Unite Share Discussion Threads

[wirralowl] 26/11/2014 17:21

...and me, very occasionally! ;-)

Cheers for the heads-up on the IC tip, Maddox, will have to check it out on Hargreaves Lansdowne.

[maddox] 26/11/2014 11:45

Hi DT1010, Your on the wrong thread - only me on this one! Maddox :-)

[dt1010] 25/11/2014 18:28

A tip?

Buy Inland Homes, 58.75p now, Simon Thompson in the IC, WH Ireland and Finncapp all target it to go to at least 70p on strong results. AGM in December.

They develop in the commuter belt outside London, a market which is still booming. Telford Homes results tomorrow will prove this nicely and should reflect well on INL.

The share traded in a tight range between 43 - 50p for all of 2014. Broke 50p recently. New target is 70p.

[maddox] 10/11/2014 14:32

Hi WirralOwl,

Yes precisely. You may have noticed a while back that The Welcome Trust took full ownership of iQ their 50/50 joint venture in student accommodation with Quintain (QED). The Welcome Trust are very shrewd investors with an immensely impressive investment track record. They will only have increased their exposure to this sector if they were happy with the risk/reward profile.

hxxp://www.wellcome.ac.uk/News/Media-office/Press-releases/2014/WTP056447.htm

So their move was very reassuring - different company but very much the same sector specific risk/reward consideratrions.

Regards, Maddox

[wirralowl] 05/11/2014 10:46

Many thanks for those snippets, Maddox.

All sounds very promising and makes for a very nice 'sleep easy' investment for me.

BR,
WirralOwl

[maddox] 04/11/2014 17:55

Hi Wirral Owl,

A couple of interesting points from the analyst briefing call this morning. Unite report that there is c. £3billion of student property currently up for sale - this is a significant proportion of the total asset class. Investor demand is reported to be strong and this is likely to firm up asset valuations. Against this backdrop factor in the 4.5% EPS yield and forecast min. 3% rental growth. The prospects are thus good for a nice uplift in NAV by the 31st Dec year-end.

After a period of somewhat lateral share price movement I expect that Mr Market will respond positively as the sales of these student properties are announced.

Regards, Maddox

[wirralowl] 04/11/2014 09:49

Hi Maddox, thanks for the summary. The great progress is also reflected in the bond price, UTG1 having recovered better than many bonds from the recent general sell off, now back near its all term high at 107.6p.

[maddox] 04/11/2014 08:24

Another excellent set of results from Unite with EPS target to be achieved ahead of schedule. The outlook also looks very positive with growth in student numbers and a pipeline of future developments secured. Impressive.


HIGHLIGHTS
· Very strong lettings performance with 99% of rooms occupied for the 2014/15 academic year (2013/14: 98%)
· On target to deliver like-for-like rental growth of at least 3% for the full year
· Expecting to achieve our 4.5% EPS yield on NAV target for 2014, a year ahead of our original plan
· Development pipeline progressing well with planning consent secured at Greetham Street, Portsmouth (836 beds for 2016 delivery) and further sites secured in Aberdeen and Liverpool (combined 1,250 beds targeted for 2017 delivery)
· Student number outlook remains positive with prospect of student number cap being removed for the 2015/16 academic year.

[maddox] 13/10/2014 13:24

The pipeline of future developments is filling up...

Unite Students, the UK's leading developer and manager of student accommodation has acquired two new development sites. One site is in Aberdeen and the other in Liverpool, and together the projects will add c. 1,250 new beds, scheduled to be open in time for the 2017/18 academic year.

The two schemes are expected to achieve returns in line with Unite's targets for regional development of 9.5 to 10% yield on cost and have a combined total development cost of c. £80 million, representing approximately 60% of the Group's planned development activity for 2017 delivery. On completion, the schemes are expected to add c. 12 pence to NAV per share and c. 2.5 pence per annum to EPRA earnings per share.

[maddox] 07/10/2014 23:42

Hi Clarkrob,

No idea. However the FIs investing in Unite are probably looking for a fairly large sized investment. So buying, selling or re-balancing they are going to move the share price.

It appears that UK student accommodation is attracting some major international FIs.

