Share Name Share Symbol Market Type Share ISIN Share Description
Unite Group Plc LSE:UTG London Ordinary Share GB0006928617 ORD 25P
  Price Change % Change Share Price Shares Traded Last Trade
  5.50 0.5% 1,112.00 648,049 16:35:17
Bid Price Offer Price High Price Low Price Open Price
1,115.00 1,116.50 1,120.00 1,103.00 1,114.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Real Estate Investment & Services 215.60 -120.10 -31.80 4,427
Last Trade Time Trade Type Trade Size Trade Price Currency
18:06:28 O 3 1,112.333 GBX

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Unite Daily Update: Unite Group Plc is listed in the Real Estate Investment & Services sector of the London Stock Exchange with ticker UTG. The last closing price for Unite was 1,106.50p.
Unite Group Plc has a 4 week average price of 1,082.50p and a 12 week average price of 927p.
The 1 year high share price is 1,191p while the 1 year low share price is currently 681p.
There are currently 398,145,754 shares in issue and the average daily traded volume is 721,768 shares. The market capitalisation of Unite Group Plc is £4,427,380,784.48.
speedsgh: Well, I finally took the bull by the horns late this pm and added to my starter position at just under 1128p. No idea what the share price will do in the short term but content to keep my eyes fixed firmly on the horizon. Just hope I haven't broken the bull!
speedsgh: Hi Maddox. UTG had been on my radar/watchlist for a long time but it's thanks to you and your excellent StockSlam presentation from Feb this year that pushed me into pulling my finger out and doing some hard research. So I owe you one but only a small one at this stage due to the limited size of my position :o) With hindsight, yes, I probably should have been bolder when I first attained a better understanding of the investment case here but the share price had already started running uphill and, being the ultra cautious type, I held off which, to date, has merely been to my cost. Que sera. As I say, if I have missed the boat, I will not lose sleep over it. There are always opportunities elsewhere and there will doubtless be further opportunities here as well at some point in the future [said in hope more than confidence!] ATB
maddox: Investors Chronicle 17 Mar 2021 has a positive write-up and buy recommendation on UTG but no share price target. They make a favourable comparison with Empiric (ESP) based on UTG 21/22 advance bookings at 66% to ESP's 20%. With this reflecting UTG's less reliance on overseas students.
maddox: Hi me, Couldn't agree with you more. The prospects and market dynamics are not changing as rapidly or as dramatically as the share price might suggest. However, I wonder whether UTG's resilience might actually be counting against it - there are far larger yields available elsewhere if that's what FIs are seeking. If you are brave an optimistic on a retail recovery you could see New River Reit (NRR) on 9% plus as attractive. Similarly, British Land (BLND) is offering 4% if you think we're not going to be working from home on a permanent basis. UTG is a bit of a hybrid offering resilience, growth and income might not be appealing atm. Any other thoughts?
