REG - Unite Group PLC - Interim Results
23/07/2024 16:45
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RNS Number : 5247X Unite Group PLC (The) 23 July 2024
PRESS RELEASE
23 July 2024
THE UNITE GROUP PLC
("Unite Students", "Unite", the "Group", or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
CONTINUED STRONG DEMAND WITH SIGNIFICANT GROWTH OPPORTUNITIES
Joe Lister, Chief Executive of Unite Students, commented:
"We have had a strong first half, with 14% growth in adjusted earnings
underpinned by full occupancy, rental growth and substantial investment into
our platform and portfolio.
"There is an acute and growing shortage of student homes, which is amplified
by a shrinking private rental sector and depressed levels of new PBSA
development. Unite has a crucial role to play in partnering with universities
to deliver new supply of high-quality, affordable accommodation where the need
is greatest, which also frees up local family homes in the process. Our
development pipeline has grown to a record £1.5 billion for delivery into the
strongest university markets, including our first university joint venture
with Newcastle University. We are uniquely positioned to secure further
opportunities to support the growth of our university partners through our
long standing and trusted relationships, in-house development capability and
best-in-class operating platform.
"Our alignment to the UK's strongest universities, alongside a growing range
of attractive investment opportunities and a more supportive policy
environment, puts us in a strong position to deliver continued long-term
growth for shareholders."
H1 2024 H1 2023 FY 2023 Change from
H1 2023
Adjusted earnings(1) £125.3m £110.2m £184.3m 14%
Adjusted earnings per share(1) 28.7p 27.5p 44.3p 4%
IFRS profit £281.7m £111.7m £102.5m 152%
IFRS diluted EPS 64.4p 27.8p 24.6p 132%
Dividend per share 12.4p 11.8p 35.4p 5%
Total accounting return(2) 7.9% 2.4% 2.9%
As at 30 Jun 2024 30 Jun 2023 31 Dec 2023 Change from
31 Dec 2023
EPRA NTA per share(2) 969p 928p 920p 5%
IFRS NAV per share 973p 952p 931p 5%
Net debt: EBITDA 5.7x 6.8x 6.1x (0.4x)
Loan to value(3,4) 26% 31% 28% (2)%
HIGHLIGHTS
Growing earnings, strong demand for 2024/25
· Adjusted EPS up 4% to 28.7p (H1 2023: 27.5p)(1), IFRS diluted EPS
up 132% to 64.4p (H1 2023: 27.8p)
· Confident in 98-99% occupancy and rental growth of at least 7% for
2024/25 (2023/24: 98% and 7.4%)
· Growing demand from university partners, accounting for c.58% of
beds for 2024/25 (2023/24: 53%)
Positive outlook supports accelerating earnings growth
· FY2024 EPS guidance increased to upper end of 45.5-46.5p range,
4-5% YoY growth (2023: 44.3p)
· Strongest demand for high-quality universities to which Unite is
aligned
· Earnings growth to accelerate from 2026 as development completions
increase
Universities seeking partners to address housing shortages
· Significant unmet need for high-quality, value-for-money student
homes
· New PBSA supply 60% below pre-pandemic levels and 100,000-150,000
fewer HMO beds available
· Unique capability to deliver new beds in strategic partnerships
with universities
· £250 million joint venture with Newcastle University to develop
2,000 high-quality beds progressing well
· Confident of securing second university joint venture in next 6-12
months
Record and growing pipeline with investment focused in the strongest markets
· £1.5 billon pipeline in Russell Group cities at 6.7% yield on cost
· Planning consent secured in H1 for 2,400 beds in London, Bristol
and Glasgow
· New acquisition of £170 million consented development in Zone 1
London for delivery in 2027
· Portfolio enhanced through £47 million of refurbishments at 8%
yield on cost in 2024
· Completed disposals of £184 million (Unite share: £76 million) at
6.2% yield to improve portfolio quality
Rental growth driving total accounting returns
· EPRA NTA up 5% to 969p (2023: 920p) and 7.9% Total Accounting
Return in H1 (H1 2023: 2.4%)
· £8.7 billion portfolio valuation (Unite share: £5.7 billion), up
2.7% on a like-for-like basis
· Expect Total Accounting Return of around 12% pre-yield movement in
FY2024
· LTV of 26% at 30 June 2024(3) and net debt to EBITDA of 5.7x
(December 2023: 28% and 6.1x)
(1) Adjusted earnings and adjusted EPS remove the impact of SaaS
implementation costs from EPRA earnings and EPRA EPS. See glossary for
definitions and note 7 for calculations and reconciliations
(2) The financial statements are prepared in accordance with International
Financial Reporting Standards (IFRS). The Group uses alternative performance
measures (APMs), which are not defined or specified under IFRS. These APMs,
which are not considered a substitute for IFRS measures, provide additional
helpful information and include measures based on the European Public Real
Estate Association (EPRA) best practice recommendations. The metrics are also
used internally to measure and manage the business. The adjustments to the
IFRS results are intended to help users in the comparability of these results
across other listed real estate companies in Europe and reflect how the
Directors monitor the business. See glossary for definitions
(3) Excludes IFRS 16 related balances recognised in respect of leased
properties. See glossary for definitions
(4) Wholly-owned balances plus Unite's share of balances relating to USAF and
LSAV
(5) Like-for-like properties owned at both 30 June 2024 and 31 December 2023
PRESENTATION
A live webcast of the presentation including Q&A will be held tomorrow at
8:30am BST for investors and analysts. The webcast can be accessed via
https://brrmedia.news/UTG_IR24 (https://brrmedia.news/UTG_IR24) and will be
available for playback on our website (https://www.unitegroup.com
(https://www.unitegroup.com) ) after the event.
To register for the event or to receive dial-in details, please contact
unite@powerscourt-group.com (mailto:unite@powerscourt-group.com) .
For further information, please contact:
Unite Students
Joe Lister / Michael Burt / Saxon Ridley Tel: +44 117 302 7005
Press office Tel: +44 117 450 6300
Sodali & Co
Justin Griffiths / Victoria Heslop Tel: +44 20 7250 1446
CHIEF EXECUTIVE'S REVIEW
The business has delivered a strong performance in the first half, with growth
in earnings, dividends and net assets. We have delivered strong reservations
for the 2024/25 academic year, well ahead of our typical leasing pace, which
reflects the strength of student demand as well as the continued appeal of our
value-for-money proposition and well-located portfolio.
Adjusted earnings for the period increased by 14% to £125.3 million (H1 2023:
£110.2 million). This increase was driven by strong rental growth for the
2023/24 academic year and delivery of asset management and development
projects over the past 12 months. Growth in rental income helped to offset the
impact of inflationary increases in staff and property costs. Adjusted EPS
increased 4% to 28.7p on a per share basis (H1 2023: 27.5p), reflecting the
increased share count following our equity raise in July 2023. The Group
recorded an IFRS profit before tax of £283.9 million in the first half (H1
2023: £112.2 million), principally driven by adjusted earnings and the
increase in property values.
We are announcing an interim dividend of 12.4p (H1 2023: 11.8p), an increase
of 5% on H1 2023, which reflects the growth in our adjusted EPS and a positive
outlook for the 2024/25 academic year. We plan to distribute 80% of adjusted
EPS as dividends for 2024.
EPRA NTA per share increased by 5% to 969p (31 December 2023: 920p), with
strong valuation growth, driven by rental growth, partially offset by the
FY2023 final dividend payment. This resulted in a total accounting return of
7.9% in the first six months of the year (H1 2032: 2.4%), including the final
dividend paid in the period. IFRS NAV per share increased by 5% to 973p over
the half (31 December 2023: 931p).
Our key financial performance indicators are set out below:
Financial highlights H1 2024 H1 2023 FY 2023
Adjusted earnings £125.3m £110.2m £184.3m
Adjusted EPS 28.7p 27.5p 44.3p
Dividend per share 12.4p 11.8p 35.4p
Total accounting return 7.9% 2.4% 2.9%
IFRS profit before tax £283.9m £112.2m £102.5m
IFRS diluted EPS 64.4p 27.8p 24.6p
EPRA NTA per share 969p 928p 920p
IFRS NAV per share 973p 952p 931p
Loan to value 26% 31% 28%
Growing shortage of high-quality student homes
Structural factors continue to drive a growing supply / demand imbalance for
student accommodation. Demographic growth will see the population of UK
18-year-olds increase by 124,000 (16%) by 2030 (source: ONS). Application
rates to university have also grown significantly over the long term,
reflecting the value young adults place on a higher level of education and the
life experience and opportunities it offers. Strong wage growth in recent
years has seen graduate earnings keep pace with inflation at a time when
tuition fees have been frozen for seven years, supporting the overall
attractiveness of a university education. Undergraduate applications for the
2024/25 academic year are encouraging, with application rates for UK school
leavers meaningfully ahead of pre-Covid levels and robust demand from
international students, particularly China and India. Applications to
high-tariff universities, to which the Group is aligned, have grown 15% since
before the pandemic, significantly outperforming the wider sector.
The supply of student accommodation cannot keep pace with student demand and
many university cities are already facing housing shortages, which are
particularly acute for the strongest universities where our investment is
focused. Private landlords are leaving the sector at pace in response to
rising costs from higher mortgage rates and increasing regulation, such as EPC
certification and local authority licencing schemes. Since 2021, there has
been an 8% reduction in the number of HMOs in England (source: Department of
Housing, Communities and Local Government), equivalent to 100,000-150,000
fewer beds available for students to rent.
New supply of PBSA is also down 60% on pre-pandemic levels, reflecting
viability challenges created by higher build and funding costs. In many
markets, property valuations are now below replacement costs, further
constraining new supply. Once allowance is made for first generation
university-owned beds leaving the market each year through obsolescence, we
expect to see almost no growth in PBSA supply in the near term.
The combination of these factors has significantly increased demand for our
product in many cities and we expect this trend to continue for a number of
years.
Strong demand underpinning rental growth
Across the Group's total operational portfolio, 94% of rooms are now sold for
the 2024/25 academic year (2023/24: 98%). Reservation rates are slightly
behind last year's record levels but have consistently tracked ahead of
typical years throughout the sales cycle. We have seen strong demand from both
UK and international students, in addition to increased demand from
universities. Nominations agreements with universities cover 58% of total beds
for 2024/25 (2023/24: 54%), including four new multi-year agreements with
Russell Group universities for over 2,500 beds.
Demand from international students remains robust, with 18% of the portfolio
sold on direct-let tenancies to international students for 2024/25, unchanged
compared to last year (2023/24: 19%). We have not seen a meaningful impact
from the removal of visas for family members of international postgraduate
taught students, which reflects the single-occupancy nature of our properties.
We are confident in delivering full occupancy for the 2024/25 academic year
and achieving rental growth of at least 7%.
We expect the supply / demand imbalance in UK PBSA to remain for a number of
years. We see further upside to rental growth from asset management
initiatives to improve our properties and the capture of rental growth on
long-term nomination agreements, where rental increases have lagged the wider
market.
Cost growth is also moderating, with inflation returning to the Bank of
England's 2% target level and a more encouraging outlook for utility pricing
in 2025 and 2026, which we anticipate to grow in line with headline inflation
based on latest pricing for future seasons. This outlook supports improving
operating margins over the next two years.
Breakdown of reservations for 2024/25 by domicile and year of study:
Nominations(*) Direct let
UK China India Other Intl. Total
First year 4% 2% -% 1% 7%
Returning students 14% 4% 1% 2% 21%
Postgraduate 1% 8% 1% 1% 11%
% of reservations 61% 19% 14% 2% 4% 100%
% of portfolio 58% 18% 13% 2% 3% 94%
(*) All years and domiciles
High quality, value-for-money homes
Our customer offer is built around a value-for-money, hassle-free living
experience, with support on hand for students when it is needed. Our pricing
is inclusive of utilities, Wi-Fi and contents insurance, and is comparable to
the HMO alternative after including these services. We have invested over £90
million over the past year to enhance our portfolio, service and experience to
meet student needs, such as a 24/7 physical presence by staff, with a
particular focus on student welfare support.
We have taken a balanced approach to increasing rents, with customer
affordability forefront in our minds as we respond to rising costs. We are a
Real Living Wage employer and have increased wages for our city teams by over
20% in the past two years as we honour this commitment. Utility costs have
increased by around 40% per bed over the last three years which, together with
other cost increases, has compressed operating margins from pre-pandemic
levels as we continue to invest in our teams and platform. Overall, our rents
are lower in real terms for the 2024/25 academic year than in 2019/2020, while
providing a significantly enhanced product and service.
Deepening partnerships with universities
Universities increasingly recognise that a shortage of high-quality and
value-for-money accommodation is a barrier to their growth. Housing shortages
and funding constraints are encouraging universities to partner with Unite to
deliver new accommodation. In February, we announced our first joint venture
with a university, to redevelop existing accommodation in partnership
with Newcastle University. The agreement to deliver 2,000 new beds on the
University's land highlights how Unite is uniquely positioned to address
student housing shortages.
We are in advanced discussions with a number of universities for further
strategic partnerships for the development of new accommodation on- and
off-campus, as well as the stock transfer and refurbishment of existing
university accommodation. Given strong university engagement, we are
increasingly confident of securing a second joint venture in the next 6-12
months.
Partnering with universities through nominations agreements underpins our
sales cycles each year, with over half our beds let for an average remaining
term of 5.8 years. The relationships built through these agreements support
our development pipeline, where we often pre-let a portion of the building to
a university. These long-term agreements in turn provide a gateway to more
strategic partnership opportunities.
Significant opportunities for growth
Current market conditions provide the strongest investment opportunity for
Unite in a number of years. Our development pipeline totals £1.5 billion
(8,000 beds) in the strongest university cities. We are committed to the
delivery of nine developments totalling 6,900 beds, which are fully funded,
and expect to commit to additional developments at attractive returns in the
second half of the year.
In many of Unite's markets, property valuations are below replacement costs,
following a sharp increase in build costs over the past two years. This
creates a significant opportunity to invest in income-enhancing asset
management opportunities across our £8.7 billion estate (Unite share: £5.7
billion), which will also drive meaningful improvements in customer
experience. We will deliver £47 million of schemes this year (Unite share:
£40 million) at an 8% yield on cost, benefiting 5,600 students, and expect to
further increase the level of asset management activity in 2025.
We are also tracking several further opportunities to acquire developments or
income-producing assets with value-add potential at attractive pricing, where
vendors are seeking liquidity. Thanks to our strong balance sheet and
capabilities in development and asset management, we are well placed to secure
new growth opportunities in the second half.
We are focused on delivering growth while maintaining a high-quality balance
sheet. During the period we sold six properties for £184 million (Unite
share: £76 million) to increase our alignment to the strongest universities
and fund new development and asset management projects.
More supportive policy environment
The new Government recognises the global appeal of education in the UK and the
economic value of UK Higher Education. The opportunities afforded by a
university education are seen as a route to reducing inequality and, coupled
with a growing 18-year-old UK population, provides strong foundations for
future growth in student numbers. Encouragingly, there is also recognition
that university funding arrangements are not meeting the needs of students and
universities and the new Government has committed to creating a secure future
for UK Higher Education.
The Migration Advisory Committee report in May recommended no change to the
Graduate Route visa for international students, which the previous Government
accepted ahead of the election. Other competing student destinations are
introducing quotas for international students as part of tighter visa rules,
which is adding to the relative attractiveness of the UK as a place to study.
The new Labour Government has put growth at the heart of its strategy and has
identified planning reform, increased housing supply and infrastructure as key
enablers. The Government has committed to streamlining planning for new
homes, including funding for local authority planning departments. Planning
has become a significant constraint on new development and any acceleration
would be welcomed, though viability challenges remain in many markets where
development costs exceed property valuations. Unite will play its part in
delivering new student homes at affordable rents, freeing up traditional
housing for families and benefitting local communities.
The Government has confirmed that it does not intend to implement rent
controls, instead focusing on reform of the private rented sector by
abolishing Section 21 'no fault' evictions and extending 'Awaab's Law' to
strengthen renters rights. The Group does not use Section 21 evictions and a
possible tightening of regulations will likely further reduce the supply of
private rental housing.
Outlook
We have delivered a strong sales performance for the 2024/25 academic year,
reflecting the strength of demand from students and our university partners
and the value for money of our professionally managed, all-inclusive customer
offer. Strong rental growth supports an increase in our 2024 adjusted EPS
guidance to the upper end of our 45.5-46.5p range and underpins a total
accounting return of around 12% in 2024, prior to yield movements.
The current environment offers the strongest investment opportunity for the
business in a number of years. There is a significant and growing need for new
high-quality, affordable student homes in the strongest markets at a time of
capital constraints for universities and most of our competitors. We are
tracking several new opportunities, at attractive returns, which we expect to
commit to in the near term. Building on our joint venture with Newcastle
University, we see a significant opportunity to unlock the potential for new
homes on university campuses through further university partnerships. We are
uniquely placed to unlock these opportunities thanks to our long-term
relationships, access to capital and operational and development capabilities.
