REG - Unite Group PLC - RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024
25/02/2025 07:00
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RNS Number : 2907Y Unite Group PLC (The) 25 February 2025
PRESS RELEASE
25 February 2025
THE UNITE GROUP PLC
('Unite Students', 'Unite', the 'Group', or the 'Company')
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024
GROWING EARNINGS, ENCOURAGING OUTLOOK FOR 2025/26 AND SIGNIFICANT GROWTH
OPPORTUNITIES
Joe Lister, Chief Executive of Unite Students, commented:
"The business performed strongly in 2024 and demonstrated resilience in a
challenging market. We continue to deliver growth in our earnings over the
year and our record development pipeline supports this into the medium term.
This is underpinned by our strong university relationships, sustainable rental
growth and substantial investment in our portfolio.
The outlook for 2025 is encouraging with growing momentum, driven by
increasing demand and a more supportive policy environment for international
students. Additionally, private HMO landlords continue to leave the sector,
creating a shortage of student housing. We are well-positioned to respond,
with a robust development pipeline and new university joint-venture
partnerships. This not only provides students with high-quality homes but also
frees up family housing in local communities. We are excited by the
opportunities that lie ahead for the business."
Year ended 31 December 2024 31 December 2023 Change
Adjusted earnings(1,3) £213.8m £184.3m 16%
Adjusted EPS(1,3) 46.6p 44.3p 5%
IFRS profit attributable to owners £441.9m £102.5m 331%
IFRS diluted EPS 96.1p 24.6p 291%
Dividend per share 37.3p 35.4p 5%
Total accounting return(1) 9.6% 2.9%
As at 31 December 2024 31 December 2023 Change
EPRA NTA per share(1) 972p 920p 6%
IFRS net assets per share 982p 931p 5%
Net debt: EBITDA 5.5x 6.1x 0.6x
Loan to value(2) 24% 28% 4ppts
HIGHLIGHTS
Strong rental growth for 2024/25, demonstrating value of our platform
· 8.2% rental growth and 97.5% occupancy for the 2024/25 academic
year (2023/24: 7.4% and 99.8%)
· Occupancy significantly ahead of 94% sector average, underpinned
by nomination agreements
· +5% YoY growth in adjusted EPS to 46.6p (2023: 44.3p)
Growing student demand continues to outpace constrained housing supply
· 2% increase in university applications by UK 18-year-olds for
2025/26
· More supportive environment for international students with most
recent visa issuance up 14% YoY
· 70% reserved for 2025/26 (2024/25: 79%), reflecting a
normalisation in demand
· Strong demand from university partners with 57% of beds nominated
for 2025/26 (2024/25: 57%)
· New PBSA supply 60% below pre-pandemic levels and competing HMO
sector in decline
Sustained earnings growth from our best-in-class platform
· On-track to deliver rental growth of 4-5% for 2025/26 and 97-98%
occupancy
· Guidance for adjusted EPS of 47.5-48.25p in 2025
· Targeting 8-10% Total Accounting Return (TAR) in 2025, before
yield movement
Increasing alignment to the UK's strongest universities
· £281 million of value-add acquisitions in strong markets (Unite
share: £210 million)
· £304 million of disposals to enhance portfolio quality (Unite
share: £161 million)
· Rental portfolio enhanced through £48 million of investments at
a 10% yield on cost
Development pipeline adding scale in the strongest markets
· £1,048 million committed pipeline fully funded, 100% in Russell
Group cities at 6.8% yield on cost
· Debut university JV with Newcastle University, with public
consultation underway for second JV
· Committed pipeline adding £71 million to NOI (Unite share) in
next four years
Strong balance sheet underpinned by growing portfolio valuation
· 4.8% like-for-like portfolio valuation increase to £6.0 billion
(Unite share) (2023: 1.2% and £5.5 billion)
· TAR of 9.6%, reflecting 6% growth in EPRA NTA to 972p (2023: 2.9%
and 920p)
· Net debt: EBITDA reduced to 5.5x (2023: 6.1x), with LTV of 24%
(2023: 28%)
· Cost of debt expected to increase to 4.1% in 2025 (2024: 3.6%)
Leading the living sector in sustainability
· Over 99% of portfolio EPC A-C rated (2023: 99%) with 9% reduction
in energy intensity since 2019
· Delivery of our lowest ever embodied carbon development at
Bromley Place, Nottingham
1. The financial statements are prepared in accordance with International
Financial Reporting Standards (IFRS). These financial highlights are based on
the European Public Real Estate Association (EPRA) best practice
recommendations and these performance measures are published as they are
intended to help users in the comparability of these results across other
listed real estate companies in Europe. The metrics are also used internally
to measure and manage the business and to align to the performance related
conditions for Directors' remuneration. See glossary for definitions.