"UK student property investment is set to surpass last year’s total of £2 billion, according to JLL." and "Student accommodation has already established a reputation as the UK’s best performing asset class and it seems more investors than ever before are ready to buy a student property."



This is likely to underpin this asset class and Unite's valuation and share price. So while buying and selling pressure is creating some volatility the value is solid.

Regards, Maddox

[clarkrob] 20/9/2014 08:28

Anybody got any ideas why this suddenly fell 1.5% in last couple of hours trading yesterday?

[maddox] 17/9/2014 13:21

Ta MT, what do you make of the volatility we're seeing at the moment? Any thoughts? Regards, Maddox

[mechanical trader] 16/9/2014 08:08

16 Sep 2014 Unite Group PLC UTG Liberum Capital Buy 0.00 433.00 516.00 523.00 Reiterates

SP Target 516p

[mechanical trader] 01/9/2014 15:01

Friday tips round-up: Playtech, Unite Group

Fri 29 August 2014 08:39

A A A
Betting and gaming software provider Playtech's first half results showed the company is firing on almost all cylinders, but much is already baked into the share price, writes The Times's Tempus. Sales at its casino division rose by 29%, driven by multiple customer wins in various territories, accompanied by a 35% increase at its sports business. However, the expansion in the latter was flattered by the World Cup and is not a sustainable rate of growth. Bingo and poker on the other hand are facing stiff competition.

The company nevertheless is left in the enviable position of having to decide how best to deploy its €366m cash pile. The board is hoping that the spread of regulation later in the year might present it with opportunities for investment. Even so, while the technology outfit is growing fast and regulatory changes offer enormous potential for gaming markets, on 19 times' earnings the stock is "not cheap, and probably only a hold," says Tempus.

Property investing is about yield, borrowing cheaply and obtaining a stable stream of income with those funds, and Unite Group is excelling at it. Over the first six months of the year the provider of student accommodation has managed to cut the average cost of its debt by 60 basis points to 4.7%. In parallel, the average maturity of that debt has been extended to over seven years and is almost all on fixed terms. Meanwhile, its portfolio of assets yields a steady 9% to 10%.

Furthermore, the company is benefiting from the increased rates of growth in university attendance. Unite expects to add another 1,600 beds, mainly in London, to its portfolio over the coming two years. It should come as little surprise therefore that the company is set to hit its earnings target of 18p per share a year early. The shares only offer a 1.3% dividend yield but what you are paying for in this case is the expansion in the net asset value of the portfolio - which is reasonable. The stock still looks attractive, so 'buy' says The Daily Telegraph's Questor column.

Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.

[maddox] 01/9/2014 10:30

Hi Guys,

Unite is tipped in the Daily Telegraph Questor Column. John Ficenec, Questor editor highlights the reduction in the cost of debt financing, extended maturity dates and the continued forecasted yield growth. This backed by a very robust demand for student lets.



Cheers Maddox

[maddox] 28/8/2014 18:28

Hi Wirral,

The broker consensus is for total 5.59p for 2014 but if the final is increased by a similar percentage to the fist half we should be looking at 6.6p. However, by my reckoning that still leaves us short of the 35% eps pay-out - so I'm pencilling in 7.32p.

Cheers Maddox

[wirralowl] 28/8/2014 14:29

Hi Maddox

Yeah very impressive headline figures.

I like the percentage increase in the dividend too, with their
growing EPS there's plenty of scope for increasing the divi going
forward too; indeed they suggest they'll look to improve the payout
ratio at the finals.

[maddox] 28/8/2014 10:46

Hi Guys,

Another very strong set of results for the first half of 2014. The
key feature is the growth in earnings up 34% y-o-y driving a 37.5%
increase in the dividend to 2.2p from 1.6p . NAV per share up 5.2%
to 402p. The switch in focus away from NAV growth to eps was
expected and likely continue as the business matures.

Very positive statement on the outlook-

'Following a period of consistent strong performance the Group
remains well placed to deliver sustained growth in the years ahead.
Market dynamics are supportive of rising demand, rents and capital
values; our development pipeline and expertise positions us to add
materially to both recurring earnings and NAV, and our brand
investment programme, building on existing efficiency and
scalability, has the potential to increase our competitive
advantage in a sector that is rapidly becoming more
established.'