We remain confident in the outlook for the business and expect another year of
above-average rental growth for the 2025/26 academic year. Our strong
operational performance and growth from our development pipeline support an
acceleration in earnings growth from 2026.
PROPERTY REVIEW
The first half has seen a strong valuation performance for our investment
portfolio, driven by the strong rental growth delivered for the 2024/25
academic year. We continue to improve the quality of the portfolio and our
alignment to the strongest universities by investing into our development
pipeline and asset management initiatives across our existing estate. We will
deliver 271 new beds in Nottingham this year and are on-site at a further four
projects. We also plan to complete asset management initiatives for a further
11 properties, which we expect to be fully let for the 2024/25 academic year.
Tight funding markets and capital scarcity are leading to motivated sellers in
search of liquidity. Unite's strong balance sheet and access to capital is a
differentiator in securing these attractive opportunities. Properties in
strong cities, available below replacement cost, potentially with value-add
investment potential, are particularly attractive. We are tracking several
such opportunities, including single assets and small portfolios.
Our 8,000-bed development pipeline is at a record size of £1.5 billion. Over
75% of the pipeline is already committed and fully funded for delivery over
the next four years.
Valuation performance
Our property portfolio saw a 2.8% increase in valuations on a like-for-like
basis during the half (Unite share: 2.7%). The valuations reflect strong
rental growth on the back of our leasing performance for the 2024/25 academic
year, which more than offset the impact from the loss of Multiple Dwellings
Relief (MDR). MDR previously provided relief from Stamp Duty Land Tax by
disaggregating the value of our properties to a flat level (either cluster
flats or studios), which reduced purchaser's costs for a number of our
properties.
The average net initial yield across the portfolio is 5.1% at 30 June 2024 (31
December 2023: 5.0%). This represents an increase of 5 basis points over the
first six months of the year, principally driven by London properties in the
wholly owned portfolio.
Like-for-like capital growth(1,2,3)
£m 30 June 2024 Yield Rental growth MDR / Other Capital expenditure(3) LfL capital growth
Valuation Expansion
Wholly owned 3,754 (63) 206 (37) (18) 88
USAF 2,931 - 146 (56) (8) 83
LSAV 1,995 (2) 81 (6) (4) 69
Total (Gross) 8,680 (65) 433 (99) (30) 240
Total (Unite share) 5,603 146
Capital growth
Wholly owned (1.7%) 5.7% (1.0%) (0.5%) 2.4%
USAF -% 5.1% (2.0%) (0.3%) 2.9%
LSAV (0.1%) 4.2% (0.3%) (0.2%) 3.6%
Total (Gross) (0.8%) 5.2% (1.2%) (0.4%) 2.8%
Total (Unite share) 2.7%
1) Excludes Build-to-Rent
2) Excludes leased properties and disposals
3) Excludes reallocation of fire safety provisions to investment
property from other assets/(liabilities)
Development and university partnership activity
Development and university partnership activity continues to be a significant
driver of future growth in our earnings and EPRA NTA. Our development pipeline
now stands at 8,000 beds, with a total development cost of £1.5 billion, and
is aligned to our strategic focus on high and mid-ranked universities.
The anticipated yield on cost of the total pipeline is 6.7%. We have lower
hurdle rates for developments that are supported by universities or where
another developer is undertaking the higher risk activities of planning and
construction.
Universities remain willing to support our planning applications as a means of
delivering the high-quality, affordable accommodation required to support
their growth ambitions. 80% by value of the schemes in our pipeline will be
delivered with support of a nomination agreement from a university partner for
a portion of the beds, giving us increased confidence to commit to projects.
Build costs have continued to rise, driven by labour and planning requirements
for higher specification design, meaning we are seeing inflation of around
3-5% p.a. being reflected in contractors' pricing. We have been able to
mitigate this impact through a combination of planning gains, cost
efficiencies and strong recent rental growth.
The Building Safety Act is now in effect and addresses the safety of new
residential accommodation, by adding three gateways to the design, build and
occupation of new buildings. We expect these gateways will add around six
months to PBSA development programmes, which will further slow new supply. Our
appraisals and delivery targets reflect the expected impact of the Act.
We are increasingly seeing attractive development opportunities become
available, often with planning, as vendors seek liquidity in a tighter funding
environment. We expect to add further schemes to our pipeline in the second
half of the year.
Committed pipeline
Including our Castle Leazes project, we have committed to deliver nine
development schemes with a total development cost of £1,077 million and
blended yield on cost of 6.8% for the student accommodation elements. We have
future capital commitments of £853 million for these projects, which will be
funded through the Group's cash and committed debt headroom of £1,046 million
at 30 June (net of the upcoming Liberty Living bond maturity).
Our 271-bed scheme at Bromley Place in Nottingham is on track for delivery on
time and on budget for the 2024/25 academic year. The scheme is tailored to
the postgraduate market, with larger room sizes and around 45% of rooms are
studios, higher than the 10% average for our portfolio.
At Meridian Square in Stratford, we secured planning approval for 952-bed
project in the period and expect to acquire the site in the coming months. Due
to delays in securing planning, we now expect to deliver the project in 2028.
Together with our nearby Hawthorne House development, the two projects will
increase our scale in Stratford to 3,400 beds, providing new homes to meet the
significant growth in student numbers anticipated in the area following the
recent opening of campuses by UCL and University of the Arts London.
We have made good progress in the period securing planning at Freestone Island
in Bristol and Central Quay in Glasgow. We have acquired the land at Freestone
Island and are on-site with early works ahead of anticipated commitment to the
build in the autumn, supporting delivery for the 2026/27 academic year. At
Central Quay, we have secured planning for 934 beds, ahead of our initial
expectation of 800 beds. We expect to acquire the Central Quay site later this
year, supporting for the 2027/28 academic year.
We also recently acquired the land for a new 444-bed scheme at King's Place in
Borough, in Zone 1 London, which has full planning consent, for delivery for
the 2027/28 academic year. Total development costs are expected to be £170
million, delivering an attractive 6.5% yield for a central London scheme with
planning. The project will have around 50% more amenity space per student than
our typical specification, offering high-quality common spaces to complement
the studio-led property.
Future pipeline
Our future pipeline now stands at 1,100 beds across two London schemes with
total development costs of £305 million, delivering a 6.2% yield on cost. We
have submitted a revised planning application for TP Paddington, which we
expect to go to committee in the next 6-9 months.
During the period, we secured an option to acquire a 501-bed project in
Elephant and Castle in London, which is well located for a number of leading
London universities. The scheme is expected to be delivered in 2028, subject
to planning.
Secured development and University partnerships pipeline
Type(1) Target delivery Secured beds/ Total completed value Total devel. Costs Capex in period Capex remaining Forecast NTA remaining Forecast yield on cost
units
no. £m £m £m £m £m %
Committed development
Bromley Place, Nottingham DL 2024 271 42 36 14 5 3 7.1%
Abbey Lane, Edinburgh DL 2025 401 76 62 6 44 9 7.1%
Marsh Mills, Bristol Noms/DL 2025 623 123 79 12 41 17 7.3%
Freestone Island, Bristol Noms/DL 2026 500 108 74 13 59 18 7.3%
Hawthorne House, Stratford(3) Noms/DL 2026 716 236 194 14 88 29 6.1%
Central Quay, Glasgow Noms/DL 2027 934 160 123 0 122 23 7.5%
King's Place, London DL 2027 444 227 170 0 170 32 6.5%
Meridian Square, Stratford Noms/DL 2028 952 271 211 3 198 22 6.4%
Total Committed pipeline 4,841 1,243 949 62 727 153 6.7%
University JV's
Castle Leazes, Newcastle(2,4) UPT 2027/28 2,000 291 250 2 248 16 7.3%
Future pipeline
TP Paddington, London(2) Noms/DL 2028 605 178 1 172 6.0%
Elephant & Castle, London(2) Noms/DL 2028 501 127 3 123 6.5%
Total Future pipeline 1,106 305 4 295 6.2%
Total pipeline 7,947 1,504 68 1,270 6.7%
Total pipeline (Unite share) 1,382 1,148 6.7%
1) DL - Direct-let, Noms - Nominated, UPT - University partnership joint
venture
2) Subject to obtaining planning consent
3) Assumes sale of academy space
4) 51% Unite ownership. Yield on cost includes management fees in NOI
and deducts development management fee from costs
University partnerships pipeline
Co-investment in accommodation alongside a university has been an objective
for the business for several years. In February, we announced that Unite and
Newcastle University have agreed to enter into a joint venture (JV) to develop
2,000 beds at the University's Castle Leazes site for delivery in 2027 and
2028. The JV deepens our 20-year relationship with Newcastle University
through a long-term strategic partnership. Planning has been granted for
demolition of the existing Castle Leazes site, which will be completed this
year. We have also submitted planning for construction of the new
accommodation, which supports finalisation of the JV before the end of 2024.
Since announcing our agreement with Newcastle University, we have seen
increased engagement from other university partners, seeking their own
long-term accommodation solutions. We are in active discussions with a number
of universities for further partnerships, focused on delivery of new on-campus
accommodation and the potential transfer and refurbishment of their existing
student accommodation. We expect to submit a joint planning application with
one of our university partners in Q3 and are increasingly confident of
securing a second joint venture the next 6-12 months.
Asset management
In addition to our development activity, we see significant opportunities to
create value through asset management projects in our estate. Asset management
projects typically have shorter lead times than new developments (often
carried out over the summer period) and deliver extremely attractive
risk-adjusted returns.
This year, we will complete 11 asset management schemes in strong markets with
a total investment of £47 million (Unite share: £40 million) and yield on
cost of 8%. The projects will deliver additional beds, refurbish existing
rooms and common spaces and enhance the environmental performance of the
properties. In total, we will have enhanced properties offering 5,600 beds in
the year and anticipate a further increase in asset management activity in
2025.
Fire safety
Fire safety is a critical part of our health and safety strategy, and we have
a track record of leading the sector on fire safety standards through our
proactive approach. During the period we undertook fire safety improvements on
nine buildings across our estate. We prioritise remediation according to our
risk assessments are progressing detailed surveys on additional properties and
expect to recognise new provisions in H2.
We spent £6.8 million (Unite share: £2.6 million) on fire safety capex
during the period. Included in our period-end balance sheet is total committed
fire safety spend of £53.4 million (£24.9 million Unite share), the costs
for which will be incurred over the next two years. Of this, £35.5 million
(£19.8 million Unite share) is included in provisions and £17.9 million
(£5.1 million Unite share) is included in the fair value of our investment
properties.
During the period, we reached agreement with contractors for recovery of £6.4
million of remediation costs (Unite share: £3.2 million) in relation to one
building. In total, we have now agreed settlements totalling £45.6 million
(Unite share: £30.5 million). We expect to recover 50-75% of total cladding
remediation costs through claims from contractors, although the settlement and
recognition of these claims is likely to lag costs incurred to remediate
buildings. We anticipate the remediation programme to complete in 2028 with
net spend higher in the earlier years of the programme and reducing
substantially from 2026.
Build-to-rent
During the period, we committed to the planned refurbishment of our 180
Stratford pilot Build to Rent (BTR) asset. The project will deliver new
amenity space as well as a rolling refurbishment of the 178 apartments over
the next 24 months as units are vacated. Total costs are expected to be c.£15
million, delivering a yield on cost in line with PBSA returns.
We do not expect to increase our capital commitment to BTR in the short term.
We are continuing to explore opportunities to increase the scale of our BTR
operations through co-investment with institutional investors, where Unite
would act as asset manager. Subject to identifying suitable opportunities,
this structure would enhance returns for the Group while limiting capital
requirements as we develop our understanding of the opportunity in the BTR
sector.
Disposal activity
During the period we completed the sale of six properties in Birmingham,
Cardiff, Leicester, Liverpool, Nottingham and Sheffield for £184 million
(Unite share: £76 million). The disposal was priced at a blended yield of
6.2% and in line with book value after retentions for remedial fire safety
capex. The proceeds were partially used to meet redemption requests in USAF.
Disposals remain a key part of our strategy to improve the quality of our
portfolio and increase alignment to the strongest universities. They also help
to manage our balance sheet leverage and provide funding for development and
asset management opportunities, which offer superior risk-adjusted returns. We
expect to make disposals of £100-150 million per annum (Unite share) on an
ongoing basis.
FINANCIAL REVIEW
The Group uses alternative performance measures (APMs), which are not defined
or specified under IFRS. These APMs, which are not considered to be a
substitute for IFRS measures, provide additional helpful information and
include, among others, measures based on the European Public Real Estate
Association (EPRA) best practice recommendations. The metrics are used
internally to measure and manage the business, figures in this section are
APMs unless otherwise identified as such.
Earnings
We delivered a strong operating performance in H1 2024, with rental income
increasing by 7% to £211.8 million, up from £197.0 million in H1 2023,
reflecting rental growth for the 2023/24 academic year and property investment
activity. Adjusted EPS increased by 4% to 28.7p (H1 2023: 27.5p).
Based on progress to date on reservations, we anticipate delivering occupancy
of 98-99% for the 2024/25 academic year (2023/24: 99.8%). This income
visibility underpins our confidence in delivering adjusted EPS for 2024 at the
upper end of our previously guided range of 45.5-46.5p.
Summary EPRA income statement H1 2024 H1 2023 FY 2023
£m £m £m
Rental income 211.8 197.0 369.5
Property operating expenses (58.6) (50.2) (113.0)
Net operating income (NOI) 153.2 146.8 256.5
NOI margin 72.3% 74.5% 69.4%
Management fees 9.0 9.0 16.9
Operating expenses (14.2) (16.8) (33.1)
Finance costs (22.1) (30.7) (55.1)
Development and other costs (3.3) (1.6) (9.1)
EPRA earnings 122.6 106.7 176.1
SaaS implementation costs 2.7 3.5 8.2
Adjusted earnings 125.3 110.2 184.3
Adjusted EPS 28.7p 27.5p 44.3p
EPRA EPS 28.1p 26.6p 42.4p
EBIT margin 71.6% 72.9% 68.0%
A reconciliation of profit after tax to EPRA earnings is set out in note 2.2b
of the financial statements
IFRS profit before tax increased to £283.9 million in the first half (H1
2023: £112.2 million), comprised of adjusted earnings and the net revaluation
gain of £132.5 million (H1 2023: £10.9 million loss).
H1 2024 H1 2023 FY 2023
£m £m £m
Adjusted earnings 125.3 110.2 184.3
SaaS implementation costs (2.7) (3.5) (8.2)
EPRA earnings 122.6 106.7 176.1
Valuation gains/(losses) and profit/(loss) on disposal 132.5 (10.9) (61.2)
Changes in valuation of interest rate swaps 5.4 14.1 (17.2)
Non-controlling interest and other items 23.4 1.8 4.8
IFRS profit before tax 283.9 111.7 102.5
Adjusted earnings per share 28.7p 27.5p 44.3p
EPRA EPS 28.1p 26.6p 42.4p
IFRS diluted earnings per share 64.4p 27.8p 24.6p
A reconciliation of profit before tax to EPRA earnings measures is expanded in
section 7 of the financial statements.
Software as a Service adjustment
During the period, our technology investment programme delivered enhancements
to our customer payment platforms, brand management system and new customer
website and mobile app for the class of 2024, who join us in September.
Our technology upgrade project includes transitioning from traditional
on-premises solutions to a predominantly cloud-based Software as a Service
(SaaS) model at a total cost of c.£35 million over the five years to 2026.
Implementation costs, which were previously capitalised, are now to be
recognised as an expense when incurred. £16 million of costs have already
been expensed to date, including £2.7 million in the first half (H1 2023:
£3.5 million). We expect to incur around £10 million of further
implementation costs in FY2024 with the remaining £9 million split across
FY2025 and FY2026. To better reflect the underlying operating performance of
the business, these implementation costs will be removed from adjusted
earnings. Post implementation, technology licence costs will be expensed on a
recurring basis.
Operations result
Like-for-like rental income, excluding the impact of new openings, disposals,
and major refurbishments, increased by 7% during the first half. This was
offset by the 15% increase in operating expenses for like-for-like properties
in the period primarily driven by increased staff and utility costs. This
resulted in the Group's NOI margin decreasing to 72.3% for the six months (H1
2023: 74.5%).