2. Excludes IFRS 16 related balances recognised in respect of leased
properties. See glossary for definitions.
3. 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.
PRESENTATION
A live webcast of the presentation including Q&A will be held today at
08.30am GMT for investors and analysts, and is available here
(https://brrmedia.news/UTG_FY_2024) . Slides and a replay of the event will be
available via our website at https://www.unitegroup.com/
(https://www.unitegroup.com/) .
To register for the event or to receive dial-in details, please contact
unite@sodali.com (mailto:unite@sodali.com) .
For further information, please contact:
Unite Students
Joe Lister / Mike 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
Courtney Sanford / Louisa Henry unite@sodali.com (mailto:unite@sodali.com)
CHIEF EXECUTIVE'S REVIEW
The business has performed strongly in 2024, delivering continued growth in
earnings and dividends. This reflects the strength of our best-in-class
operating platform, the commitment of our teams and the ongoing appeal of our
value-for-money proposition. Our affordable pricing, UK customer focus and
strength of relationships with universities are key differentiators, enabling
us to significantly outperform the sector in a more competitive environment.
We operate in a structurally growing sector, bolstered by demographic growth
and the attractiveness of the UK's Higher Education sector to domestic and
international students. The shortage of accommodation to meet this demand
supports sustainable long-term rental growth and our track record and
reputation in the sector create compelling investment opportunities for the
business.
Growing earnings and dividend
A strong lettings performance for the 2023/24 and 2024/25 academic years
supported growth in adjusted earnings to £213.8 million and adjusted EPS of
46.6p, up 16% and 5% respectively year-on-year. The growth in adjusted EPS
also reflects the increased share count following our capital raise in July
2024. IFRS profit attributable to owners of the company of £441.9 million and
diluted EPS of 96.1p (2023: £102.5 million and 24.6p) also reflects the
valuation increase of our property portfolio, driven primarily by rental
growth. We have proposed a final dividend of 24.9p which, if approved, totals
37.3p for the full year, representing a payout ratio of 80% of adjusted EPS
and a year-on-year increase of 5%.
Total accounting returns for the year were 9.6%, reflecting dividends paid in
the year and 6% growth in EPRA NTA per share to 972p. Following our capital
raise in the year, our net debt: EBITDA and LTV ratios reduced to 5.5x and 24%
respectively, providing the funding capacity to invest for future growth.
Our key financial performance indicators are set out below:
Financial highlights(1) 2024 2023 2022
Adjusted earnings £213.8m £184.3m £163.4m
Adjusted EPS 46.6p 44.3p 40.9p
IFRS profit £441.9m £102.5m £350.5m
IFRS diluted EPS 96.1p 24.6p 87.6p
Dividend per share 37.3p 35.4p 32.7p
Total accounting return 9.6% 2.9% 8.1%
EPRA NTA per share 972p 920p 927p
IFRS net assets per share 982p 931p 944p
Loan to value 24% 28% 31%
1. See glossary for definitions and note 7 for alternative performance measure
calculations and reconciliations. A reconciliation of profit before tax to
EPRA earnings and adjusted earnings is set out in note 7 of the financial
statements.
Encouraging outlook for 2025/26
We continue to see strong demand from students and universities for our well
located, value-for-money student accommodation. We observed a normalisation in
leasing trends over the course of 2024, which we expect to continue for the
2025/26 sales cycle with more bookings made later in the cycle.
We have seen strong demand from universities for the coming year, as they look
to secure accommodation to meet student demand, resulting in nomination
agreements for 57% of beds for 2025/26. These agreements deepen our
relationships with universities and underpin occupancy each year, providing
income security at rental levels comparable with direct-let sales.
International student demand is improving for 2025 after the disruption
created by changes to visa policy in early 2024. Visas granted to students
were down 14% in 2024 as a result of this policy change and uncertainty
created by the review of post-study visa policy ahead of the UK general
election. The new government has been vocal in its support of international
students coming to the UK, recognising the value they bring to the UK and its
universities, and we are not expecting any further visa changes in the near
term. Recruitment data is encouraging, with indications of a 14% increase in
the intake for January 2025 and a 3% increase in international applicants for
the 2025/26 academic year, with 9% growth from China.
