2019. These disposals have increased the focus of our portfolio in the strongest university cities and ensure our ability to sustain rental growth over a longer time horizon. Our balance sheet is also positioned for growth with the investment capacity to deliver our biggest ever secured development pipeline of £1 billion and pursue further opportunities to extend our best-in-class platform"

[beltd] 25/2/2022 17:40

Soon bounce back as expected!

[maddox] 23/2/2022 18:46

Looking at the share price recently you'd think Putin had invaded Unite not Ukraine.

Yes, a very strong recovery is in-progress and the outlook for academic year (AY) 2022/23 is highly positive. The development pipeline is at an all-time high of 6000 beds(c.£1bn in value) that will increase the weighting 44% towards London (35%).

The dividends are recovering nicely with more to come as the Covid effect wears-off.

With the LTV ratio at 29% UTG have huge headroom should any peachy PBSA portfolio become available for acquisition.

On Covid IMHO the virus is following a clear evolutionary pathway where each new dominant variant is more infectious but less severe – making the likelihood of the emergence of a more serious variant highly unlikely. The 20+ different viruses that we refer to as 'the common cold' was each probably a deadly human pandemic in its time. So, I think that this threat is being over-exaggerated.

Some interesting strategic opportunities/initiatives were revealed today:

>> HMOs: The private landlord with Homes of Multiple Occupation (HMOs) rented to students is a specific target for UTG. UTG is already competitively priced with HMOs and landlords are now under significant new pressures to comply with energy efficiency standards. The cost of retrofitting insulation to old property to meet the minimum standards could be prohibitive. UTG have their electricity costs fully hedged in 2022 and 85% hedged for 2023, and gas (which accounts for less than 0.5% of rent) is hedged through 2023. HMO renters are unlikely to be as well protected from escalating energy prices.

>> Premium segments: UTG are also trialling greater segmentation of their portfolio to target some more premium-priced segments. One of these is the recently graduated professional requiring City Centre accommodation a.k.a build-to-rent. This closely associated market vertical could become an important new market for Unite and definitely something to watch.

So, a very welcome set of results and plenty of interesting growth opportunities in-sight. I'd recommend you listen to the replay of the presentation as there is far too many points of interest for me to only scratch the surface of in this summary:



Regards, Maddox

[beltd] 23/2/2022 13:04

Good set results, better than expected. 2.2% yield that should keep growing.

[beltd] 22/2/2022 14:28

Well results tomorrow folks ...... drum roll

[speedsgh] 16/2/2022 12:31

Brookfield Starts $4.7 Billion Student-Dorm Unit Sale -

Brookfield Asset Management Inc. is preparing to kick off the sale of one of the U.K.’s largest student-accommodation businesses amid heightened investor demand for such assets, according to people familiar with the matter.

The infrastructure specialist is working with advisers on the disposal of Student Roost, which could be valued at more than 3.5 billion pounds ($4.7 billion), the people said, asking not to be identified as the matter is private. It will send marketing documents to potential suitors imminently and the sale is likely to attract private equity and strategic bidders, including Blackstone Inc. and Unite Group Plc, the people said.

Deliberations are ongoing and no final decisions on the timing of any sale have been made, according to the people. Representatives for Blackstone, Brookfield and Unite declined to comment.

Toronto-based Brookfield entered the U.K. student housing market in 2016 when it bought a portfolio of roughly 5,000 beds from Avenue Capital Group and developed it into what is now Student Roost. The business operates in more than 20 cities across the U.K. and is expected to have about 23,000 beds by the end of the 2022-23 academic year.

A sale of the Student Roost could be the largest deal in the sector since Blackstone Inc. 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 be popular among financial investors in the U.K., with the number students vastly outnumbering the rooms available in purpose-built accommodation. The shortage is being exacerbated as international students return to the U.K. amid the removal of pandemic-era hurdles likes lockdowns and quarantines.

Brookfield’s real estate business in Europe managed over $45 billion of assets as of the third-quarter in 2021, having more than doubled in size since 2016. Its overall assets in Europe topped $110 billion last year.

[speedsgh] 25/1/2022 10:53

Yes, I was rather confused by the explanation too as one would obviously expect a lower-than-normal yield for something with less risk attached. Perhaps not the best worded rns?!

[maddox] 25/1/2022 10:07

Thanks Speedsgh, good news and the 7% initial yield on costs is higher than normal - although I'm not sure I understand the explanation?

'which reflects the lower risk associated for a project with planning approval already secured.' I presume it means they secured the land at a price which did not fully reflect the additional cost of taking it through the planning process?