H1 2024 H1 2023 YoY change
Wholly owned Share of Fund/JV Total Wholly owned Share of Fund/JV Total
£m £m £m £m
£m £m £m %
Rental income
Like-for-like properties 137.6 59.2 196.8 129.0 55.1 184.1 12.7 7%
Non-like-for-like properties 12.4 2.6 15.0 9.8 3.1 12.9 2.1 16%
Total rental income 150.0 61.8 211.8 138.8 58.2 197.0 14.8 7%
Property operating expenses
Like-for-like properties (37.8) (16.2) (54.0) (33.3) (13.5) (46.8) (7.2) 15%
Non-like-for-like properties (3.8) (0.8) (4.6) (2.1) (1.3) (3.4) (1.2) 35%
Total property operating expenses (41.6) (17.0) (58.6) (35.4) (14.8) (50.2) (8.4) 17%
Net operating income
Like-for-like properties 99.8 43.0 142.8 95.7 41.6 137.3 5.5 4%
Non-like-for-like properties 8.6 1.8 10.4 7.6 1.9 9.5 0.9 10%
Total net operating income 108.4 44.8 153.2 103.3 43.5 146.8 6.4 4%
The increase in property operating expenses in the first half was driven by an
average 10% pay increase for city staff and higher spend on utilities,
centrally allocated costs and property insurance. Utility costs in H1 2023
were reduced by a £2.5 million non-recurring benefit from a sellback of
excess volume. Excluding the non-recurring benefit in H1 2023, the YoY
increase in utility costs in H1 was £2.2 million or 15% and in line with our
expectations. Our utility costs are fully hedged through H2 2024 and 65% for
2025.
H1 2024 H1 2023 2023 Change
£m £m £m
Staff costs (16.4) (14.6) (29.7) 13%
Utilities (16.4) (11.7) (26.9) 40%
Summer cleaning (0.7) (0.7) (5.7) (7)%
Marketing (3.8) (4.1) (7.3) (7)%
Central costs (8.7) (7.5) (16.8) 17%
Other (12.6) (11.6) (26.6) 9%
Property operating expenses (58.6) (50.2) (113.0) 17%
Our EBIT margin reduced to 71.6% in the period (H1 2023: 72.9%) due to the
growth in staff and utility costs. Our strong leasing performance for the
2024/25 academic year and moderating cost inflation, particularly for
utilities, still supports an improvement in EBIT margin around 50bps for 2024
as a whole with further improvement anticipated in 2025.
Finance costs reduced to £22.1 million (H1 2023: £30.7 million) due to the
impact of lower net debt following our capital raise in July 2023. The cost of
debt reduced to 2.8% over the period due to lower drawings on the Group's bank
debt facilities (H1 2023: 3.3%). £6.0 million of interest costs were
capitalised in the first half, an increase from £3.4 million in H1 2023, due
to increased construction activity in the development pipeline.
EPRA NTA growth
EPRA net tangible assets (NTA) per share, our key measure of NAV, increased by
5% to 969 pence at 30 June 2024 (31 December 2023: 920 pence). EPRA net
tangible assets were £4,260 million at 30 June 2024, up from £4,015 million
six months earlier.
The main drivers of the £245 million increase in EPRA NTA and 49 pence
increase in EPRA NTA per share were:
· Valuation increase from rental growth (£287 million, 57 pence),
reflecting sales progress for 2024/25
· Yield movement (£(64) million, (13) pence)
· Development gains (£14 million, 3 pence)
· Capital expenditure on maintenance, fire safety and sustainability
(£(98.0) million, (20) pence)
· Further commitments to fire safety capex, net of claims agreed
(£(6) million, (1) pence)
· Temporary cash balances received from interest rate hedging of £49
million (9 pence)
· The positive impact of retained profits and other movements (£63
million, 14 pence)
Property portfolio
The valuation of our property portfolio at 30 June 2024, including our share
of properties held in USAF and LSAV, was £5,960 million (31 December 2023:
£5,770 million). The £190 million increase in portfolio value reflects the
valuation movements outlined above, completed disposals, capital expenditure
and interest capitalised on developments.
Summary balance sheet
30 June 2024 30 June 2023 31 December 2023
Wholly owned Share of Fund/JV Total Wholly owned Share of Fund/JV Total Wholly owned Share of Fund/JV Total
£m £m £m £m £m £m £m £m £m
Rental properties 3,803 1,831 5,634 3,646 1,792 5,438 3,728 1,782 5,510
Rental properties (leased) 82 - 82 89 - 89 85 - 85
Properties under development 244 - 244 217 - 217 175 - 175
Total property 4,129 1,831 5,960 3,952 1,792 5,744 3,988 1,782 5,770
Net debt (972) (535) (1,507) (1,214) (528) (1,742) (1,030) (541) (1,571)
Lease liability (78) - (78) (86) - (86) (84) - (84)
Other assets/(liabilities) (89) (26) (115) (117) (50) (167) (49) (51) (100)
EPRA net tangible assets 2,990 1,270 4,260 2,535 1,214 3,749 2,825 1,190 4,015
IFRS NAV 4,269 3,834 2,848 1,219 4,067
LTV 26% 31% 28%
Cash flow and net debt
The Operations business generated £128 million of net cash in H1 2024 (H1
2023: £126 million) and net debt reduced to £1,507 million (31 December
2023: £1,571 million). The key components of the movement in net debt were an
operational cash inflow and the timing benefit of the swap £49 million offset
by total capital expenditure of £101.6 million, disposals of £76 million and
dividend payments of £78 million.
Interest rate hedging arrangements and cost of debt
During the period, borrowing rates for new debt remained high, as markets
adjusted to a more gradual loosening of monetary policy by central banks than
previously anticipated. We are well protected from significant increases in
borrowing costs through our well-laddered debt maturity profile and forward
hedging of interest rates, but still expect to see our borrowing costs
increase over time as we refinance in-place debt at higher prevailing market
costs.
Our see-through borrowing cost reduced to 2.8% during the first half as a
result of lower drawings on the Group RCF following our July 2023 capital
raise (December 2023: 3.2%). Based on our hedging protection and current
market interest rates, we forecast a cost of debt of 3.3% for 2024 as a whole.
Yields on our investment portfolio and secured development pipeline continue
to show a healthy positive spread against our funding costs.
Reflecting our strong operational performance and reduction in borrowings, Net
debt to EBITDA improved to 5.7x and interest cover to 4.8x in the first half
(December 2023: 6.1x and 4.6x respectively).
Key debt statistics (Unite share basis) 30 Jun 2024 30 Jun 2023 31 Dec 2023
Net debt £1,507m £1,742m £1,571m
LTV 26% 31% 28%
Net debt to EBITDA ratio(1) 5.7 6.8 6.1
Interest cover ratio(1) 4.8 3.8 4.6
Average debt maturity 4.0 years 4.1 years 3.8 years
Average cost of debt 2.8% 3.3% 3.2%
Proportion of investment debt at fixed rate 100% 100% 100%
(1) Calculated on a 12-month look-back basis
Debt financing and liquidity
As at 30 June 2024, the wholly-owned Group had £1,342 million of cash and
debt headroom (31 December 2023: £588 million), comprising of £592 million
of cash balances and £750 million of undrawn debt (31 December 2023: £38
million and £550 million respectively). Headroom will reduce to £1,046
million following repayment of the £300 million Liberty Living bond which
matures in November.
The Group maintains a disciplined approach to leverage and capital allocation,
with LTV of 26% at 30 June 2024 (31 December 2023: 28%). The Group continues
to target an LTV of around 30% on a built-out basis alongside interest cover
of 3.5-4.0x and net debt to EBITDA of 6-7x.
We have secured four new loans during the period, totalling £850 million,
supporting the refinancing of 2024 maturities and adding new capacity and
flexibility to fund our development pipeline and growth opportunities.
In February, we increased our revolving credit facility by £150 million to a
total of £750 million and added a further £150 million term loan. Both new
facilities are on similar terms to our existing RCF and mature in 2027.
The Group established a £2 billion Euro Medium Term Note (EMTN) Programme
during the period. Following establishment of the programme, the Group issued
a £400 million eight-year bond bearing a 5.625% coupon. Following issuance of
the fixed rate bond, the Group broke pre-hedging swaps, resulting in a gain of
£47 million in H1. We anticipate introducing new hedging for future
borrowings during H2, which will result in a reinvestment of the
mark-to-market gain on the crystallised swaps.
During the period, USAF completed a new £150 million secured loan,
refinancing its maturing £150 million RCF. The five-year loan has a fixed
rate of 5.6%. We have started planning for the refinancing of the USAF £395
million bond due to mature in June 2025.
Dividend
We are proposing an interim dividend payment of 12.4p per share, which
represents an increase of 5% compared to the prior year (H1 2023: 11.8p). The
interim dividend will be fully paid as a Property Income Distribution (PID) of
12.4p. The interim dividend will be paid on 1 November 2024 to shareholders on
the register at close of business on 20 September 2024.
For those shareholders electing to participate in the Company's scrip dividend
scheme, this interim dividend will be paid in new ordinary shares. The last
date for receipt of scrip elections for this interim dividend is 11 October
2024. Details of the scrip scheme, terms and conditions and the process for
election are available at the Company's website.
The Company offered an Enhanced Scrip Dividend alternative in respect of the
2023 final dividend paid in May 2024, resulting in scrip elections for 26% of
the Company's share capital, allowing the Company to retain £26 million of
capital for investment into accretive growth opportunities.
Tax and REIT status
The Group holds REIT status and is exempt from tax on its property business.
During the first half of 2024, we recognised a current tax charge of £1.2
million (H1 2023: £1.1 million).
Funds and joint ventures
The table below summarises the key financials at 30 June 2024 for USAF and
LSAV.
Property assets Net Other liabilities Net Unite share Maturity Unite share
£m debt £m assets of NTA
£m £m £m
USAF 2,931 (771) (29) 2,131 619 Infinite 29%
LSAV 1,995 (622) (64) 1,302 651 2032 50%
Property valuations increased by 2.8% and 3.6% for USAF and LSAV respectively
over the first half of the year on a like-for-like basis, driven by rental
growth, which more than offset the impact of the removal of MDR.
During the period, USAF paid £86 million of redemptions to unitholders out of
disposal proceeds resulting in a 0.8% increase in Unite's ownership of USAF to
29.0%.
Fees
During the six months to June 2024, the Group recognised net fees of £9.0
million from its fund and asset management activities (H1 2023: £9.0
million).
H1 2024 H1 2023 FY 2023
£m £m £m
USAF asset management fee 6.5 6.6 12.1
LSAV asset and property management fee 2.5 2.4 4.8
Total fees 9.0 9.0 16.9
Principal risks and uncertainties
The principal risks of the business are set out on pages 72-79 of the 2023
Annual Report published in April. The Board has reviewed the principal risks
again and concluded that they have not changed since the year-end report. Our
principal risks fall into six categories and are summarised as follows:
Category Risk
Market risk · Demand reduction: driven by macro events (such as Covid-19,
government policy around Higher Education or immigration)
· Demand reduction: value for money / affordability
· Supply increase: maturing PBSA sector and increasing supply of PBSA
beds
Operational risk · Major health and safety (H&S) incident in a property or a
development site
· Information security and cyber threat
Property / development risk · Inability to secure the best sites on the right terms. Failure or
delay to complete a development within budget and on time for the scheduled
academic year
· Property markets are cyclical and performance depends on general
economic conditions
Sustainability / ESG risk · Failing to proactively address the environmental, social and
governance risks demanded of Unite Students as a responsible business
Financing risk · Balance sheet liquidity risk / compliance with debt covenants
People risk · Unable to attract, develop and retain an appropriately skilled,
diverse and engaged workforce
Responsibility statement of the directors in respect of the interim report and
accounts
We confirm that to the best of our knowledge:
· The condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the United
Kingdom and gives a true and fair view of the assets, liabilities, financial
position and profit or loss of the issuer, or the undertakings included in the
consolidation as a whole as required by DTR 4.2.4R
The interim management report includes a fair review of the information
required by:
· DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year; and
· DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so.
Joe Lister
Mike Burt
Chief Executive Chief
Financial Officer
INTRODUCTION AND TABLE OF CONTENTS
These financial statements are prepared in accordance with IFRS. The Group
uses alternative performance measures (APMs), which are not defined or
specified under IFRS. These APMs, which are not considered to be a substitute
for IFRS measures, provide additional helpful information and include measures
based on the European Public Real Estate Association (EPRA) best practice
recommendations. The metrics are used internally to measure and manage the
business. The reconciliation between IFRS performance measures and EPRA
performance measures can be found in Section 2.2b for EPRA Earnings and 2.3c
for EPRA net tangible assets (NTA). The adjustments to the IFRS results are
intended to help users in the comparability of these results across other
listed real estate companies in Europe and reflect how the Directors monitor
the business.
Primary statements
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in shareholders' equity
Consolidated statement of cash flows
Section 1: Basis of preparation
Section 2: Results for the period
2.1 Segmental information
2.2 Earnings
2.3 Net assets
2.4 Revenue and costs
Section 3: Asset management
3.1 Wholly owned property assets
3.2 Inventories
3.3 Investments in joint ventures
Section 4: Funding
4.1 Borrowings
4.2 Interest rate swaps
4.3 Dividends
Section 5: Working capital
5.1 Provisions
5.2 Cash and cash equivalents
Section 6: Post balance sheet events
Section 7: Alternative performance measures
CONSOLIDATED INCOME STATEMENT
For the 6 months to 30 June 2024
Note Unaudited Unaudited Year to 31 December
6 months to
6 months to
2023
30 June 2024
30 June 2023
£m
£m
£m
Rental income 2.4 150.0 139.1 259.2
Other income 2.4 8.9 8.9 16.9
Total revenue 158.9 148.0 276.1
Cost of sales (41.3) (34.7) (76.8)
Expected credit losses (0.3) (0.8) (3.0)
Operating expenses (16.0) (18.2) (41.6)
Results from operating activities before gains/(losses) on property 101.3 94.3 154.7
(Losses)/ gains on disposal of property (3.4) 19.3 11.8
Net valuation (losses)/ gains on property (owned and under development) 3.1a 90.0 (28.2) (37.2)
Net valuation losses on property (leased) 3.1a (3.3) (4.3) (10.4)
Profit before net financing costs 184.6 81.1 118.9
Loan interest and similar charges (5.6) (13.8) (19.8)
Interest on lease liability (3.6) (3.9) (7.7)
Mark to market changes in interest rate swaps 5.4 14.1 (17.2)
Swap cancellation costs (1.8) (0.1) -
Finance costs (5.6) (3.7) (44.7)
Finance income 2.6 0.4 1.3
Net financing costs (3.0) (3.3) (43.4)
Share of joint venture profit 3.3a 102.3 34.4 27.0
Profit before tax 283.9 112.2 102.5
Current tax (1.2) (1.1) (1.2)
Deferred tax 0.6 1.3 2.3
Profit for the period 283.3 112.4 103.6
Profit for the period attributable to
Owners of the parent company 2.2c 281.7 111.7 102.5
Non-controlling interest 1.6 0.7 1.1
283.3 112.4 103.6
Earnings per share
Basic 2.2c 64.6p 27.9p 24.7p
Diluted 2.2c 64.4p 27.8p 24.6p
All results are derived from continuing activities.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 6 months to 30 June 2024
Unaudited Unaudited Year to 31 December
6 months to
6 months to
2023
30 June 2024
30 June 2023
£m
£m
£m
Profit for the period 283.3 112.4 103.6
Share of joint venture mark to market movements on hedging instruments (2.3) 0.9 (2.1)
Other comprehensive income for the period (2.3) 0.9 (2.1)
Total comprehensive income for the period 281.0 113.3 101.5
Attributable to
Owners of the parent company 279.4 112.6 100.4
Non-controlling interest 1.6 0.7 1.1
281.0 113.3 101.5
All other comprehensive income may be classified as profit and loss in the
future.
There are no tax effects on items of other comprehensive income.