Across the Group's entire property portfolio, 70% of rooms are now sold for
the 2025/26 academic year (2024/25: 79%), in-line with our expectations for a
later sales cycle. We remain on track to deliver 97-98% occupancy and rental
growth of 4-5% for the 2025/26 academic year.
Constrained supply of student housing
Many university cities are facing housing shortages, and our investment
activity is focused on those markets with the most acute need. Over half of
students who need term-time accommodation live in HMOs where many private
landlords are choosing to leave the sector due to rising mortgage costs and
increasing regulation. In some markets, delivery of Build-to-Rent
accommodation is partially mitigating reduced availability of HMO stock,
albeit at higher price points.
New supply of PBSA is also down 60% on pre-pandemic levels, reflecting
viability challenges created by higher costs of construction and funding as
well as planning backlogs and time required to secure Building Safety Act
approvals. Weekly rents now need to be at least £200 for new PBSA development
outside of London to be viable, meaning there is little prospect of new supply
in many markets.
We expect obsolescence of older university accommodation to further impact
supply, with 5,000-10,000 beds being removed from the market each year due to
building age and the need to operate buildings more sustainably.
The combination of these factors has significantly increased demand for our
accommodation in many cities. Our strong, established relationships with
universities position us as a long-term partner to help solve their housing
needs. The Government has also set ambitious targets for new housing, and we
will play our part in delivering new student accommodation which frees up
local housing for families.
Delivering our strategy
Our purpose is to deliver a Home for Success, creating communities where young
people thrive. Our strategy is focused on three key objectives to deliver for
our key stakeholders:
· Great Place to Live - Creating places that our customers can call
home while they stay with us
· Great Place to Work - Creating the platform for our people to do
their best work, experience the career journey of a lifetime and achieve
extraordinary things together
· Great Place to Invest - Delivering long-term growth for our
investors as a sustainable and resilient business
Great Place to Live
We delivered significant enhancements to our buildings and service offering in
2024, delivering value for money for our customers. During the year we
refurbished 11 buildings, upgrading the living experience for 5,200 students,
driving significant improvements in Net Promoter Scores. Our accommodation is
comparable in cost to HMOs once bills are included. This is before allowing
for the price certainty we provide on utilities and the additional product and
service features we offer, such as on-hand maintenance teams, 24/7 security,
high-speed Wi-Fi and contents insurance.
We have a best-in-class 24/7/365 operating platform in the student
accommodation sector, underpinned by our PRISM technology platform, passionate
customer-facing teams and sector-leading student support in partnership with
universities. We are in the process of upgrading our PRISM platform to enhance
customer experience and deliver operational efficiencies and during 2024 we
delivered new payment options, as well as a new customer website and app. We
continue to support student welfare through our Support to Stay programme and
are also building on the research of the Living Black Commission in
partnership with the HE sector to improve the university accommodation
experience for black students.
The impact of our customer initiatives is reflected in a further increase in
our Net Promoter Scores to +50 for students at check-in and +37 with
university partners (2023: +42 and +32). We have also seen an increase in the
proportion of beds under nomination agreements to 57% (2023/24: 53%),
reflecting our status as the partner of choice for universities as they
increasingly look to trusted partners to meet their accommodation needs.
Great Place to Work
Delivering for our customers and investors requires us to attract and retain
the best people and enable them to deliver their best work.
We have maintained our commitment to the Real Living Wage for 2025, with 5%
pay awards for our city teams. During the year we introduced a new performance
management framework to support our people in having more meaningful
performance conversations, helping to align individual goals with the
company's objectives. We also maintained our focus on Diversity, Equity,
Inclusion and Belonging, by introducing guidance on neurodiversity and the
menopause. Our teams delivered a record number of Positive Impact projects in
their local communities in 2024, delivering lasting benefits in many of our
cities.
Our employee engagement score rose to 74, the highest in two years, and we
achieved the Investors in People Gold Award, reflecting the positive impact of
these initiatives.
Great Place to Invest
We delivered 5% growth in adjusted EPS and dividends in the year as strong
rental growth offset cost increases in our operations. Rental growth also
supported increases in our property valuations, which resulted in a total
accounting return of 9.6%.
The quality and scale of our portfolio is key to delivering attractive,
sustainable returns for our shareholders. We secured planning on three
projects in our development pipeline and successfully delivered £48 million
of building upgrade projects in the year at a blended yield on cost of 10%. We
continue to recycle capital with a focus on increasing alignment to the
strongest universities and disposed of £304 million of properties in the year
(Unite share: £161 million).