maddox: My StockSlam pick is a property company specialising in Purpose Built Student Accommodation (PBSA) –called Unite (LON:UTG) . It is by far the largest in this sector with c. 75,000 beds a Mkt Cap £3.4bn and features in the FT250. Its shares peaked at £13.38 in Feb 2020 but was then hit by Covid-19 and is now down at 963p (down about 27%). This price I think presents a good short-term buying opportunity with the end of Covid restrictions in sight. Student Accommodation is a resilient investment, its asset backed and its market is uncorrelated with the general economy. Student Accommodation was the best performing property asset class during the Global Economic Crisis of 2008/9. One of Unite’s strengths is that 55% of its beds are guaranteed to be occupied by its agreement with Universities. Unite (LON:UTG) is a REIT (Real Estate Income Trust), which allows exemption from UK corporation tax on its rental profits and to qualify as a REIT it has to distribute 90% of its income to investors by way of dividends. Which should be attractive to income seekers, but Unite's yield is relatively low, this is because it is expected to grow, both by its development pipeline and also by acquisition. It took over the markets' third largest player Liberty Living in 2019. The Covid Impact: Covid-19 has hit Unite’s business - they released students from their contracts very early on, also given discounts and rental free periods. Typically, they would achieve 98% occupancy – but managed only 89% in 2020. So Covid has hit its income and consequently its property values have fallen. Unite has published a Student Survey this morning: The findings are: >> 77% students struggled with mental health and wellbeing as a result of Covid-19, but 84% say engaging in university life has been positive for their mental health; >> Students' biggest challenge this year is the lack of face-to-face teaching, practical experience or facilities; >> Traditional face-to-face university experience is key for students: 86% are keen to get onto university campus once it is safe to do so; 75% agree that living in university accommodation and being on campus is as important a part of the university experience as lectures and tutorials; and >> Four in five (79%) students would like a return to face-to-face tuition after the Easter break. This based on a survey of 2000 students. Covid-19 has been very instructive: It has demonstrated just how robust the demand is for the 'university experience'. Going to University is clearly a culturally entrenched 'right of passage' for the UK's young adults. It has often been postulated that on-line learning would disrupt this tradition. Covid-19 has provided the opportunity to test this hypothesis. Whilst, on-line learning has clearly allowed teaching to continue during the Covid-19 Lockdowns - it is certainly not a substitute for the uni experience. Students want the 'real-life' full-fat university experience - it's not just about learning ( ;-) These are two extremely significant points for anyone assessing the risks of investing in this sector. So, I’m expecting a full recovery in demand once Covid-19 restrictions are removed. The market back-ground is supportive: The market is under-supplied, there is a short-fall of c. 243k beds of those required for first years and international students - that universities like of offer 'in-hall' accommodation. Secondly demand is growing: Demographics are positive - the number of 17/18 year olds is increasing - and, a higher proportion of them are opting to go to university. The Government has at long last recognised the value of international students to the UK. The Govt has changed the rules to now allow foreign students studying in the UK to stay-on to work for a further two years. Also, the Govt are targeting to increase the number of international students by c. 33% to 600k by 2030 - from c. 450k previously. In addition to income Unite also offers growth: It has a development pipeline of 5000+ new beds to be delivered by 2024. It raised £300m in June 2020 by way of a placing at 870p – now you might think that this was to repair the balance sheet – but no it was to take advantage of depressed land prices and fund the acquisition of three more prime development sites. It has a strong balance sheet with a 33% debt to asset value ratio. To summarise: Covid-19 presents the opportunity to get on-board this high quality REIT that offers the prospects of both growth and income. With the end of Covid restrictions now in-sight I’m expecting to see a full recovery in demand for Unite's accommodation and a bounce in the share price. But, due to its resilient market, this is a share I’m very happy to hold in the face of a possible UK recession. Maddox (Declaration: I am very long Unite (LON:UTG)) ///////////////////////////////////////////////////////////////////// and in answer to some questions: Watkin Jones (LON:WJG) is a great business but I haven't invested. I particularly like that they de-risk their business by pre-selling their developments and thus finance their developments using the customer's cash - perfect. I favour Unite (LON:UTG) because it retains its developed PBSA assets and is thus inexorably growing in size and efficiency. WJG OTOH has to keep expanding its development operations in order to grow - this will at some point cause difficulties. £UTG has a further advantage over Empiric Student Property (LON:ESP) and CPG Student Living (LON:DIGS) in its unique capital structure that provides substantially greater financial deal capacity. Its property development and management company is supported by two own managed property funds. This distinguishes it strategically from it's competitors, the funds are: USAF £2.8bn – Unite own c.22%; and LSAV £1.3bn – Unite own 50%. This means that Unite (LON:UTG) is not restrained by its own balance sheet debt capacity (a conservative 33% debt to value), once the yield on a developed property matures it can sell the property into the funds and re-finance its development pipeline. The funds can also be leveraged in takeovers, such as Aston University's Campus and Liberty Living. The financial firepower that this structure provides is a key strategic advantage in what is likely to be a consolidating sector. \\\\\\\\\\\\\\\ Cladding - Grenfell tragedy Unite have been hit by this dreadful scandal but are in a good position to quickly fix it. They have 19 buildings with unsafe cladding, which will be removed within the next 12 months at a total estimated cost of about £15 - £20m.