CONSOLIDATED BALANCE SHEET
At 30 June 2024
Note Unaudited Unaudited 31 December
30 June 2024
30 June 2023
2023
£m
£m
£m
Assets
Investment property (owned) 3.1a 3,678.7 3,646.1 3,694.3
Investment property (leased) 3.1a 81.7 89.0 84.7
Investment property (under development) 3.1a 244.2 216.9 174.7
Investment in joint ventures 3.3a 1,298.1 1,246.6 1,219.0
Other non-current assets 13.6 13.2 12.7
Interest rate swaps 4.2 12.4 87.3 56.0
Right of use assets 3.3 2.2 1.7
Deferred tax asset 6.1 4.7 5.6
Total non-current assets 5,338.1 5,306.0 5,248.7
Assets classified as held for sale 3.1a 124.7 - 25.7
Inventories 3.2 31.3 17.4 26.2
Trade and other receivables 82.8 84.8 132.8
Cash and cash equivalents 591.7 65.5 37.5
Total current assets 830.5 167.7 222.2
Total assets 6,168.6 5,473.7 5,470.9
Liabilities
Current borrowings 4.1 (299.7) - (299.4)
Lease liabilities (6.7) (4.8) (5.4)
Trade and other payables (212.8) (203.9) (207.8)
Current tax liability (0.3) (0.1) 0.6
Provisions 5.1 (5.1) (26.9) (5.2)
Total current liabilities (524.6) (235.7) (517.2)
Borrowings 4.1 (1,275.3) (1,294.9) (782.2)
Lease liabilities (72.9) (82.5) (78.4)
Total non-current liabilities (1,348.2) (1,377.4) (860.6)
Total liabilities (1,872.8) (1,613.1) (1,377.8)
Net assets 4,295.8 3,860.6 4,093.1
Equity
Issued share capital 109.6 100.6 109.4
Share premium 2,447.7 2,161.8 2,447.6
Merger reserve 40.2 40.2 40.2
Retained earnings 1,669.6 1,524.7 1,466.0
Hedging reserve 1.4 7.0 3.8
Equity attributable to the owners of the parent company 4,268.5 3,834.3 4,067.0
Non-controlling interest 27.3 26.3 26.1
Total equity 4,295.8 3,860.6 4,093.1
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the 6 months to 30 June 2024
Issued Share Merger Retained earnings Hedging Attributable Non-controlling Total
share capital
premium
reserve
£m
reserve
to owners
interest
£m
£m
£m
£m
£m
of the parent
£m
£m
At 1 January 2024 109.4 2,447.6 40.2 1,466.0 3.8 4,067.0 26.1 4,093.1
(Unaudited)
Profit for the period - - - 281.7 - 281.7 1.6 283.3
Other comprehensive income for the period:
Share of joint venture mark to market movements on hedging instruments - - - - (2.3) (2.3) - (2.3)
Total comprehensive income for the period - - - 281.7 (2.3) 279.4 1.6 281.0
Shares issued 0.2 0.1 - - - 0.3 - 0.3
Fair value of share based payments - - - 1.0 - 1.0 - 1.0
Deferred tax on share based payments - - - (0.2) - (0.2) - (0.2)
Own shares acquired - - - (1.0) - (1.0) - (1.0)
Unwind of realised swap gain - - - - (0.1) (0.1) - (0.1)
Dividends to owners - - - (77.9) - (77.9) - (77.9)
of the parent company
Dividends to non-controlling interest - - - - - - (0.4) (0.4)
At 30 June 2024 109.6 2,447.7 40.2 1,669.6 1.4 4,268.5 27.3 4,295.8
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the 6 months to 30 June 2023
Issued Share Merger Retained earnings Hedging Attributable Non-controlling Total
share capital
premium
reserve
£m
reserve
to owners
interest
£m
£m
£m
£m
£m
of the parent
£m
£m
At 1 January 2023 100.1 2,162.0 40.2 1,479.0 6.2 3,787.5 26.4 3,813.9
(Unaudited)
Profit for the period - - - 111.7 - 111.7 0.7 112.4
Other comprehensive income for the period: - - - - - - - -
Mark to market movements on hedging instruments - - - - - - - -
Share of joint venture mark to market movements on hedging instruments - - - - 0.9 0.9 - 0.9
Total comprehensive income for the period - - - 111.7 0.9 112.6 0.7 113.3
Shares issued 0.5 (0.2) - - - 0.3 - 0.3
Fair value of share based payments - - - 0.6 - 0.6 - 0.6
Deferred tax on share based payments - - - 0.4 - 0.4 - 0.4
Own shares acquired - - - (0.6) - (0.6) - (0.6)
Unwind of realised swap gain - - - - (0.1) (0.1) - (0.1)
Dividends to owners - - - (66.4) - (66.4) - (66.4)
of the parent company
Dividends to non-controlling interest - - - - - - (0.8) (0.8)
At 30 June 2023 100.6 2,161.8 40.2 1,524.7 7.0 3,834.3 26.3 3,860.6
Issued Share Merger Retained earnings Hedging Attributable Non-controlling Total
share capital
premium
reserve
£m
reserve
to owners
interest
£m
£m
£m
£m
£m
of the parent
£m
£m
At 1 January 2023 100.1 2,162.0 40.2 1,479.0 6.2 3,787.5 26.4 3,813.9
Profit for the year - - - 102.5 - 102.5 1.1 103.6
Other comprehensive income for the year: - - - - - - - -
Mark to market movement on hedging instruments - - - - - - - -
Hedges reclassified to profit or loss - - - - - - - -
Share of joint venture mark to market movements on hedging instruments - - - - (2.1) (2.1) - (2.1)
Total comprehensive income for the year - - - 102.5 (2.1) 100.4 1.1 101.5
Shares issued 9.3 285.6 - - - 294.9 - 294.9
Fair value of share based payments - - - 2.2 - 2.2 - 2.2
Deferred tax on share based payments - - - 0.2 - 0.2 - 0.2
Own shares acquired - - - (0.6) - (0.6) - (0.6)
Unwind of realised swap gain - - - - (0.3) (0.3) - (0.3)
Dividends to owners - - - (117.3) - (117.3) - (117.3)
of the parent company
Dividends to non-controlling interest - - - - - - (1.4) (1.4)
At 31 December 2023 109.4 2,447.6 40.2 1,466.0 3.8 4,067.0 26.1 4,093.1
CONSOLIDATED STATEMENT OF CASH FLOWS
For the 6 months to 30 June 2024
Note Unaudited Unaudited Year to 31 December
6 months to
6 months to
2023
30 June 2024
30 June 2023
£m
£m
£m
Net cash flows from operating activities 5.2 147.1 147.5 153.2
Investing activities
Investment in joint ventures 2.3 (1.0) -
Capital expenditure on property (84.4) (73.4) (135.3)
Acquisition of intangible assets (2.4) (0.7) (1.8)
Acquisition of plant and equipment (0.5) (0.6) (0.9)
Proceeds from the sale of investment property 22.7 - -
Interest received 2.5 0.4 1.3
Dividends received 18.3 12.9 27.3
Net cash flows from investing activities (41.5) (62.4) (109.4)
Financing activities
Proceeds from the issue of share capital 0.3 0.3 294.9
Payments to acquire own shares (1.0) (0.6) (0.6)
Interest paid in respect of financing activities (8.4) (14.5) (38.8)
Swap gain net of exit fees 49.0 - -
Proceeds from non-current borrowings 543.9 30.1 -
Repayment of borrowings (50.0) - (182.5)
Dividends paid to the owners of the parent company (77.9) (65.6) (103.4)
Withholding tax paid on distributions (6.9) (6.5) (12.0)
Dividends paid to non-controlling interest (0.4) (0.8) (1.9)
Net cash flows from financing activities 448.6 (57.6) (44.3)
Net increase/(decrease) in cash and cash equivalents 554.2 27.5 (0.5)
Cash and cash equivalents at start of period 37.5 38.0 38.0
Cash and cash equivalents at end of period 591.7 65.5 37.5
NOTES TO THE INTERIM FINANCIAL STATEMENTS
Section 1: Basis of preparation
General information
The information for the year ended 31 December 2023 does not constitute
statutory accounts as defined in section 434 of the Companies Act 2006 but is
derived from those accounts. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditors reported on
those accounts: their report was unqualified, did not draw attention to any
matters by way of emphasis and did not contain a statement under section
498(2) or (3) of the Companies Act 2006.
Basis of preparation
The financial statements consolidate those of Unite Group plc and its
subsidiaries (together referred to as the Group) and include the Group's
interest in jointly controlled entities.
The annual financial statements of the Group are prepared in accordance with
IFRSs as adopted by the United Kingdom. The condensed set of financial
statements included in this half yearly financial report has been prepared in
accordance with International Accounting Standard 34 'Interim Financial
Reporting', as adopted by the United Kingdom and the Disclosure and
Transparency Rules of the United Kingdom's Financial Services Authority.
The accounting policies have been applied consistently to all periods
presented in these consolidated financial statements.
Going concern
In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether the Group can continue in operational existence for at least 12 months from the date of this report.
The Directors have considered a range of scenarios for future performance through the 2023/24 and 2024/25 academic years. This included a base case assuming cash collection and performance for the 2023/24 academic year remains in line with current expectations and sales performance for the 2024/25 academic year consistent with published guidance; and a reasonable worst-case scenario where income for the 2024/25 academic year is impacted by reduced sales, equivalent to occupancy of around 90%. Both scenarios assume that the USAF Bond is refinanced in June 2025, and that the Liberty Living Bond is repaid in November 2024 following the recent refinancing.
The impact of our ESG asset transition plans are included within the cashflows, which have been modelled to align with the Group's 2030 net zero carbon targets. Under each of these scenarios, the Directors are satisfied that the Group has sufficient liquidity and will maintain in covenant compliance over the next 12 months. To further support the Directors' going concern assessment, a 'Reverse Stress Test' was performed to determine the level of performance at which adopting the going concern basis of preparation may not be appropriate. This involved assessing the minimum amount of income required to ensure financial covenants would not be breached. Within the tightest covenant, occupancy could fall to approximately 60% before there would be a breach. The Group has capacity for property valuations to fall by around 40% before there would be a breach of LTV and gearing covenants in facilities where such covenants exist. Were income or asset values to fall beyond these levels, the Group has certain cure rights, such that an immediate default could be avoided.
The Directors are satisfied that the possibility of such an outcome is sufficiently remote that adopting the going concern basis of preparation is appropriate.
Accordingly, after making enquiries and having considered forecasts and appropriate sensitivities, the Directors have formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, being at least 12 months from the date of these financial statements.
Seasonality of operations
The results of the Group's Operations segment, a separate business segment (see Section 2), are closely linked to the level of occupancy achieved in its portfolio of property. Occupancy typically falls over the summer months (particularly July and August) as students leave for the summer holidays.
Conversely, the Group's build cycle for new properties sees construction complete shortly before the start of the academic year in September. There will be a net income benefit in the second half of the year from one newly completing asset in 2024.
Changes in accounting policies
The Group has not adopted any new accounting standards or policies compared to
those included in the 2023 Annual Report.
Critical accounting judgements and key sources of estimation uncertainty
Full details of critical accounting judgements and key sources of estimation
uncertainty are given on page 184 of the 2023 Annual Report and Accounts. This
includes detail of the Group's approach to valuation of investment property
and investment property under development, the recognition and valuation of
provisions for cladding remediation and the classification of joint venture
vehicles. There have been no changes to critical accounting judgements and
key sources of estimation uncertainty.
Section 2: Results for the period
This section focuses on the results and performance of the Group and provides
a reconciliation between the primary statements and EPRA performance measures.
The following disclosures explain the Group's results for the period,
segmental information, earnings and net tangible asset value (NTA) per share.
The Group uses EPRA earnings, adjusted earnings and NTA movement as key
comparable indicators across other real estate companies in Europe.
IFRS performance measures
Note Unaudited Unaudited 31 December
30 June 2024
30 June 2023
2023
£m pps £m pps £m pps
Profit after tax(1) 2.2c 281.7 64.6 111.7 27.9 102.5 24.7
Net assets(1) 2.3d 4,268.5 973 3,834.3 952 4,067.0 931
(1 Profit after tax represents profit attributable to the owners of the parent
company and net assets represents equity attributable to the owners of the
parent company.)
EPRA performance measures
Note Unaudited Unaudited 31 December
30 June 2024
30 June 2023
2023
£m pps £m pps £m pps
EPRA earnings 2.2c 122.6 28.1 106.7 26.6 176.1 42.4
Adjusted earnings(2) 2.2c 125.3 28.7 110.2 27.5 184.3 44.3
EPRA NTA diluted 2.3d 4,262.3 969 3,750.9 928 4,018.6 920
(2 Adjusted earnings are calculated as EPRA earnings after adding back
software as a service costs previously capitalised (net of deferred tax) (see
note 2.2a), in order to reflect the performance of the Group's underlying
operating activities.)
2.1 Segmental information
The Board of Directors monitors the business along two activity lines, Operations and Property. The reportable segments for the 6 months ended 30 June 2024 and 30 June 2023 and for the year ended 31 December 2023 are Operations and Property. The Group undertakes its Operations and Property activities directly and through joint ventures with third parties. The joint ventures are an integral part of each segment and are included in the information used by the Board to monitor the business. Detailed analysis of the performance of each of these reportable segments is provided in the following sections 2.2 to 2.3. The Group's properties are located exclusively in the United Kingdom. The Group therefore has one geographical segment.
2.2 Earnings
EPRA earnings and adjusted earnings amend IFRS measures by removing principally the unrealised investment property valuation gains and losses such that users of the financial statements are able to see the extent to which dividend payments (dividend per share) are underpinned by earnings arising from operational activity. In 2024 and 2023, software as a service costs, which were previously capitalised under the existing intangibles policy, have been excluded from adjusted earnings (net of deferred tax), to align with the International Financial Reporting Interpretations Committee ('IFRIC') agenda decision from 2021. The reconciliation between profit attributable to owners of the Company and EPRA earnings is available in note 2.2b.
The Operations segment manages rental properties, owned directly by the Group or by joint ventures. Its revenues are derived from rental income and asset management fees earned from joint ventures. The way in which the Operations segment adds value to the business is set out in the Operations review on pages 32-35 of the 2023 Annual Report. The Operations segment is the main contributor to adjusted earnings and adjusted EPS and these are therefore the key indicators which are used by the Board to monitor the Groups financial performance.
The Board does not manage or monitor the Operations segment through the balance sheet and therefore no segmental information for assets and liabilities is provided for the Operations segment.
2.2a EPRA earnings
Unaudited 30 June 2024
Share of joint ventures Group on see
through basis
£m Unite USAF LSAV Total
Rental income 150.0 32.5 29.3 211.8
Property operating expenses (41.6) (10.3) (6.7) (58.6)
Net operating income 108.4 22.2 22.6 153.2
Management fees 11.5 (2.5) - 9.0
Overheads (13.8) (0.2) (0.2) (14.2)
Lease liability interest (3.6) - - (3.6)
Net financing costs (5.2) (5.5) (7.8) (18.5)
Operations segment result 97.3 14.0 14.6 125.9
Property segment result (0.8) - - (0.8)
Unallocated to segments (2.3) (0.1) (0.1) (2.5)
EPRA earnings 94.2 13.9 14.5 122.6
Software as a service costs 2.7 - - 2.7
Adjusted earnings 96.9 13.9 14.5 125.3
Included in the above is rental income of £11.1 million and property
operating expenses of (£5.7 million) relating to sale and leaseback
properties.
The unallocated to segments balance includes the fair value of share-based
payments (£1.2 million), contributions to the Unite Foundation (£0.5
million), a deferred tax credit £0.4 million and a current tax charge (£1.2
million).
Depreciation and amortisation totalling £2.5 million is included within
overheads.
The software as a service costs are presented net of deferred tax £0.9
million.
Unaudited 30 June 2023
Share of joint ventures Group on see
through basis
£m Unite USAF LSAV Total
Rental income 139.1 30.7 27.2 197.0
Property operating expenses (35.5) (8.6) (6.1) (50.2)
Net operating income 103.6 22.1 21.1 146.8
Management fees 11.4 (2.4) - 9.0
Overheads (16.3) (0.2) (0.3) (16.8)
Lease liability interest (3.9) - - (3.9)
Net financing costs (15.6) (3.9) (7.3) (26.8)
Operations segment result 79.2 15.6 13.5 108.3
Property segment result (0.8) - - (0.8)
Unallocated to segments (0.6) (0.1) (0.1) (0.8)
EPRA earnings 77.8 15.5 13.4 106.7
Software as a service costs 3.5 - - 3.5
Adjusted earnings 81.3 15.5 13.4 110.2
Included in the above is rental income £10.3 million and property operating
expenses (£4.7 million) relating to sale and leaseback properties.
The unallocated to segments balance includes the fair value of share-based
payments (£0.8 million), contributions to the Unite Foundation (£0.4
million), a deferred tax credit £1.4 million and a current tax charge (£1.0
million).
Depreciation and amortisation totalling (£4.1 million) is included within
overheads.
The software as a service costs are presented net of deferred tax £1.2
million.
31 December 2023
Share of joint ventures Group on see
through basis
£m Unite USAF LSAV Total
Rental income 259.2 57.5 52.8 369.5
Property operating expenses (79.8) (20.0) (13.2) (113.0)
Net operating income 179.4 37.5 39.6 256.5
Management fees 21.4 (4.5) - 16.9
Overheads (32.2) (0.4) (0.5) (33.1)
Interest on lease liabilities (7.7) - - (7.7)
Net financing costs (22.9) (9.4) (15.1) (47.4)
Operations segment result 138.0 23.2 24.0 185.2
Property segment result (2.7) - - (2.7)
Unallocated to segments (6.0) (0.2) (0.2) (6.4)
EPRA earnings 129.3 23.0 23.8 176.1
Software as a service costs 8.2 - - 8.2
Adjusted earnings 137.5 23.0 23.8 184.3
Included in the above is rental income £19.0 million and property operating
expenses (£10.2 million relating to sale and leaseback properties).