In July 2024, we raised £450 million in equity to accelerate our investment
activity into development and acquire value-add investment assets. We have
deployed around 50% of the proceeds and expect the transaction to enhance
earnings and total returns as projects are delivered.
More supportive government policy
Higher Education contributes over £250 billion to the UK economy, creates new
opportunities and life experiences for young people, and provides global
influence through the soft power of education. The HE sector also plays a key
part in increasing skill levels in support of the Government's mission to
kickstart economic growth. Recognising this value, the new UK government is
supportive of both the university sector and international students.
Tuition fees for English students increased for the first time since 2017 for
the 2025/26 academic year, rising by 3.1% to £9,535 p.a. While this was
welcomed by universities, they continue to face cost pressures due to the
significant real-term decline in fees over recent years. In 2025, the
Government will publish a comprehensive spending review including funding for
Higher Education, laying out budgets and capital investment until 2029.
The Government is expected to announce a new Higher Education Policy and
International Education Strategy in the spring, which we expect to focus on
attracting growing numbers of international students to study in the UK. The
Government is actively encouraging international student recruitment and the
introduction of student number restrictions by Canada and Australia is
expected to increase the relative attractiveness of the UK as a study
destination.
Universities are well established, long-term institutions with strong balance
sheets and little debt. In recent years, universities have responded to rising
costs by growing student numbers, increasing international recruitment and
delivering efficiencies within their cost bases. We have deliberately aligned
ourselves to the strongest universities which, though not immune, are best
positioned to respond to rising costs. A small number of universities face
greater challenges where broader cost reduction programmes may be required but
our exposure to this part of the market is minimal.
We are confident that our alignment to the strongest universities positions us
to navigate future changes in student demand and government policy. Our
standing in the sector provides us with unique insight and unlocks
opportunities to deepen partnerships. Together with our high-quality portfolio
and responsible approach to rent setting, this positions us to deliver
sustainable rental growth in the years ahead.
Significant growth opportunities
Universities increasingly see the lack of high-quality and value-for-money
accommodation as a barrier to their growth. The challenge of obsolescence in
legacy estates and limited funding creates significant opportunities for Unite
to support universities to deliver new, improved and sustainable
accommodation. During the year, we announced our first university joint
venture with Newcastle University to develop 2,000 new beds on university
land. We expect to announce our second agreement in the next three months.
In addition, we have a substantial committed pipeline of £1.2 billion of
traditional development close to campuses, which is 100% aligned to Russell
Group universities. The equity raised over the past two years means our
pipeline is fully funded for committed schemes being delivered in the period
to 2028. These projects are underpinned by demand from universities for 63% of
beds, which supports significant growth in our earnings and NTA over the next
four years.
The Building Safety Act introduced three gateways for construction of new
high-rise buildings and has added around six months to development programmes.
Delays in reviewing applications as the new regulatory process is implemented
have unfortunately resulted in the delivery of our Freestone Island
development in Bristol being delayed until 2027.
We have increased our target returns for new investment to reflect higher
capital costs and increased delivery risks in the current environment. We
remain focused on the delivery of our committed pipeline which will add £71
million to net operating income (Unite share) over the medium term as projects
are delivered.
Acquisitions, providing immediate income, have become more attractive and we
expect to see an increased availability of investment opportunities over the
next two years. We acquired eight properties in 2024, all in strong markets
with value-add potential, which we expect to deliver attractive risk adjusted
returns. We will remain disciplined in our investment activity, ensuring that
new commitments enhance the growth and quality of our portfolio, while
maintaining a strong balance sheet.
Positive outlook
The outlook for the business is strong. Student accommodation is structurally
supported by growing demand for UK Higher Education and constrained supply,
which supports sustainable growth in our rents and earnings over the
long-term. An environment of higher funding costs will impact our earnings
growth, but we also expect this to create significant opportunities for our
well-capitalised business to invest and grow in the UK's strongest university
cities.
An encouraging outlook for student demand supports rental growth of 4-5% for
the 2025/26 academic year and 2-4% growth in adjusted EPS in 2025. We see
mid-single digit earnings growth over the medium term, driven by our operating
performance and accelerating development completions, which supports
attractive total accounting returns of c.10% before yield movements.
We are investing significantly to deliver the new student homes to support the
growth of the UK's strongest universities and help free up much-needed family
housing in our local communities. The strength of our university
relationships, best-in-class operating platform and development expertise has
unlocked the opportunity for strategic partnerships and we expect to announce
our second university joint venture in the coming months.