speedsgh: Thanks for your thoughts, Maddox. Good question re possible re-basing of rental prices. I guess there is a possibility shorter term but I would've thought that, if the demand returns as is anticipated once the world starts opening up again, then rents ought to return to previous levels fairly pronto. At the end of the day rental prices will be driven by supply-and-demand (assuming that there is no regulation/controls of student accommodation prices). I know if I had been a student now, I would have been itching to get back to uni. As you stated in your presentation, for students the socialising is just as important as the studying... in fact for many it is probably for more important! I kind of see the current share price as a reasonable entry level if you are willing to wait a couple of years or so for life to fully revert to normal. Unite's track record speaks for itself.
maddox: Hi speedsgh and thank you. The Stockopedia figs are one year 'rolling' figures so partly historic and forward looking. As the dividends are suspended I'm not clear how that yield is derived. A few thoughts on dividends: >> My base case is that when income fully recovers in fin year 2022 I would see UTG paying 33p (equal to expected but shelved 2019) and a 3.45% yield (on current 955p share price); >> Then there are further synergies and cost efficiencies from the integration of Liberty Living to be gained. This might add 6p and give a prospective 4% on current share price, but I'm unsure whether or not Covid-factors might off-set some of this. >> The NAV is directly linked to the rental yield - so when income is hit so are the values, similarly reversed when income recovers. The premium to NAV I interpret to reflect the growth potential (pipeline and uni deals). Whilst I'm persuaded that demand will return, has their been some re-setting of rental prices that will take longer to recover? Regards Maddox
maddox: Personally I'll be somewhat relieved if Bojo's diner goes well and he get's his leg over and a deal with the EU is agreed. However, whilst I see almost zero impact on Unite's business as a result of a no deal Brexit on previous experience if there is no deal I expect Unite share price to crater. In preparation for this eventuality I would encourage anyone interested in UTG as an investment to look at the recent share price action and valuation metrics to decide what represents a good price to buy-in. It'll be a shame if we don't get a trade deal with the EU but a double shame if a potential bargain price is missed to get on board.
maddox: The student property funds performance will clearly be reflective of Unite as a whole. So, the quarterly valuations indicate a current fall in property values of, say 3% (rounding-up). The cashflow impact of Covid-19 Unite currently estimate at between £90-£125m in 2020/21. This based on the assumption that the next academic year starts pretty much as planned. I estimate that this impact is roughly 26-36% of rental income which seems high. Unite's shares are trading at 821p, as I post, down 39% on 21 Feb Covid Virus Crash Day Zero share price of 1339p. The share price decline appears to reflect a far worse position than what the current available facts present. For what I consider to be my most resilient investment I'm repeatedly surprized by the share price volatility (the Brexit vote dip in 2016 is a similarly extreme example). On the one-hand this might be the end of capitalism and the only solution is to climb under the bed with a bottle of whisky and a resolver. On the other, we might get on-top of Covid-19 and the economy survives and this is a painful blip. I'm thinking the latter scenario is likely, students will return and the share price will recover. Anyway, I'd be interested to understand why Unite exhibits such exaggerated volatility - what is Mr Market seeing that I'm not? Regards Maddox
maddox: Well its been a long couple of weeks in the market, so thought I'd better revisit my last post on 'UTG knocking on the door of the FT100'. When I wrote that post UTG's share price was 1336p and mkt cap £4.84bn. Now the share price is 1160p (down 13%) and mkt cap £4.2bn and UTG's chances of making the draft are looking far less likely. UTG are now in ninth place from the top of the FT250 and now only larger than the bottom four firms in the FT100. So it appears that UTG have dropped disproportionately in this market correction triggered by Covid-19 virus fears. Regards Maddox
Unite share price data is direct from the London Stock Exchange
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