Unallocated to segments includes the fair value of share-based payments (£3.4
million), costs due to leadership changes (£2.9 million), contributions to
the Unite Foundation and social causes (£1.6 million), a deferred tax credit
£2.5 million and current tax charge (£1.0 million). Depreciation and
amortisation totalling (£6.3 million) is included within overheads.
The software as a service costs are presented net of deferred tax £2.8
million.
2.2b IFRS reconciliation to EPRA earnings and adjusted earnings
EPRA earnings excludes movements relating to changes in values of investment
properties (owned, leased and under development), profits/losses from the
disposals of properties, mark to market changes on interest rate swaps, swap
cancellation costs which are included in the profit/loss reported under IFRS.
EPRA earnings and adjusted earnings reconcile to the profit attributable to
owners of the parent company as follows:
Note Unaudited Unaudited 31 December
30 June 2024
30 June 2023
2023
£m
£m
£m
Profit attributable to owners of the parent company 281.7 111.7 102.5
Net valuation (gains)/losses on investment property (owned and under 3.1a (90.0) 28.2 37.2
development)
Property disposals (owned) losses/(gains) 3.4 (19.2) (11.8)
Net valuation loss on investment property (leased) 3.1a 3.3 4.3 10.4
Amortisation of fair value of debt recognised on acquisition (2.1) (2.1) (4.3)
Share of joint venture gains on investment property 3.3a (50.4) (2.4) 21.9
Share of joint venture property disposal losses 3.3a (1.2) - 3.5
Mark to market changes on interest rate swaps (5.4) (14.1) 17.2
Swap cancellation and loan break costs 1.8 - -
Current tax relating to property disposals - - (0.1)
Deferred tax (0.2) 0.2 (0.2)
Non-controlling interest and other (18.3) 0.1 (0.2)
EPRA earnings 2.2a 122.6 106.7 176.1
Software as a service costs 2.7 3.5 8.2
Adjusted earnings 2.2a 125.3 110.2 184.3
(*) The non-controlling interest share, or non-controlling interest, arises as
a result of the Group not owning 100% of the share capital of one of its
subsidiaries, USAF (Feeder) Guernsey Ltd. More detail is provided in note 3.3.
2.2c Earnings per share
Basic EPS calculation is based on the earnings attributable to the equity
shareholders of The Unite Group PLC and the weighted average number of shares
which have been in issue during the year. Basic EPS is adjusted in line with
EPRA guidelines in order to allow users to compare the business performance of
the Group with other listed real estate companies in a consistent manner and
to reflect how the business is managed on a day-to-day basis.
The calculations of earnings and EPS on a basic, diluted, EPRA and adjusted
basis are as follows:
Note Unaudited Unaudited 31 December
30 June 2024
30 June 2023
2023
£m pps £m pps £m pps
Basic 281.7 64.6 111.7 27.9 102.5 24.7
Diluted 281.7 64.4 111.7 27.8 102.5 24.6
EPRA 2.2a 122.6 28.1 106.7 26.6 176.1 42.4
Diluted EPRA 122.6 28.0 106.7 26.5 176.1 42.2
Adjusted 2.2a 125.3 28.7 110.2 27.5 184.3 44.3
Diluted adjusted 125.3 28.6 110.2 27.4 184.3 44.2
Weighted average number of shares (thousands) Unaudited Unaudited 31 December 2023
30 June 2024 30 June 2023
Basic 436,218 400,534 415,733
Dilutive potential ordinary shares (share options) 1,475 1,526 1,165
Diluted 437,693 402,060 416,898
The total number of ordinary shares in issue at 30 June 2024 was 438,687,730
(30 June 2023: 402,581,000, 31 December 2023: 435,854,542).
In 2024, there were 102,662 options excluded from the potential dilutive
shares that did not affect the diluted weighted average number of shares (30
June 2023: 124,913, 31 December 2023: 30,553).
2.3 Net Assets
EPRA NTA per share makes adjustments to IFRS measures by removing the fair
value of financial instruments and the carrying value of intangibles. The
reconciliation between IFRS NAV and EPRA NTA is available in note 2.3c.
The Group's Property business undertakes the acquisition and development of
properties. The way in which the Property segment adds value to the business
is set out in the Property review on pages 36-40 of the 2023 Annual Report.
2.3a EPRA net assets
Unaudited 30 June 2024
Share of joint ventures Group on see through basis
Unite USAF LSAV Total
£m
£m
£m
£m
Investment properties (owned)(*) 3,803.4 840.2 991.2 5,634.8
Investment properties (leased) 81.7 - - 81.7
Investment properties (under development) 244.2 - - 244.2
Total property portfolio 4,129.3 840.2 991.2 5,960.7
Debt on properties (1,563.2) (272.2) (337.1) (2,172.5)
Lease liability on properties (78.2) - - (78.2)
Cash 591.7 48.0 26.3 666.0
Net debt (1,049.7) (224.2) (310.8) (1,584.7)
Other assets and (liabilities) (89.9) 3.0 (29.4) (116.3)
EPRA NTA 2,989.7 619.0 651.0 4,259.7
Loan to value(**) 24% 26% 31% 26%
Loan to value post-IFRS 16 25% 26% 31% 27%
* Investment property (owned) includes assets classified as held for sale in
the IFRS balance sheet.
** LTV calculated excluding leased investment property and the corresponding
lease liability. LTV is an APM - see note 7.
Unaudited 30 June 2023
Share of joint ventures Group on see through basis
Unite USAF LSAV Total
£m
£m
£m
£m
Investment properties (owned) 3,646.1 821.7 970.7 5,438.5
Investment properties (leased) 89.0 - - 89.0
Investment properties (under development) 216.9 - - 216.9
Total property portfolio 3,952.0 821.7 970.7 5,744.4
Debt on properties (1,279.1) (243.6) (336.2) (1,858.9)
Lease liability on properties (86.1) - - (86.1)
Cash 65.5 25.4 26.4 117.3
Net debt (1,299.7) (218.2) (309.8) (1,827.7)
Other assets and (liabilities) (117.7) (20.5) (29.8) (168.0)
EPRA NTA 2,534.6 583.0 631.1 3,748.7
Loan to value(**) 31% 27% 32% 31%
Loan to value post-IFRS 16 33% 27% 32% 32%
* LTV calculated excluding leased investment property and the corresponding
lease liability. LTV is an APM - see note 7.
* LTV calculated excluding leased investment property and the corresponding
lease liability. LTV is an APM - see note 7.
31 December 2023
Share of joint ventures Group on see through basis
Unite USAF LSAV Total
£m
£m
£m
£m
Investment properties (owned)(*) 3,727.8 827.8 954.7 5,510.3
Investment properties (leased) 84.7 - - 84.7
Investment properties (under development) 174.7 - - 174.7
Total property portfolio 3,987.2 827.8 954.7 5,769.7
Debt on properties (1,067.6) (243.5) (337.0) (1,648.1)
Lease liability on properties (83.8) - - (83.8)
Cash 37.5 18.2 21.5 77.2
Net debt (1,113.9) (225.3) (315.5) (1,654.7)
Other liabilities (48.3) (22.3) (29.7) (100.3)
EPRA NTA 2,825.0 580.2 609.5 4,014.7
Loan to value(**) 26% 27% 33% 28%
Loan to value post-IFRS 16 28% 27% 33% 29%
* Investment property (owned) includes assets classified as held for sale in
the IFRS balance sheet.
** LTV calculated excluding leased investment property and the corresponding
lease liability. LTV is an APM - see note 7.
2.3b Movement in EPRA NTA during the period
Contributions to EPRA NTA by each segment during the period are as follows:
Unaudited 30 June 2024
Share of joint ventures Group on see through basis
Unite USAF LSAV Total
£m
£m
£m
£m
Operations
Operations segment result 97.3 14.1 14.6 126.0
Add back amortisation of intangibles 1.7 - - 1.7
Total operations 99.0 14.1 14.6 127.7
Property
Rental growth 137.9 16.0 34.8 188.7
Yield movement (62.7) 0.1 (1.2) (63.8)
Disposal (losses)/gains (owned) (3.4) 1.1 (0.1) (2.4)
Investment property gains (owned)* 71.8 17.2 33.5 122.5
Investment property losses (leased) (3.3) - - (3.3)
Investment property gains (under development) 14.9 - - 14.9
Pre-contract/other development costs (0.8) - - (0.8)
Total property 82.6 17.2 33.5 133.3
Unallocated
Shares issued 0.3 - - 0.3
Dividends received from joint ventures 18.0 (11.5) (6.5) -
Dividends paid (77.9) - - (77.9)
Swap gain 49.0 - - 49.0
Swap cancellation costs (1.8) - - (1.8)
Purchase of intangibles (1.7) - - (1.7)
Other (2.7) 19.0 (0.2) 16.1
Total unallocated (16.8) 7.5 (6.7) (16.0)
Total EPRA NTA movement in the period 164.8 38.8 41.4 244.9
Total EPRA NTA brought forward 2,824.9 580.2 609.5 4,014.6
Total EPRA NTA carried forward 2,989.7 619.0 651.0 4,259.7
(*) Investment property (owned) includes assets classified as held for sale in
the IFRS balance sheet.
Unaudited 30 June 2023
Share of joint ventures Group on see through basis
Unite USAF LSAV Total
£m
£m
£m
£m
Operations
Operations segment result 79.2 15.6 13.5 108.3
Add back amortisation of intangibles 3.2 - - 3.2
Total operations 82.4 15.6 13.5 111.5
Property
Rental growth 81.2 20.6 29.8 131.6
Yield movement (91.5) (16.0) (32.5) (140.0)
Disposal losses (owned) 19.3 - - 19.3
Investment property gains/(losses) (owned) 9.0 4.6 (2.7) 10.9
Investment property losses (leased) (4.3) - - (4.3)
Investment property losses (under development) (17.9) - - (17.9)
Pre-contract/other development costs (0.8) - - (0.8)
Total property (14.0) 4.6 (2.7) (12.1)
Unallocated
Shares issued 0.3 - - 0.3
Dividends received from joint ventures 12.3 (12.3) - -
Dividends paid (66.4) - - (66.4)
Acquisition of intangibles (0.7) - - (0.7)
Other (0.4) (0.1) (0.1) (0.6)
Total unallocated (55.0) (12.4) (0.1) (67.5)
Total EPRA NTA movement in the period 13.5 7.8 10.7 32.0
Total EPRA NTA brought forward 2,521.1 575.2 620.4 3,716.7
Total EPRA NTA carried forward 2,534.5 583.0 631.1 3,748.6
31 December 2023
Share of joint ventures Group on see through basis
Unite USAF LSAV Total
£m
£m
£m
£m
Operations
Operations segment result 137.8 23.3 24.1 185.2
Add back amortisation of intangibles 5.2 - - 5.2
Total operations 143.0 23.3 24.1 190.4
Property
Rental growth 185.2 41.8 56.1 286.7
Yield movement (215.9) (34.4) (85.7) (339.6)
Disposal gains/(losses) (owned) 11.8 (3.7) 0.3 8.4
Investment property (losses)/gains (owned) * (18.9) 3.7 (29.3) (44.5)
Investment property losses (leased) (10.4) - - (10.4)
Investment property losses (under development) (6.6) - - (6.6)
Pre-contract/other development costs (2.8) - - (2.8)
Total property (38.7) 3.7 (29.3) (64.3)
Unallocated
Shares issued 294.9 - - 294.9
Dividends received from joint ventures 27.3 (21.8) (5.5) -
Dividends paid (117.3) - - (117.3)
Acquisition of intangibles (1.6) - - (1.6)
Share based payment charge (3.4) - - (3.4)
Other (0.4) (0.2) (0.2) (0.8)
Total unallocated 199.6 (22.0) (5.7) 172.0
Total EPRA NTA movement in the year 303.9 5.0 (10.9) 298.0
Total EPRA NTA brought forward 2,521.1 575.2 620.4 3,716.7
Total EPRA NTA carried forward 2,825.0 580.2 609.5 4,014.7
(*) Investment property (owned) includes assets classified as held for sale in
the IFRS balance sheet.
2.3c Reconciliation to IFRS
To determine EPRA NTA, net assets reported under IFRS are amended to exclude
the fair value of financial instruments, associated tax and the carrying value
of intangibles.
To determine EPRA NRV, net assets reported under IFRS are amended to exclude
the fair value of financial instruments, associated tax and real estate
transfer tax.
To determine EPRA NDV, net assets reported under IFRS are amended to exclude
the fair value of financial instruments but include the fair value of fixed
interest rate debt and the carrying value of intangibles.
The net assets reported under IFRS reconcile to EPRA NTA, NRV and NDV as
follows:
Unaudited 30 June 2024
NTA NRV NDV
£m
£m
£m
Net asset value reported under IFRS 4,268.5 4,268.5 4,268.5
Mark to market interest rate swaps (12.4) (12.4) -
Unamortised swap gain (1.1) (1.1) (1.1)
Mark to market of fixed rate debt - - 38.5
Unamortised fair value of debt recognised on acquisition 13.0 13.0 13.0
Current tax 1.1 1.1 -
Deferred tax 0.6 0.6 -
Intangibles per IFRS balance sheet (10.0) - -
Real estate transfer tax - 383.6 -
EPRA reporting measure 4,259.7 4,653.3 4,318.9
Unaudited 30 June 2023
NTA NRV NDV
£m
£m
£m
Net asset value reported under IFRS 3,834.3 3,834.3 3,834.3
Mark to market interest rate swaps (92.5) (92.5) -
Unamortised swap gain (1.3) (1.3) (1.3)
Mark to market of fixed rate debt - - 70.4
Unamortised fair value of debt recognised on acquisition 17.0 17.0 17.0
Current tax 0.5 0.5 -
Deferred tax 0.4 0.4 -
Intangibles per IFRS balance sheet (9.7) - -
Real estate transfer tax - 301.7 -
EPRA reporting measure 3,748.7 4,060.1 3,920.4
31 December 2023
NTA NRV NDV
£m
£m
£m
Net asset value reported under IFRS 4,067.0 4,067.0 4,067.0
Mark to market interest rate swaps (58.1) (58.1) -
Unamortised swap gain (1.2) (1.2) (1.2)
Mark to market of fixed rate debt - - 35.0
Unamortised fair value of debt recognised on acquisition 15.2 15.2 15.2
Current tax 0.7 0.7 -
Deferred tax 0.4 0.4 -
Intangibles per IFRS balance sheet (9.3) - -
Real estate transfer tax - 306.7 -
EPRA reporting measure 4,014.7 4,330.7 4,116.0
2.3d NTA, NRV and NDV per share
Basic NAV is based on the net assets attributable to the equity shareholders
of The Unite Group plc and the number of shares in issue at the end of the
period. The Board uses EPRA NTA to monitor the performance of the Property
segment on a periodic basis.
Note Unaudited Unaudited 31 December Unaudited Unaudited 31 December
30 June 2024
30 June 2023
2023
30 June 2024
30 June 2023
2023
£m £m £m pps pps pps
Net assets
Basic 2.3c 4,268.5 3,834.3 4,067.0 973 952 931
EPRA NTA 2.3a 4,259.7 3,748.7 4,014.7 971 931 921
EPRA NTA (diluted) 4,262.3 3,750.9 4,018.6 969 928 920
EPRA NRV 2.3c 4,653.3 4,060.1 4,330.7 1,061 1,009 994
EPRA NRV (diluted) 4,655.9 4,062.3 4,334.6 1,058 1,006 992
EPRA NDV 2.3c 4,318.9 3,920.4 4,116.0 984 974 944
EPRA NDV (diluted) 4,321.4 3,922.6 4,119.9 982 971 943
Number of shares (thousands)
Basic 438,688 402,582 435,855
Outstanding share options 1,265 1,401 1,165
Diluted 439,953 403,983 437,020
2.4 Revenue and costs
The Group earns revenue from the following activities:
Note Unaudited Unaudited 31 December
30 June 2024
30 June 2023
2023
£m
£m
£m
Rental income(*) Operations segment 2.2a 150.0 139.1 259.2
Management fees Operations segment 9.0 9.0 17.1
159.0 148.1 276.3
Impact of non-controlling interest on management fees (0.1) (0.1) (0.2)
Total revenue 158.9 148.0 276.1
(*) EPRA earnings includes £211.8 million of rental income (30 June 2023:
£197.0 million, 31 December 2023: £369.5 million), which is comprised of
£150.0 million recognised on wholly owned assets (30 June 2023: £139.1
million, 31 December 2023: £259.2 million) and a further £61.8 million from
joint ventures (30 June 2023: £57.9 million, 31 December 2023: £110.3
million) which is included in share of joint venture profit/loss in the
consolidated IFRS income statement.