OPERATIONS REVIEW
Strong rental growth delivered for 2024/25
Annual rents increased by 8.2% on a like-for-like basis for 2024/25 academic
year (2023/24: 7.4%), which was above our initial expectations. We saw strong
growth across both our direct-let and nominated beds. This reflected our
success in agreeing increased rental levels on renewals of single year and new
multi-year nomination agreements where our university partners recognise the
value our accommodation provides at a time of increasing costs. Continued
enhancements to our service and product offering drove strong demand and
supported the increase in our check-in NPS score to +50 (2023: +42).
We achieved occupancy of 97.5% across our total portfolio for the 2024/25
academic year (2023/24: 99.8%) as the market returned to more normal levels of
occupancy after two years of exceptional demand resulting from the surge in
student numbers during and immediately following the pandemic. The strength of
our relationships with universities, the quality and location of our portfolio
and focus on UK customers at affordable price points saw lettings outperform
the wider PBSA sector, where occupancy averaged around 94%.
Growing demand for student accommodation
The UK's universities attract young people from around the world for the
quality of learning and life experience they offer. This demand for university
education and our accommodation is structurally supported with the UK
population of 18-year-olds forecast to grow 11% (99,000) by 2030 (Source:
ONS). We are also seeing a return to growth in international demand for UK
Higher Education following disruption in 2024 caused by visa changes.
The latest UCAS data shows 2% growth in applications for the 2025/26 academic
year from UK 18-year-olds, our core customer demographic, which is supported
by population growth and strong application rates.
Resilient student demand
Overall, the undergraduate intake for 2024/25 increased by 2% to 565,000
(2023/24: 554,000) with a record number of UK 18-year-olds starting courses.
We have been deliberate in aligning our portfolio to high- and medium-tariff
universities, where the number of accepted applicants grew by 4% for the
2024/25 academic year. In contrast, lower tariff universities saw a 1%
reduction in acceptances, continuing the trend of the past decade where higher
tariff universities have captured a growing share of student demand. Our
portfolio is 93% aligned to Russell Group markets, where the number of
accepted students rose by 8% YoY and is now 16% above pre-pandemic levels.
Recruitment of international students was disrupted for 2024/25 by the removal
of visas for family members of postgraduate taught students, which became
effective in January 2024, and uncertainty created by the Government's review
of the Graduate Route in May 2024. This led to a 14% reduction in visas issued
to international students in 2024, ranging from a 5% reduction for Russell
Group universities to c.25% fewer for other universities. Encouragingly, more
recent data indicates a return to growth in international student numbers with
January 2025 intake up 14% year-over-year and 3% growth in international
applications through UCAS for the 2025/26 academic year.
Strong demand from universities
We have maintained a high proportion of income let to universities, with
38,326 beds (57% of total) provided under nomination agreements for 2024/25
(2023/24: 37,143 and 53%). The increase in the percentage of beds under
nomination agreements reflects universities' growing reliance on private
providers to meet their accommodation needs and our position as the partner of
choice. We saw further improvement in our university NPS score to +37 (2023:
+32), recognising the strength of our partnerships, sector-leading student
welfare offer, and thought leadership in the sector.
The unexpired term of our nomination agreements is 5.8 years, unchanged on
2023/24. A balance of nomination agreements and direct-let beds provides the
benefit of having income secured by universities, as well as the ability to
offer rooms to re-bookers and postgraduates and determine market pricing on an
annual basis. We expect to maintain nomination agreements between 50-60% of
beds going forward, providing significant income visibility.
67% of our nomination agreements, by income, are multi-year and therefore
benefit from annual fixed or inflation-linked uplifts based on RPI or CPI. The
remaining agreements are single year, and we achieved a renewal rate of 81%
with universities for 2024/25 where we offered to renew (2023/24: 89%). As
inflation moderates, we expect annual rental uplifts will return closer to
historical levels of 0.5-1.0% above CPI inflation.
Agreement length Beds % Income
2024/25 2024/25
Single year 12,812 33%
2-5 years 8,586 23%
6-10 years 4,308 11%
11-20 years 6,398 17%
20+ years 6,222 16%
Total 38,326 100%
UK students account for 72% of our customers for 2024/25 (2023/24: 72%),
making up a large proportion of the beds under nomination agreements with
universities. This represents a significant increase in our weighting to UK
students over recent years, compared to 60% immediately prior to the pandemic,
and reflects our success in retaining second- and third-year students who
might have historically moved into the HMO sector. The proportion of our
customers from outside the UK is unchanged at 28% (2023/24: 28), highlighting
the resilience of our strategy in a year when international demand was
disrupted.