Regards, Maddox

[wirralowl] 26/8/2014 10:26

Thanks for your considered thoughts, Maddox.

I'd agree with you, the recovery is fragile at best, so interest rate rises are likely to be lower than they've been in previous cycles, impact will hopefully therefore be relatively subdued.

And as you say, the way UTG is evolving we should see less capital spend on development and a growing rental income, which should provide the necessary cashflow to introduce a more progressive dividend policy. Were this to happen, I would almost certainly buy the shares too.

I note the share price is showing good strength ahead of the interims...

Regards
WirralOwl

[maddox] 21/8/2014 22:53

Thanks WirralOwl for your kind words.

I've thought about the effect of a rise in interest rates on Unite. Clearly Unite has had all the stars aligned and low interest rates has been one of them - but not the most important. They are the largest student property company in a large and fragmented market. There is a huge student demand, the rental market is strong and Unite's property is attractive and well located. They have no problems letting and they are consistently able to increase prices. They can still find development opportunities with an attractive gain and on initial yield. These factors are far more important.

Also, the recovery is still pretty fragile and I'll be very surprised if rates rise more than 0.25%. With a small rate rise it is unlikely to put too much of a dampener on Unite and their funding position is now very sound.

Unite is maturing and the balance is shifting from development gains towards rental income. As Unite will need to recycle less cash back into development they will be able to increase dividends. This will drive the share price forward as the typical property investors seeking asset backed income come on board.

We are in the midst of this transition and we may tread water as share price support moves from NAV to dividend yield. It might just be that rising interest rates highlight the attractiveness of a company that will be able to grow its dividends?

Anyway, looking forward to the interims on the 28th.

Regards, Maddox

[wirralowl] 21/8/2014 16:10

Hi Maddox

About half of my portfolio is in bonds from the ORB market, as I now earn my living primarily from the income my portfolio generates. So the need to be able to buy bonds in companies I can trust (and that let me sleep at night!) is imperative.

Unite issued their bond (UTG1) around Xmas 2012, offering a fairly high (relative to the ORB market) fixed 6.125% pa coupon (paid out bi-anually). Since then I've received around 10% in dividend payments and the bid on the bond is around 105.5. I purchased at the IPO @ £1, so all in all currently up around 15% in around 19 months. Not bad!

The potential fly in the ointment is when interest rates rise, with many commentators predicting that bond prices will fall across the board, and the capital gain here would likely be eroded/lost. However, this wouldn't really be a problem from me, as I'm intending to hold until the redemption date in 2020 anyway (because as previously mentioned I need the income). Of course if the market over-reacts and bond prices fall too much (eg. below par), the effective yield would increase above the 6.125% coupon, and I may even buy more at that point, depending on how the business was doing of course.Will be interesting to see how UTG fares in an environment of rising interest rates...do you have any thoughts?

Incidentally all bonds (irrespective of duration) can now be held in an ISA (so income is tax-free) and many brokers allow you to trade them online at the usual prices.

WRT your's and Rochdae's earlier comments re: this bulletin board, I find the better companies tend to have quieter BB's, so I find the UTG board reassuringly quiet. That said, please don't feel you're on your own on this thread; I see you as the authority for UTG, and do regularly check in to read your updates.

Cheers
WirralOwl

[maddox] 21/8/2014 12:55

Hi WirralOwl,

Thanks for posting. Yes the fact that this is a business that doesn't keep you awake at night probably detracts from having a very active BB!

Investing in bonds is foreign to me and I'm interested in your perspective.
Unite equity hasn't offered a yield historically have the bonds have performed well for you and have you a capital gain on them?

Cheers, Maddox

[wirralowl] 21/8/2014 09:17

Hi Maddox & Rochdae! Not quite on your own, but I'm a bondholder rather than shareholder, so do only tend to pop in every now and then with a cursory glance to check everything's still on course.

Was reassured by recent reports of higher numbers going to University, seems UTG are in prime position to exploit this trend, so more than happy to go on collecting the lovely UTG1 coupon every 6 months.

[mechanical trader] 21/8/2014 08:54

UTG UNITE Group PLC

Gone long on UTG just thinking of all those extra UNI Places this next year, they are going to need more accomadation.