The cost of sales included in the consolidated IFRS income statement includes
property operating expenses of £41.3 million (30 June 2023: £34.7 million,
31 December 2023: £76.8 million).
Section 3: Asset management
The Group holds its property portfolio directly and through its joint
ventures. The performance of the property portfolio whether wholly owned or in
joint ventures is the key factor that drives EPRA Net Tangibles Asset Value
(NTA), one of the Group's key performance indicators.
The following pages provide disclosures about the Group's investments in property assets and joint ventures and their performance over the period.
3.1 Wholly owned property assets
The Group's wholly owned property portfolio is held in four groups on the
balance sheet at the carrying values detailed below. In the Group's EPRA NTA,
all are shown at market value, except where otherwise stated.
i) Investment property (owned)
These are assets that the Group intends to hold for a long period to earn
rental income or capital appreciation. The assets are held at fair value in
the balance sheet with changes in fair value taken to the income statement.
ii) Investment property (leased)
These are assets the Group sold to institutional investors and simultaneously
leased back. These right-of-use assets are held at fair value in the balance
sheet with changes in fair value taken to the income statement.
iii) Investment property (under development)
These are assets which are currently in the course of construction and which
will be transferred to Investment property on completion. These assets are
initially recognised at cost and are subsequently measured at fair value in
the balance sheet with changes in fair value taken to the income statement.
iv) Investment property classified as held for sale
These are assets whose carrying amount will be recovered through a sale
transaction rather than to hold for long-term rental income or capital
appreciation. This condition is regarded as met only when the sale is highly
probable and the investment property is available for immediate sale in its
present condition. Management must be committed to the sale which should be
expected to qualify for recognition as a completed sale within one year from
the date of classification. The assets are measured at fair value in the
balance sheet, with changes in fair value taken to the income statement. The
assets are presented as current in the IFRS balance sheet.
3.1a Valuation process
The valuations of the properties are performed twice a year on the basis of
valuation reports prepared by external, independent valuers, having an
appropriate recognised professional qualification. The fair values are based
on market values as defined in the RICS Appraisal and Valuation Manual, issued
by the Royal Institution of Chartered Surveyors, and taking account of
committed fire safety and external façade works as provided by Unite. CB
Richard Ellis Ltd, Jones Lang LaSalle Ltd and Messrs Knight Frank LLP,
Chartered Surveyors were the valuers in the 6 months ending 30 June 2024 and
throughout 2023.
The valuations are based on both:
· Information provided by the Group such as current rents, occupancy,
operating costs, terms and conditions of leases and nomination agreements,
capital expenditure, etc. This information is derived from the Group's
financial systems and is subject to the Group's overall control environment.
· Assumptions and valuation models used by the valuers - the
assumptions are typically market related and include rental value, yield and
discount rates. These are based on their professional judgement and market
observation.
The information provided to the valuers - and the assumptions and the
valuation models used by the valuers - are reviewed by the Property Leadership
Team and the CFO. This includes a review of the fair value movements over the
period.
The fair value of the Group's wholly owned properties and the movements in the
carrying value of the Group's wholly owned properties during the period ended
30 June 2024 is shown in the table below. Included in the fair value is £17.9
million related to committed fire safety and external façade capital
expenditure (31 December 2023: £20.2 million).
Unaudited 30 June 2024
£m Investment property (owned) Investment property (leased) Investment property (under development) Total
At 1 January 2024 3,694.3 84.7 174.7 3,953.7
Cost capitalised 34.0 0.3 53.5 87.8
Interest capitalised - - 6.5 6.5
Transfer from conditionally exchanged schemes - - 2.1 2.1
Transfer to assets classified as held for sale (124.7) - - (124.7)
Disposals - - (7.5) (7.5)
Valuation gains 110.0 - 33.5 143.5
Valuation losses (34.9) (3.3) (18.6) (56.8)
Net valuation gains/(losses) 75.1 (3.3) 14.9 86.7
Carrying value and market value at 30 June 2024 3,678.7 81.7 244.2 4,004.6
Assets classified as held for sale at 30 June are comprised of £124.7 million
of investment property (owned). Assets held for sale are reported within the
Operations segment and represents four properties intended to be sold in the
next 12 months.
The fair value of the Group's wholly owned properties and the movements in the
carrying value of the Group's wholly owned properties during the period ended
30 June 2023 is shown in the table below:
Unaudited 30 June 2023
£m Investment property (owned) Investment property (leased) Investment property (under development) Total
At 1 January 2023 3,623.4 90.3 202.7 3,916.4
Cost capitalised 33.0 3.0 28.7 64.7
Interest capitalised - - 3.4 3.4
Valuation gains 41.9 - 15.9 57.8
Valuation losses (52.2) (4.3) (33.8) (90.3)
Net valuation gains/(losses) (10.3) (4.3) (17.9) (32.5)
Carrying value and market value at 30 June 2023 3,646.1 89.0 216.9 3,952.0
The fair value of the Group's wholly owned properties and the movements in the
carrying value of the Group's wholly owned properties during the year ended 31
December 2023 is shown in the table below:
31 December 2023
£m Investment property (owned) Investment property (leased) Investment property (under development) Total
At 1 January 2023 3,623.4 90.3 202.7 3,916.4
Cost capitalised 66.5 4.8 58.9 130.2
Interest capitalised - - 8.4 8.4
Transfer from investment property under development 88.7 - (88.7) -
Transfer to assets classified as held for sale (33.5) - - (33.5)
Valuation gains 121.1 - 32.4 153.5
Valuation losses (151.7) (10.4) (39.0) (201.1)
Net valuation gains/(losses) (30.6) (10.4) (6.6) (47.6)
Committed fire safety and external façade works (20.2) - - (20.2)
Carrying value and market value at 31 December 2023 3,694.3 84.7 174.7 3,953.7
Assets classified as held for sale at 31 December 2023 are comprised of £33.5
million of investment property (owned) less (£7.8 million) costs to sell -
the amounts are presented net in the balance sheet at £25.7 million. Assets
held for sale are reported within the Operations segment and represent a
portfolio of properties (split across the Group and joint ventures) intended
to be sold in the months following the balance sheet date.
3.1b Fair value measurement
All investment and development properties are classified as Level 3 in the
fair value hierarchy.
Class of asset Unaudited Unaudited 31 December
30 June 2024
30 June 2023
2023
£m
£m
£m
London - Rental properties 1,199.4 1,196.7 1,154.9
Prime provincial - Rental properties 1,183.8 1,119.4 1,156.0
Major provincial - Rental properties 1,249.6 1,153.2 1,246.0
Other provincial - Rental properties 102.7 104.3 104.0
London - Development properties 96.7 82.5 86.2
Prime provincial - Development properties 104.0 40.3 57.0
Major provincial - Development properties 33.4 83.8 22.0
London Build to Rent - Rental properties 67.8 72.5 66.9
Prime provincial Build to Rent - Development properties 10.2 10.3 9.5
Investment property (owned) 4,047.6 3,863.0 3,902.5
Investment property (leased) 81.7 89.0 84.7
Market value (including assets classified as held for sale) 4,129.3 3,952.0 3,987.2
Investment property (classified as held for sale) (124.7) - (33.5)
Market value 4,004.6 3,952.0 3,953.7
The valuations have been prepared in accordance with the latest version of the
RICS Valuation - Global Standards (incorporating the International Valuation
Standards) and the UK national supplement (the "Red Book") based on net rental
income, estimated future costs, occupancy, property management costs and the
net initial yield or discount rate.
Where the asset is leased to a University, the valuation also reflects the
length of the lease, the allocation of maintenance and insurance
responsibilities between the Group and the lessee, and the market's general
perception of the lessee's credit worthiness.
The resulting valuations are cross-checked against comparable market
transactions.
For development properties, the fair value is usually calculated by estimating
the fair value of the completed property (using the discounted cash flow
method) less estimated costs to completion
3.1c Quantitative information about fair value measurements using unobservable inputs (Level 3)
Unaudited 30 June 2024
Fair value £m Valuation technique Unobservable inputs Range Weighted average
London - RICS Red Book Net rental income (£ per week) £212-£465 £332
Rental properties Estimated future rent (%) 2% - 4% 3%
Discount rate (yield) (%) 4.0%-4.7% 4.4%
1,199.4
Prime regional - RICS Red Book Net rental income (£ per week) £158-£324 £210
Rental properties Estimated future rent (%) 2% - 3% 4%
Discount rate (yield) (%) 4.3%-7.0% 5.0%
1,183.8
Major regional - RICS Red Book Net rental income (£ per week) £86-£210 £161
Rental properties Estimated future rent (%) 2% - 4% 3%
Discount rate (yield) (%) 4.8%-8.5% 5.8%
1,249.6
Provincial - RICS Red Book Net rental income (£ per week) £110-£169 £144
Rental properties Estimated future rent (%) 2% - 3% 3%
Discount rate (yield) (%) 7.1%-21.7% 9.1%
102.7
London - RICS Red Book Estimated cost to complete (£m) £88m-£198m £153m
Development properties Net rental income (£ per week) £180-£456 £304
Estimated future rent (%) 3% 3%
Discount rate (yield) (%) 4.15% 4.15%
96.7
Prime regional - RICS Red Book Estimated cost to complete (£m) £41m-£248m £162m
Development properties Net rental income (£ per week) £227-£362 £251
Estimated future rent (%) 3% 3%
Discount rate (yield) (%) 4.35%-5.20% 4.62%
104.0
Major regional - RICS Red Book Estimated cost to complete (£m) £8m-£122m £92m
Development properties Net rental income (£ per week) £179-£250 £211
Estimated future rent (%) 3% 3%
Discount rate (yield) (%) 5.15% 5.15%
33.4
Fair value at 30 June 2024 3,969.6
Investment property - Build to Rent 67.8 RICS Red Book Net rental income (£ per week) £497 £497
Estimated future rent (%) 3% 3%
Discount rate (yield) (%) 4.6% 4.6%
Development Property -Build to Rent 10.2 RICS Red Book Estimated cost to complete (£m) £11m £11m
Net rental income (£ per week) £289-£845 £535
Estimated future rent (%) 3.0% 3.0%
Discount rate (yield) (%) 4.4% 4.4%
Fair value at 30 June 2024 4,047.6
Investment property - Leased 81.7 RICS Red Book Estimated cost to complete (£m) £105-£221 £165
1.4%-2.6%
2.1%
Estimated future rent (%)
6.3%
6.3%
Discount rate (yield) (%)
Fair value at 30 June 2024 4,129.3
Unaudited 30 June 2023
Fair value £m Valuation technique Unobservable inputs Range Weighted average
London - RICS Red Book Net rental income (£ per week) £197-£520 £325
Rental properties Estimated future rent (%) 2% - 4% 3%
Discount rate (yield) (%) 3.9%-4.5% 4.01%
1,196.7
Prime regional - RICS Red Book Net rental income (£ per week) £150-£405 £192
Rental properties Estimated future rent (%) 2% - 4% 3%
Discount rate (yield) (%) 4.2%-6.8% 4.83%
1,119.4
Major regional - RICS Red Book Net rental income (£ per week) £81-£284 £143
Rental properties Estimated future rent (%) 2% - 4% 3%
Discount rate (yield) (%) 4.6%-7.6% 5.74%
1,153.2
Provincial - RICS Red Book Net rental income (£ per week) £92-£197 £139
Rental properties Estimated future rent (%) 2% - 4% 3%
Discount rate (yield) (%) 7.0%-24.6% 8.76%
104.3
London - RICS Red Book Estimated cost to complete (£m) £110m-£191m £154m
Development properties Net rental income (£ per week) £187-£384 £258
Estimated future rent (%) 3% 3%
Discount rate (yield) (%) 3.90% 3.90%
82.5
Prime regional - RICS Red Book Estimated cost to complete (£m) £43m-£56m £51m
Development properties Net rental income (£ per week) £230-£242 £237
Estimated future rent (%) 3% 3%
Discount rate (yield) (%) 4.35%-5.25% 4.73%
40.3
Major regional - RICS Red Book Estimated cost to complete (£m) £26m £26m
Development properties Net rental income (£ per week) £171-£245 £190
Estimated future rent (%) 3% 3%
Discount rate (yield) (%) 5.15% 5.15%
83.8
Fair value at 30 June 2023 3,780.2
Investment property - Build to Rent 72.5 RICS Red Book Net rental income (£ per week) £376 £376
Estimated future rent (%) 3% 3%
Discount rate (yield) (%) 4.0% 4.0%
Development Property -Build to Rent 10.3 RICS Red Book Estimated cost to complete (£m) £13m £13m
Net rental income (£ per week) £272-£800 £410
Estimated future rent (%) 3% 3%
Discount rate (yield) (%) 4.10% 4.10%
Fair value at 30 June 2023 3,869.2
Investment property - Leased Estimated cost to complete (£m) £99-£191 £154
1%-3% 2%
89.0 RICS Red Book Estimated future rent (%) 6.8% 6.8%
Discount rate (yield) (%)
Fair value at 30 June 2023 3,952.0
31 December 2023
Fair value £m Valuation technique Unobservable inputs Range Weighted average
London - RICS Red Book Net rental income (£ per week) £206-£424 £324
Rental properties Estimated future rent (%) 2%-4% 3%
Discount rate (yield) (%) 4.0%-4.7% 4.3%
1,154.9
Prime provincial - RICS Red Book Net rental income (£ per week) £152-£270 £189
Rental properties Estimated future rent (%) 2%-5% 3%
Discount rate (yield) (%) 4.3%-6.7% 4.9%
1,156.0
Major provincial - RICS Red Book Net rental income (£ per week) £84-£189 £135
Rental properties Estimated future rent (%) 2%-5% 3%
Discount rate (yield) (%) 4.9%-7.2% 5.7%
1,246.0
Provincial - RICS Red Book Net rental income (£ per week) £103-£162 £136
Rental properties Estimated future rent (%) 2%-3% 3%
Discount rate (yield) (%) 7.0%-21.7% 8.9%
104.0
Prime regional - RICS Red Book Estimated cost to complete (£m) £50.0m-£52.0m £51.4m
Development properties Net rental income (£ per week) £234-£246 £242
Estimated future rent (%) 3% 3%
Discount rate (yield) (%) 4.4%-5.2% 4.7%
57.0
Major regional - RICS Red Book Estimated cost to complete (£m) £19.4m-£124.1m £97.6m
Development properties Net rental income (£ per week) £214 £214
Estimated future rent (%) 3% 3%
Discount rate (yield) (%) 5.2% 5.2%
22.0
Fair value at 31 December 2023 3,826.1
Investment property - Build to Rent 66.9 RICS Red Book Net rental income (£ per week) £412 £412
Estimated future rent (%) 3% 3%
Discount rate (yield) (%) 4.1% 4.1%
Development Property - Build to Rent 9.5 RICS Red Book Estimated cost to complete (£m) £12.6m £12.6m
Net rental income (£ per week) £278 £278
Estimated future rent (%) 3% 3%
Discount rate (yield) (%) 4.4% 4.4%
Fair value at 31 December 2023 3,902.5
Investment property - Leased 84.7 Discounted cash flows Net rental income (£ per week) £106-£207 £168
Estimated future rent (%) 1.8%-2.7% 2.3%
Discount rate (yield) (%) 6.3% 6.3%
Fair value at 31 December 2023 3,987.2
Fair value sensitivity analysis
A decrease in net rental income or occupancy will result in a decrease in the
fair value, whereas a decrease in the discount rate (yield) will result in an
increase in fair value. There are inter-relationships between these rates as
they are partially determined by market rate conditions. These two key sources
of estimation uncertainty are considered to represent those most likely to
have a material impact on the valuation of the Group's investment property
within the next 12 months as a result of reasonably possible changes in
assumptions used. The potential effect of such reasonably possible changes has
been assessed by the Group and is set out below:
Class of assets Fair value at +5% -5% +25bps -25bps
30 June 2024
change in estimated
change in estimated
change in
change in
net rental income
net rental income
nominal equivalent yield
nominal equivalent yield
Rental properties (£m)
London 1,199.4 1,277.9 1,156.2 1,151.8 1,290.2
Prime provincial 1,183.8 1,242.8 1,125.1 1,127.1 1,247.0
Major provincial 1,249.6 1,304.5 1,179.3 1,189.2 1,299.6
Other provincial 102.7 108.9 98.5 100.8 106.7
Development properties
London 96.7 100.6 92.8 91.0 101.0
Prime provincial 104.0 109.2 98.8 110.1 98.6
Major provincial 33.4 34.6 31.3 31.4 34.2
Build to Rent
London 67.8 71.4 64.7 64.6 71.9
Prime provincial 10.2 10.7 9.7 9.6 10.8
Market value 4,047.6 4,260.6 3,856.4 3,875.6 4,260.0
3.2 Inventories
Unaudited Unaudited 31 December
30 June 2024
30 June 2023
2023
£m
£m
£m
Interests in land 31.3 15.9 25.3
Other stocks - 1.5 0.9
Inventories 31.3 17.4 26.2
At 30 June 2024, 30 June 2023 and 31 December 2023 Interests in land includes
conditionally exchanged schemes.