Postgraduates make up 17% of our customer base and non-first year
undergraduates accounted for a further 27% of our bookings for the 2024/25
academic year (2023/24: 17% and 28%), reflecting the success of proactive
marketing to these groups. The growing appeal of our offering to postgraduate
and non-first year undergraduate students, who typically seek greater
independence, supports our strategy of increasing the segmentation of our
customer offer to capture market share from the traditional HMO sector.
Occupancy by type and domicile by academic year
Direct let
Nominations UK China EU Non-EU Total
2021/22 51% 21% 13% 3% 6% 94%
2022/23 52% 24% 14% 2% 7% 99%
2023/24 53% 24% 13% 2% 8% 100%
2024/25 57% 22% 13% 1% 5% 98%
Leasing trends normalising for 2025/26
Applications data for the 2025/26 academic year is encouraging, with
applications up 2% on 2024/25 from UK 18-year-olds who are our core customer
group. We continue to see strongest demand for the high-tariff universities to
which we have aligned our portfolio, where applications increased by 4%.
Applications from international students are 3% higher for 2025/26, with
particularly strong growth from China.
Across the Group's entire property portfolio, 70% of rooms are now reserved
for the 2025/26 academic year, which is in-line with our long-term leasing
pace. We have seen strong early demand from universities who see quality
accommodation as a key part of their offer to prospective students, including
new and extended multi-year nomination agreements for 7,000 beds.
We expect the normalisation of booking trends seen over the course of 2024 to
continue for the 2025/26 sales cycle with more bookings made later in the
cycle. Recent data releases on international student demand are encouraging
and we anticipate an acceleration in reservations over the coming months. Our
nominations and direct-let sales performance to date is supportive of our
guidance for 97-98% occupancy and rental growth of 4-5% for the 2025/26
academic year.
Cost pressures are easing
Cost growth slowed in 2024 as utility costs stabilised in the second half and
inflation moderated. Property operating costs increased by 8% in 2024 (2023:
14%), principally driven by staff costs due to wage increases linked to the
Real Living Wage and utility costs as a result of higher commodity prices
following the expiry of cheaper historical hedges.
Summer cleaning costs decreased by £0.4 million through in-sourcing activity,
which supported the improvement in our NPS score. Marketing costs reduced by
£0.3 million, reflecting fewer direct-let beds for sale and more targeted
investment in our commercial proposition. Central and other costs together
increased by £1.7 million driven by maintenance activity, growth in central
teams and council tax/HMO licences.
We expect further normalisation of cost growth in 2025 as utility growth slows
further and inflationary pressures subside. Increased National Insurance
contributions from April 2025 will cost the business around £2 million p.a.
and we have adopted the 5% increase in the Real Living Wage for relevant
roles. Our utility costs are fully hedged through 2025 and 35% for 2026, and
we expect a low single-digit percentage increase in the cost of utilities in
2025.
The combination of slowing cost growth and strong rental growth secured for
the 2024/25 academic year supports an improvement in our EBIT margin of around
50bps in 2025.
Property operating expenses breakdown 2024 2023 Change
£m £m
Staff costs (34.0) (29.7) 14%
Utilities (30.5) (26.9) 13%
Summer cleaning (5.3) (5.7) (7%)
Marketing (7.0) (7.3) (4%)
Central costs (18.0) (16.8) 7%
Other (27.1) (26.6) 2%
Property operating expenses (121.9) (113.0) 8%
Technology enhancing customer experience and margins
Our technology upgrade programme to enhance customer experience and drive
efficiencies delivered significant milestones in 2024 as we launched a new
student app and website, opened up new payment methods and launched a new
reward and benefit platform for our people. We will deliver new booking,
customer service, maintenance and finance platforms over the next two years,
which will support our strategic objectives of delivering a Great Place to
Live and Work. We expect to incur a further £15 million of costs in 2025 as
the programme continues to deliver change. We expect to achieve a payback on
our investment through enhanced utilisation of our portfolio and cost
efficiencies, which will increase our EBIT margin by around 1% over the medium
term.
PROPERTY REVIEW
Our property portfolio saw a 4.9% increase in valuations on a like-for-like
basis during the year (Unite share: 4.8%), as strong rental growth more than
offset the loss of Multiple Dwellings Relief (MDR) and increases in property
yields. The see-through net initial yield of the portfolio was 5.1% at 31
December 2024 (December 2023: 5.0%), which reflects like-for-like yield
expansion of 10 basis points in the year. We are encouraged by the
stabilisation of property yields in the year and an increase in transaction
volumes for PBSA.