3.3 Investments in joint ventures
The Group has two joint ventures:
Joint venture Share of Objective Partner Legal entity in which
assets/results 2024 (December 2023)
Group has interest
The UNITE UK Student Accommodation Fund (USAF) 29.05% (28.15%) Invest and operate Consortium of investors UNITE UK Student Accommodation Fund,
student accommodation throughout the UK
a Jersey Unit Trust
London Student Accommodation Venture (LSAV) 50% (50%) Invest and operate student accommodation in London and Birmingham GIC Real Estate Pte, Ltd. Real estate LSAV Unit Trust, a Jersey Unit Trust, and LSAV (Holdings) Ltd, incorporated in
investment vehicle Jersey
of the Government
of Singapore
(*) Part of the Group's interest was held through a subsidiary, USAF (Feeder)
Guernsey Ltd, in which there was one other external investor. A
non-controlling interest therefore occurred on consolidation of the Group's
results representing the external investor's share of profits and assets
relating to its investment in USAF. The single external investor was paid out
through the sale of USAF units and a minority interest no longer exists beyond
30(th) June 2024.
The ordinary shareholders of The Unite Group plc are beneficially interested
in 29.05% of USAF (30 June 2023: 28.15%, 31 December 2023: 28.15%).
3.3a Movement in carrying value of the Group's investments in joint ventures
The carrying value of the Group's investment in joint ventures has increased
by £79.2 million during the 6 months ended 30 June 2024 (30 June 2023: £20.0
million, 30 December 2023: (£7.6 million)), resulting in an overall carrying
value of £1,298.2 million (30 June 2023: £1,246.6 million, 30 December 2023:
£1,219.0 million). The following table shows how the increase has arisen.
Unaudited Unaudited Year to 31 December
6 months to
6 months to
2023
30 June 2024
30 June 2023
£m
£m
£m
Recognised in the income statement:
Operations segment result 28.7 29.1 47.4
Non-controlling interest share of Operations segment result 1.4 0.8 1.3
Management fee adjustment relating to trading with joint venture 2.6 2.4 4.5
Net valuation gains on investment property 50.4 2.4 (21.9)
Property disposals 1.2 - (3.5)
Ineffective swap - - (0.4)
Other 17.9 (0.3) (0.4)
102.3 34.4 27.0
Recognised in equity:
Movement in effective hedges (loss)/gain (2.3) 0.9 (2.1)
Other adjustments to the carrying value:
Profit adjustment related to trading with joint venture (2.6) (2.4) (4.5)
Distributions received (18.3) (12.9) (28.0)
Increase in carrying value 79.1 20.0 (7.6)
Carrying value brought forward 1,219.0 1,226.6 1,226.6
Carrying value carried forward 1,298.1 1,246.6 1,219.0
3.3b Transactions with joint ventures
The Group acts as asset and property manager for the joint ventures and
receives management fees in relation to these services. In addition, the Group
is entitled to performance fees from USAF and LSAV, if the joint ventures
outperform certain benchmarks. The Group receives either cash or an enhanced
equity interest in the joint ventures as consideration for the performance
fee.
The Group has recognised the following gross fees in its results for the
period.
Unaudited Unaudited Year to
6 months to
6 months to
31 December
30 June 2024
30 June 2023
2023
£m
£m
£m
USAF 9.1 9.0 16.6
LSAV 2.4 2.4 4.8
Asset and property management fees 11.5 11.4 21.4
Total fees 11.5 11.4 21.4
On an EPRA basis, fees from joint ventures are shown net of the Group's share of the cost to the joint venture.
The Group's share of the management fees to the joint ventures is £2.5 million (30 June 2023: £2.4 million, 31 December 2023: £4.5 million), which results in management fees from joint ventures of £9.0 million being shown in the Operations segment result in note 2.2a (30 June 2023: £9.0 million, 31 December 2023: £16.9 million).
During the period the Group did not sell any properties to LSAV or USAF (2022: no properties sold to LSAV or USAF).
Investment management fees are included within the unallocated to segments section in note 2.2a.
On 15 February 2024, Unite announced the formation of a joint venture with Newcastle University to acquire a long leasehold interest and the subsequent development of a £250 million 2,000 bed site of purpose-built student accommodation. The joint venture is not presented above, because the joint venture balances are £nil, where the transfer of title of assets is subject to conditions such as planning permission, which are yet to complete. A balance of £1.9 million is presented within other debtors, which represents future recoverable costs.
Section 4: Funding
The Group finances its development and investment activities through a mixture
of retained earnings, borrowings and equity. The Group continuously monitors
its financing arrangements to manage its gearing.
Interest rate swaps are used to manage the Group's risk to fluctuations in
interest rate movements.
The following pages provide disclosures about the Group's funding position,
including borrowings and hedging instruments.
4.1 Borrowings
The table below analyses the Group's borrowings which comprise bank and other
loans by when they fall due for payment:
Unaudited 30 June 2024 Unaudited 30 June 2023 31 December 2023
£m £m £m
Current
In one year or less, or on demand 299.7 - 299.4
Non-current
In more than one year but not more than two years - 557.6 -
In more than two years but not more than five years 420.5 - 320.7
In more than five years 842.8 721.4 447.6
1,263.3 1,279.0 1,067.6
Unamortised fair value of debt recognised on acquisition 12.0 15.9 14.0
Total borrowings 1,575.0 1,294.9 1,081.6
The carrying value of borrowings is considered to be approximate to fair
value, except for the Group's fixed rate loans as analysed below:
Unaudited Unaudited 31 December 2023
30 June 2024
30 June 2023
Carrying value Fair value Carrying value Fair value Carrying value Fair value
£m £m £m £m £m £m
Level 1 IFRS fair value hierarchy 1,275.0 1,249.7 875.0 818.6 875.0 852.3
Other loans and unamortised arrangement fees 300.0 286.8 419.9 405.9 192.6 180.3
Total borrowings 1,575.0 1,536.5 1,294.9 1,224.5 1,067.6 1,032.6
4.2 Interest rate swaps
The Group uses interest rate swaps to manage the Group's exposure to interest
rate fluctuations. In accordance with the Group's treasury policy, the Group
does not hold or issue interest rate swaps for trading purposes and only holds
swaps which are considered to be commercially effective.
The following table shows the fair value of interest rate swaps:
Unaudited Unaudited 31 December
30 June 2024
30 June 2023
2023
£m
£m
£m
Current - - -
Non-current 12.4 87.3 56.0
Fair value of interest rate swaps asset 12.4 87.3 56.0
The fair values of interest rate swaps have been calculated by a third party
expert, discounting estimated future cash flows on the basis of market
expectations of future interest rates, representing Level 2 in the IFRS 13
fair value hierarchy.
4.3 Dividends
During the 6 months to 30 June 2024, the Company declared and paid a final
dividend of £102.9 million, 23.6p per share (30 June 2023: final dividend of
£65.6 million, 21.7p per share).
After the period end, the Directors proposed an interim dividend of 12.4p per
share (30 June 2023: 11.8p per share). No provision has been made in relation
to this dividend.
The Group has modelled tax adjusted property business profits for 2023 and
2024 and the PID requirement in respect of the year ended 31 December 2023 is
expected to be satisfied by the end of 2024.
Section 5: Working capital
5.1 Provisions
During 2020, and in accordance with the Government's Building Safety Advice of
20 January 2020, the Group undertook a thorough review of the use of
High-Pressure Laminate ('HPL') cladding on its properties. This identified 27
properties with HPL cladding that needed replacing across the estate, due to
legal or contractual obligations.
The Group continue to carry out replacement works for properties with HPL
cladding and those where there is a legal obligation to do so, with activity
prioritised according to risk assessments, starting with those over 18 metres
in height. The remaining cost of the works is expected to be £35.5 million
(Unite Group Share: £19.8 million), of which £5.1 million is in respect of
wholly-owned properties. Whilst the overall timetable for these works is
uncertain, management anticipate this will be incurred over the next 12-24
months.
The Government's Building Safety Bill, covering building standards, was passed
in April 2022 and has introduced more stringent fire safety regulations. The
Group will ensure it remains aligned to fire safety regulations as they evolve
and continue to make any required investment to ensure its buildings remain
safe to occupy. The Group has provided for the costs of remedial work where
there is a legal obligation to do so.
The amounts provided reflect the current best estimate of the extent and
future cost of the remedial works required and are based on known costs and
quotations where possible, and reflect the most likely outcome. However, these
estimates may be updated as work progresses or if Government legislation and
regulation changes.
The regulations continue to evolve in this area and Unite will ensure that its
buildings are safe for occupation and compliant with laws and regulations.
The Group has transferred the 30 June 2024 and 31 December 2023 additions in
respect of committed spend on fire safety and façade works taking place in
2024/ 2025 to property valuations, which is presented as a deduction to fair
value, see note 3.
The Group has not recognised any assets in respect of future claims, but
expect to recover 50-75% of remediation costs through claims from contractors.
Management has performed a sensitivity analysis to assess the impact of a
change in their estimate of total costs. A 20% increase in the estimated
remaining costs would affect net valuation gains/losses on property in the
IFRS P&L and would reduce the Group's NTA by 1.0 pence on a Unite Group
share basis. Whilst provisions are expected to be utilised within the next
year, there is uncertainty over this timing.
The Group has recognised provisions for the costs of these cladding works as
follows:
Gross Unite share
Wholly owned USAF LSAV Total Wholly owned USAF LSAV Total
£m £m £m £m £m £m £m £m
At 1 January 2023 29.5 55.6 28.2 113.3 29.5 15.6 14.1 59.2
Releases - (4.5) - (4.5)
Additions 12.6 - 0.5 13.1 12.6 (1.3) 0.3 11.6
Utilisation (15.2) (31.4) (3.0) (49.6) (15.2) (8.9) (1.5) (25.6)
At 30 June 2023 26.9 19.7 25.7 72.3 26.9 5.4 12.9 45.2
Releases (3.5) (3.3) - (6.9) (3.6) (0.9) - (4.5)
Additions 8.7 56.0 21.7 86.4 8.7 15.8 10.9 35.3
Utilisation (6.7) (18.2) (3.9) (28.9) (6.7) (5.1) (2.0) (13.8)
Transferred to valuations (20.2) (48.2) (12.3) (80.7) (20.1) (13.6) (6.2) (39.8)
At 31 December 2023 5.2 5.9 31.2 42.3 5.2 1.6 15.5 22.3
Additions - - - - - - - -
Utilisation (0.1) (3.9) (2.8) (6.8) (0.1) (1.1) (1.4) (2.6)
Change in ownership % - - - - - 0.1 - 0.1
At 30 June 2024 5.1 2.0 28.4 35.5 5.1 0.6 14.1 19.8
5.2 Cash and cash equivalents
Note Unaudited 6 months to 30 June 2024 Unaudited 6 months to 30 June 2023 £m Year to 31 December 2023
£m
£m
Profit for the period 283.3 112.4 103.6
Adjusted for:
Depreciation and amortisation 2.5 4.1 6.3
Fair value of share based payments 2.2a 1.2 0.8 3.4
Change in value of investment property 2.2b (90.0) 28.2 37.2
Change in value of investment property (leased) 2.2b 3.3 4.3 10.4
Net finance costs 3.0 17.3 18.5
Interest payments for leased assets 3.6 - 7.7
Mark to market changes in interest rate swaps (5.4) (14.1) 17.2
Loss/(gain) on disposal of investment property (owned) 2.2b 3.4 (19.2) (11.8)
Share of joint venture profit (102.3) (34.4) (27.0)
Trading with joint venture adjustment 2.5 2.4 4.5
Tax charge 0.6 (0.2) (1.1)
Cash flows from operating activities before changes in working capital 105.7 101.5 168.9
Increase/ (decrease) in trade and other receivables 49.8 41.0 (24.8)
Increase in inventories (5.1) (4.7) (13.5)
Increase in trade and other payables (2.2) 10.5 24.4
Cash flows from operating activities 148.2 148.4 155.0
Tax paid (1.1) (0.9) (1.8)
Net cash flows from operating activities 147.1 147.5 153.2
Section 6: Post balance sheet events
On 11 July 2024, Unite completed the acquisition of Kings Place, Borough for a
land price of £60 million. Kings Place is a 444 bed, Zone 1 London scheme
with a target delivery for the 2027/28 academic year.
Section 7: Alternative performance measures
The Group uses alternative performance measures ("APMs"), which are not
defined or specified under IFRS. These APMs, which are not considered to be a
substitute for IFRS measures, provide additional helpful information. APMs are
consistent with how business performance is planned, reported and assessed
internally by management and the Board, and provide comparable information
across the Group. The APMs below have been calculated on a see through / Unite
share basis, as referenced to the notes to the financial statements.
Reconciliations to equivalent IFRS measures are included in notes 2.2b and
2.3c. Definitions can also be found in the glossary.
Adjusted earnings of the Group excludes the non-recurring impact of one-of
transactions, improving comparability between reporting periods.
Non-EPRA measures may not have comparable calculation bases between companies
and therefore may not provide meaningful industry-wide comparability.
Note 6 months to 30 June 2024 6 months to 30 June 2023 Year to
£m £m 31 December 2023
£m
EBIT
Net operating income (NOI) 2.2a 153.2 146.8 256.5
Management fees 2.2a 9.0 9.0 16.9
Overheads 2.2a (10.6) (12.1) (22.1)
151.6 143.7 251.3
EBIT margin %
Rental income 2.2a 211.8 197.0 369.5
EBIT 7 151.6 143.7 251.3
71.6% 72.9% 68.0%
EBITDA
Net operating income (NOI) 2.2a 153.2 146.8 256.5
Management fees 2.2a 9.0 9.0 16.9
Overheads 2.2a (10.6) (12.1) (22.1)
Depreciation and amortisation 2.2a 2.5 4.1 6.3
154.1 147.8 257.6
Note 30 June 2024 31 December 2023
£m
£m 30 June 2023 £m
Net debt
Cash 2.3a 666.0 117.3 77.2
Debt on properties 2.3a (2,172.5) (1,858.9) (1,648.1)
Net debt (1,506.5) (1,741.6) (1,570.9)
Note 12 months to 30 June 2024 12 months to 30 June 2023 £m Year to 31 December 2023
£m
£m
Net debt (adjusted)
Cash (adjusted) 2.3a 234.4(1) 143.9 77.2
Debt on properties (adjusted) 2.3a (1,831.9) (2) (1,877.9) (1,648.1)
Net debt (adjusted) (1,597.5) (1,734.0) (1,570.9)
(1) Calculated on a 12 month look back basis. Average of £666.0 million and
£77.2 million in respect of H1 2024 and average of £117.3 million and £77.2
million in respect of H2 2023.
(2) Calculated on a 12 month look back basis. Average of £2,172.5 million and
£1,648.1 million in respect of H1 2024 and average £1,858.9 million and
£1,648.1 million in respect of H2 2022.
Note 12 months to 30 June 2024 12 months to 30 June 2023 Year to 31
£m
December 2023
£m
£m
Net debt: EBITDA (adjusted)
Net debt (adjusted) 7 (1,597.5) (1,734.0) (1,570.9)
EBITDA 7 263.9(1) 255.0 257.6
Ratio 6.1 6.8 6.1
(1) Calculated on a 12 month look back basis. £154.1 million in respect of H1
2024 and £109.8 million in respect of H2 2023.
12 months to 30 June 2024 12 months to 30 June 2023 Year to 31
£m
December 2023
£m
£m
Interest cover (Unite share)
EBIT 7 259.2(1) 247.0 251.3
Net financing costs 2.2a (46.6)(2) (56.9) (47.4)
Interest on lease liability 2.2a (7.8)(3) (7.9) (7.7)
Total interest (54.4) (64.8) (55.1)
Ratio 4.8 3.8 4.6
(1) Calculated on a 12 month look back basis. £151.6million in respect of
H1 2024 and £107.6 million in respect of H2 2023
(2) Calculated on a 12 month look back basis. £18.5million in respect of H1
2024 and £28.1 million in respect of H2 2023.
(3) Calculated on a 12 month look back basis. £3.6 million in respect of H1
2024 and £4.2 million in respect of H2 2023.
Reconciliation: IFRS profit before tax to EPRA earnings and adjusted earnings
Note 6 months to 30 June 2024 6 months to 30 June 2023 £m Year to 31 December 2023
£m
£m
IFRS profit before tax 283.9 112.2 102.5
Net valuation (gains)/losses on investment property (owned) 2.2b (140.4) 25.8 59.1
Property disposal losses/(gains) (owned) 2.2b 2.2 (19.2) (8.3)
Net valuation losses on investment property (leased) 2.2b 3.3 4.3 10.4
Amortisation of fair value of debt recognised on acquisition 2.2b (2.1) (2.1) (4.3)
Changes in valuation of interest rate swaps 2.2b (5.4) (14.1) 17.2
Swap cancellation and debt exit fees 1.8 - -
Non-controlling interest and other (20.7) (0.1) (0.4)
EPRA earnings 122.6 106.7 176.1
Software as a service costs 2.7 3.5 8.2
Adjusted earnings 125.3 110.2 184.3
Adjusted EPS yield
Note 30 June 2024 30 June 2023 pps 31 December 2023
pps
pps
Adjusted EPS (A) 2.2c 28.7 27.5 44.3
Opening EPRA NTA (B) 2.3d 920 927 927
Adjusted EPS yield (A/B) 3.1% 3.0% 4.8%
Total accounting return
Note 30 June 2024 30 June 2023 pps 31 December 2023
pps
pps
Opening EPRA NTA (A) 2.3d 920 927 927
Closing EPRA NTA 2.3d 969 928 920
Movement 49 1 (7)
H1 dividend paid 4.3 23.6 21.7 21.7
H2 dividend paid 4.3 - - 11.8
Total movement in NTA (B) 72.6 22.7 25.9
Total accounting return (B/A) 7.9% 2.4% 2.9%
EPRA Performance Measures
Summary of EPRA performance measures
30 June 2024 30 June 2023 31 Dec 2023 30 June 2024 30 June 2023 31 Dec
2023
£m £m £m pps pps
pps
EPRA earnings / EPS 122.6 106.7 176.1 28.1 26.6 42.4
Adjusted earnings / Adjusted EPS(*) 125.3 110.2 184.3 28.7 27.5 44.3
EPRA NTA (diluted) 4,262.3 3,750.9 4,014.7 969 928 920
EPRA NRV (diluted) 4,655.9 4,062.3 4,330.7 1,058 1,006 992
EPRA NDV (diluted) 4,321.4 3,922.6 4,116.0 982 971 943
EPRA Like-for-like gross rental income 9% 10% 7%
EPRA Cost ratio (including vacancy costs) 30% 30% 35%
EPRA Cost ratio (excluding vacancy costs) 30% 28% 35%
EPRA Loan to value 28% 34% 30%
(*) Adjusted earnings calculated as EPRA earnings less software as a service
costs (in 2024 and 2023).
EPRA like-for-like rental income (calculated based on total portfolio value of
£8.7 billion)
Properties owned throughout the period Development property Total EPRA
£m £m £m
Other*
£m
6 months to 30 June 2024
Rental income 196.8 3.5 11.5 211.8
Property operating expenses (54.0) (0.9) (3.7) (58.6)
Net rental income 142.8 2.6 7.8 153.2
6 months to 30 June 2023
Rental income 184.1 - 12.9 197.0
Property operating expenses (46.5) - (3.7) (50.2)
Net rental income 137.6 - 9.2 146.8
Like-for-like net 5.2
(£m)
Like-for-like net rental income (%) 4%
Like-for-like gross rental income (£m) 12.7
Like-for-like gross rental income (%) 7%
(*) Other includes acquisitions, disposals, major refurbishments and changes
in ownership.
EPRA cost ratio 6 months to 30 June 2024 6 months to 30 June 2023 Year to 31 Dec 2023
£m £m £m
Property operating expenses 41.6 35.5 79.8
Overheads (*) 10.2 11.6 21.2
Development / pre contract costs 0.8 0.8 2.7
Unallocated expenses 3.2 1.8 8.8
55.8 49.7 112.5
Share of JV property operating expenses 17.0 14.7 33.2
Share of JV overheads 0.4 0.5 0.9
Share of JV unallocated expenses 0.2 0.2 0.4
73.4 65.1 147.0
Less: Joint venture management fees (9.0) (9.0) (16.9)
Total costs (A) 64.4 56.1 130.1
Group vacant property costs ((**)) (0.8) (1.1) (0.8)
Share of JV vacant property costs ((**)) (0.3) (0.4) (0.3)
Total costs excluding vacant property costs (B) 63.3 54.6 129.0
Rental income 150.0 139.1 259.2
Share of JV rental income 61.8 57.9 110.3
Total gross rental income (C) 211.8 197.0 369.5
Total EPRA cost ratio (including vacant property costs) (A)/(C) 30% 28% 35%
Total EPRA cost ratio (excluding vacant property costs) (B)/(C) 30% 28% 35%
* Excludes software as a service cost net of deferred tax (in 2023).
** Vacant property costs reflect the per bed share of operating expenses
allocated to vacant beds.
Unite's EBIT margin excludes non-operational expenses which are included
within the EPRA cost ratio above. The Group capitalises costs in relation to
staff costs and professional fees associated with property development
activity.
EPRA valuation movement (Unite share)
Valuation Change %
£m £m
Wholly owned 3,803.4* 75.6 2.0%
USAF 840.2 12.4 1.5%
LSAV 991.2 36.5 3.8%
Rental properties 5,634.8 124.5 2.3%
Leased properties 81.6
Properties under development 244.3
Properties held throughout the period 5,960.7
Total property portfolio 5,960.7
(*) Includes PBSA and BTR properties.
EPRA yield movement
NOI yield Yield movement (bps)
% H1
Wholly owned 5.2 8
USAF 5.2 (1)
LSAV 4.5 -
Rental properties (Unite share) 5.0 5
EPRA property related capital expenditure
30 June 2024 31 Dec 2023
Wholly owned Share of Group share Wholly owned Share of Group share
JVs JVs
London 3.0 6.9 9.9 4.3 20.5 24.8
Prime provincial 4.3 3.6 7.9 19.3 4.8 24.1
Major provincial 14.5 6.9 21.4 24.6 3.0 27.6
Other provincial 0.7 2.0 2.7 5.2 1.3 6.5
Total rental properties 22.5 19.4 41.9 53.4 29.6 83.0
Increase in beds - - - - - -
BTR 0.2 - 0.2 2.1 - 2.1
Developments 53.5 - 53.5 58.8 - 58.8
Capitalised interest 6.0 - 6.0 8.4 - 8.4
Total property related capex 82.2 19.4 101.6 122.7 29.6 152.3
EPRA loan to value
6 months to 30 June 2024 6 months to 30 June 2023 Year to
31 Dec 2023
£m £m
£m
Investment property (owned) 5,634.8 5,438.5 5,510.4
Investment property (under development) 244.2 216.9 174.7
Intangibles 10.0 9.7 9.3
Total property value and other eligible assets 5,889.0 5,665.1 5,694.4
Cash at bank and in hand 666.0 117.3 77.2
Borrowings (2,172.5) (1,858.9) (1,648.1)
Net other payables (116.2) (168.0) (100.3)
EPRA net debt (1,622.7) (1,909.6) (1,671.2)
EPRA loan to value 27.6% 33.7% 29.3%
INDEPENDENT REVIEW REPORT TO THE UNITE GROUP PLC
Conclusion
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2024 which comprises the consolidated income statement, consolidated
statement of comprehensive income, consolidated balance sheet, consolidated
statement of changes in equity, consolidated statement of cash flows and
related sections 1 to 7.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2024 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the United Kingdom and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim
financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in Section 1, the annual financial statements of the group are
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim Financial
Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410; however future events or conditions may cause the entity to
cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the group's ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with ISRE (UK) 2410.
Our work has been undertaken so that we might state to the company those
matters we are required to state to it in an independent review report and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company, for our review work,
for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
23 July 2024
GLOSSARY
Adjusted earnings EBIT EPRA Net Tangible Assets per share
An alternative performance measure based on EPRA earnings, adjusted to remove The Group's NOI plus management fees and less overheads. In the opinion of the The diluted NTA per share figure based on EPRA NTA.
the impact of non-underlying items. Directors, adjusted EBIT is a useful measure to monitor our cost discipline
and performance of the Group.
Non-underlying items are excluded from adjusted earnings to improve the
comparability of results across reporting periods. EPRA Net Reinstatement Value (NRV)
EBIT margin EPRA NRV includes all property at market value but excludes the mark to market
of financial instruments, deferred tax and includes real estate transfer tax.
Adjusted earnings per share / EPS The Group's EBIT expressed as a percentage of rental income. In the opinion of EPRA NRV assumes that entities never sell assets and represents the value
the Directors, adjusted EBIT margin is a useful measure to monitor our cost required to rebuild the entity.
The earnings per share based on adjusted earnings and weighted average number discipline and performance of the Group.
of shares in issue (basic).
EPRA Net Disposal Value (NDV)
EBITDA
Adjusted EPS yield
EPRA NDV includes all property at market value, excludes the mark to market of
The Group's EBIT, adding back depreciation and amortisation. financial instruments, but includes the fair value of fixed interest rate debt
Adjusted EPS as a percentage of opening EPRA NTA (diluted).
and the carrying value of intangible assets. EPRA NDV represents the
shareholders' value in a disposal scenario.
EPRA
Adjusted net debt
The European Public Real Estate ESG
Net debt per the balance sheet, adjusted to remove IFRS 16 lease liabilities
and the unamortised fair value of debt recognised on the acquisition of Association, who produce best practice recommendations for financial Environmental, Social and Governance.
Liberty Living. reporting.
Full occupancy
Basis points (BPS) EPRA Cost Ratio Full occupancy is defined as occupancy in excess of 97%.
A basis point is a term used to describe a small percentage, usually in the The ratio of property operating expenses, overheads and management fees,
context of change, and equates to 0.01%. against rental income, calculated on an EPRA basis.
GRESB
GRESB is a benchmark of the Environmental, Social and Governance (ESG)
Diluted earnings / EPS EPRA earnings performance of real assets.
Where earnings values per share are used "basic" measures divide the earnings EPRA earnings exclude movements relating to changes in values of investment
by the weighted average number of issued shares in issue throughout the properties, profits/losses from the disposal of properties, swap/debt break
period, whilst the diluted measure also takes into account the effect of share costs and interest rate swaps and the related tax effects. Gross asset value (GAV)
options which have been granted and which are expected to be converted into
shares in the future. The fair value of rental properties, leased properties and development
properties.
EPRA earnings per share / EPS
Diluted NTA/NAV The earnings per share based on EPRA earnings and weighted average number of
shares in issue (basic). The Group
Where NTA/NAV per share is used, "basic" measures divide the NTA/NAV by the
number of shares issued at the reporting date, whilst the diluted measure also Wholly owned balances plus Unite's interests relating to USAF and LSAV.
takes into account the effect of share options which have been granted and
which are expected to be converted into shares in the future (both for the EPRA like-for-like rental growth
additional number of shares that will be issued and the value of additional
consideration that will be received in issuing them). The growth in rental income measured by reference to the part of the portfolio Group debt
of the Group that has been consistently in operation, and not under
development nor subject to disposal, and which accordingly enables more Wholly owned borrowings plus Unite's share of borrowings attributable to USAF
meaningful comparison in underlying rental income levels. and LSAV.
Direct let
Properties where short-hold tenancy agreements are made directly between Unite
and the student. EPRA Net Initial Yield (NIY) HMO
Annualised NOI generated by the Group's rental properties expressed as a
percentage of their fair value, taking into account notional acquisition costs Houses in multiple occupation, where buildings or flats are shared by multiple
tenants who rent their own rooms and the property's communal spaces on an
individual basis.
EPRA Net Tangible Assets (NTA)
EPRA NTA includes all property at market value but excludes the mark to market IFRS NAV per share
of financial instruments, deferred tax and intangible assets. EPRA NTA
IFRS equity attributable to the owners of the parent company from the
provides a consistent measure of NAV on a going concern basis. consolidated balance sheet divided by the total number of shares of the Parent
Company in issue at the reporting date.
Net debt per balance sheet
Interest cover ratio (ICR) Borrowings, IFRS 16 lease liabilities and the mark to market of interest rate
swaps, net of cash.
Calculated as EBIT divided by the sum of net financing costs and IFRS 16 lease
liability interest costs.
Net debt to EBITDA Rental properties
Lease Net debt as a proportion of EBITDA. Investment properties (owned and leased) whose construction has been completed
and are used by the Operations segment to generate NOI.
Properties which are leased to universities for a number of years.
Net financing costs (EPRA)
Rental properties (leased) / Sale and leaseback
Like-for-like metrics Interest payable on borrowings less interest capitalised into developments and
finance income. Properties that have been sold to a third-party investor then leased back to
Like-for-like is the change in metric, on a gross basis, calculated using
the Group. Unite is also responsible for the management of these assets on
properties owned throughout the current and previous period. behalf of the owner.
Net operating income (NOI)
LSAV The Group's rental income less property operating expenses. Resident ambassadors
The London Student Accommodation Joint Venture (LSAV) is a joint venture Student representatives who engage with students living in the property to
between Unite and GIC, in which both hold a 50% stake. LSAV has a maturity
create a community and sense of belonging.
date of September 2032. NOI margin
The Group's NOI expressed as a percentage of rental income
See-through (also Unite share)
Loan to value (LTV)
Nomination agreements Wholly owned balances plus Unite's share of balances relating to USAF and
Net debt as a proportion of the value of the rental properties, excluding
LSAV.
balances in respect of leased properties under IFRS 16. Prepared on a see Agreements at properties where universities have entered into a contract to
through basis. In the opinion of the directors, this measure enables an reserve rooms for their students, usually guaranteeing occupancy. The
appraisal of the indebtedness of the business, which closely aligns with key Universities usually either nominate students to live in the building and
covenants in the Group's lending arrangements. Unite enters into short-hold tenancies with the students or the University TCFD
enters into a contract with Unite and makes payment directly to Unite.
The Taskforce on Climate-related Financial Disclosures develops voluntary,
consistent climate-related financial risk disclosures for use by companies in
LTV post IFRS 16
providing information to investors, lenders, insurers, and other stakeholders.
Other provincial
Net debt as a proportion of the value of the rental properties, including
balances in respect of leased properties under IFRS 16. Prepared on a Properties located in Bedford, Bournemouth, Coventry, Loughborough, Medway,
see-through basis. Portsmouth, Reading and Swindon. Total accounting return
Growth in diluted EPRA NTA per share plus dividends paid, expressed as a
percentage of diluted EPRA NTA per share at the beginning of the period. In
LTV (EPRA) PBSA the opinion of the Directors, this measure enables an appraisal of the return
generated by the business for shareholders during the year.
Net debt as a proportion of the value of the rental properties including Purpose-built student accommodation.
balances in respect of leased properties and all other assets and liabilities.
Total shareholder return
Prime provincial
Major provincial
The growth in value of a shareholding over a specified period, assuming
Properties located in Bristol, Bath, Durham Edinburgh, Manchester and Oxford. dividends are reinvested to purchase additional shares.
Properties located in Aberdeen, Birmingham, Cardiff, Glasgow, Leeds,
Leicester, Liverpool, Newcastle, Nottingham, Sheffield and Southampton.
Property operating expenses USAF/the fund
Net asset value (NAV) Operating costs directly related to rental properties, therefore excluding The Unite UK Student Accommodation Fund (USAF) is Europe's largest fund
central overheads. focused purely on income-producing student accommodation investment assets.
The total of all assets less the value of all liabilities at each reporting
date. The fund is an open-ended infinite life vehicle with unique access to Unite's
development pipeline. Unite acts as fund manager for the fund, as well as
Rental growth owning a significant minority stake.
Net debt (EPRA) Calculated as the year-on-year change in average annual price for sold beds.
In the opinion of the Directors, this measure enables a more meaningful
Borrowings net of cash. IFRS 16 lease liabilities are excluded from net debt comparison in rental income as it excludes the impact of changes in occupancy. WAULT
on an EPRA basis. In the opinion of the Directors, net debt is a useful
measure to monitor the overall cash position of the Group. Weighted average unexpired lease term to expiry.
Rental income
Income generated by the Group from rental properties. Wholly owned
Balances relating to properties that are 100% owned by The Unite Group plc or
its 100% subsidiaries.
COMPANY INFORMATION
Executive Team
Joe Lister
Chief Executive
Michael Burt
Chief Financial Officer
Registered office
South Quay House
Temple Back
Bristol BS1 6FL
Registered Number in England
03199160
Auditor
Deloitte LLP
1 New Street Square, London EC4A 3HQ
Financial Advisers
J.P. Morgan Cazenove
25 Bank Street, London E14 5JP
Deutsche Numis
45 Gresham Street, London EC2V 7BF
Registrars
Computershare Investor Services PLC
PO Box 82
The Pavilions
Bridgwater Road
Bristol BS99 7NH
Financial PR Consultants
Sodali & Co.
The Leadenhall Building 122 Leadenhall Street, London EC3V 4AB
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