Rental growth was particularly strong in our wholly owned portfolio following
accretive asset management projects and recognition of rental upside in two
buildings approaching the end of long-term nomination agreements. This was
partially offset by an increase in property yields for larger assets in prime
regional markets. The stronger valuation performance for LSAV reflects its
higher London weighting, where the loss of MDR was less impactful.
Like-for-like capital growth(1,2,3)
£m Valuation Rental Yield movement MDR / Capital expenditure Total
31 Dec 2024 growth Other(2)
Wholly owned 4,149 362 (107) (38) (52) 165
USAF 2,881 202 (10) (49) (25) 118
LSAV 2,058 150 (9) (5) (21) 115
Total (Gross) 9,088 714 (126) (92) (98) 398
Total (Unite share) 6,018 498 (114) (55) (70) 257
% capital growth
Wholly owned 10.1% (3.0%) (1.1%) (1.4%) 4.6%
USAF 7.7% (0.4%) (1.9%) (0.9%) 4.5%
LSAV 7.8% (0.4%) (0.3%) (1.1%) 6.0%
Total (Gross) 8.8% (1.5%) (1.2%) (1.2%) 4.9%
Total (Unite share) 9.3% (2.1%) (1.1%) (1.3%) 4.8%
1. Excludes leased properties and gains/losses on disposals
2. Other includes changes to operating cost assumptions and income adjustments
on reversionary assets
3. Excludes fire safety expenditure costs
The proportion of the property portfolio that is income generating is 93% by
value (31 December 2023: 97%) with properties under development increasing to
7% of the property portfolio by value (31 December 2023: 3%) due to the
acquisition of several development sites and capital expenditure for on-site
projects during the year. We expect the proportion of properties under
development to grow in 2025 as we build out the committed pipeline.
The PBSA investment portfolio is 38% weighted to London by value on a Unite
share basis, which is expected to rise above 40% on a built-out basis
following completion of our secured development pipeline.
Limited new supply
There is widespread acknowledgement from universities and local authorities of
the need for new student accommodation to support the growth of universities
and relieve pressure on housing supply in local communities. However, supply
conditions remain tight due to depressed levels of new development and a
declining supply of private housing (HMOs).
New supply of PBSA is down 60% on pre-pandemic levels, with around 11,000 beds
delivered in 2024 (Source: StuRents), reflecting viability challenges created
by higher build, regulation and funding costs. Weekly rents of around £200
are now required to make development viable outside London, significantly
above market rents in many cities and 80% of our regional portfolio. In
response to increasing costs, new supply is increasingly focused on higher
price studio accommodation and is targeting a different market segment to our
85% cluster-flat portfolio. Positively, we saw build cost inflation moderate
during the year, although the availability of skilled labour remains tight,
and costs remain around 50% higher than five years ago.
Planning timescales remain protracted due to limited planning resource for
local authorities, resulting in longer delivery programmes which challenge
viability. We expect the combination of complex planning, increasing
regulation, and higher build and funding costs to restrict the delivery of new
supply for several years.
Delivering new, high-quality student homes
Developing new high-quality accommodation in the most supply constrained
markets increases our alignment to the strongest universities and is a
significant driver of both earnings growth and total returns.
Our development pipeline includes 7,676 beds with a total development cost of
£1.5 billion, of which 100% is located in Russell Group cities, 60% by cost
will be delivered in London and 63% of beds are underpinned by a university
agreement.
The Building Safety Act 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 once embedded, putting pressure on returns and further slowing new
supply. Our appraisals and delivery targets reflect the expected impact of the
Act.
We have increased our return requirements for new investment to reflect higher
funding costs and increased delivery risks in the current environment. We now
are seeking development yields on new direct-let schemes at around 8% in
regional markets and 6.75-7.0% in London, approximately 25-50 basis points
higher than previous targets. 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.
Our focus is now on successfully delivering our secured pipeline and seeking
opportunities for further university joint ventures, including on-campus
projects and stock transfer, building on our successes over the past year.
Land prices will have to adjust further for traditional development projects
to meet our increased return requirements.
Completed schemes
During the year, we completed our 271-bed Bromley Place scheme in Nottingham
at a cost of £36 million. The programme was accelerated to achieve delivery
for the 2024/25 academic year and occupancy is expected to stabilise in
2025/26 with the benefit of a full leasing cycle. The project is tailored to
postgraduate students, with smaller cluster sizes, a higher share of studios
and an enhanced room specification. Through reusing the pre-existing façade,
the project's embodied carbon of c.670kg/m(2) is 45% below the RIBA baseline
of 1,200kg/m(2), making it our lowest carbon building to date.
Committed schemes - Off campus
We are committed to seven off-campus development schemes and our Newcastle
joint venture, totalling 6,570 beds and £1,048 million in total development
costs (Unite share). Once complete, the projects will add a combined £71
million to net operating income (Unite share).
We are on track to deliver two schemes for the 2025/26 academic year. At
Burnet Point in Edinburgh, we will deliver 298 beds in cluster-flats as well
as 103 beds in two- and three-bed clusters in a separate block. These smaller
flats will be available for postgraduate students, university staff and other
young professionals and form part of our BTR pilot. At Avon Point in Bristol,
50% of the 623-bed scheme will be nominated by the University of Bristol on a
long-term nominations agreement. The site is adjacent to the University of
Bristol's new Temple Quarter campus and will grow our portfolio in Bristol to
4,700 beds.
In Stratford, work is also underway at our Hawthorne House and Meridian Square
projects which will be delivered for the 2026/27 and 2028/29 academic years
respectively. The developments will be delivered as university partnerships,
with over half of the beds let under nomination agreements to our university
partners.
Early works are underway at our Central Quay project in Glasgow and we expect
to commit to the full build contract in the coming weeks, which supports
delivery in time for the 2027/28 academic year. During the year, we acquired
the 444-bed Kings Place project in London with the benefit of a full planning
consent. Demolition is now underway, and we expect to deliver the scheme for
the 2027/28 academic year.
University joint ventures
Co-investment in accommodation alongside a university has been an objective
for the business for several years. In February 2024, we announced an
agreement with Newcastle University to enter into a joint venture to develop
c.2,000 beds at the University's Castle Leazes site. The joint venture deepens
our 20-year relationship with Newcastle University through a long-term
strategic partnership. The existing halls are being demolished in anticipation
of the new development. We are providing 1,600 beds being provided to house
first-year students during the redevelopment. We submitted a joint planning
application with Newcastle University for the new scheme in the autumn and,
following delays in reaching agreement with a third party, now expect to open
the first phase of Castle Leazes for the 2028/29 academic year.
We are in the advanced stages of agreeing our second university joint venture
with Manchester Metropolitan University, which we expect to finalise in the
second quarter of 2025. The partnership will redevelop the University's
existing 770-bed Cambridge Halls accommodation adjacent to its campus in
Manchester city centre, which is now thirty years old and no longer meets
student needs. Subject to finalising the agreement and securing planning
approval, around 2,300 beds will be built on the site for delivery in 2029 and
2030. The proposed scheme offers a range of room types and price points for
students, including a new more affordable design concept.
We are in active discussions with a range of high-quality universities for
further partnerships, which we are looking to progress over the next 12-18
months. These include discussions around stock transfer and refurbishment of
existing university accommodation as well as new development both on- and
off-campus.
Future pipeline
Our secured pipeline includes an additional 1,106 beds for as yet uncommitted
schemes with total development costs of £305 million. We have optionality
over these schemes and will make decisions on whether to proceed based on
their risk-adjusted returns relative to other investment opportunities. In
January, planning was rejected for our TP Paddington development in London
despite being recommended for approval by planning officers, again
highlighting the challenges of delivering new supply in our strongest markets.
We are reviewing our options to secure planning and deliver a scheme in-line
with our return requirements.
Secured development and 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 %
Off-campus pipeline
Avon Point, Bristol Noms 2025 623 120 80 32 22 6 7.3%
Burnet Point, Edinburgh DL 2025 401 76 62 16 33 5 7.1%
Hawthorne House, Stratford³ Noms 2026 716 244 194 31 71 33 6.1%
Freestone Island, Bristol Noms 2027 500 111 76 16 58 18 7.4%
Central Quay, Glasgow Noms/DL 2027 934 164 126 18 107 30 7.4%
Kings Place, London DL 2027 444 238 167 68 99 46 6.6%
Meridian Square, Stratford Noms 2028 952 299 217 60 143 49 6.4%
Total off-campus pipeline 4,570 1,253 921 241 533 186 6.7%
University JV
Castle Leazes, Newcastle(2,4) JV 2028/29 2,000 291 250 10 240 16 7.3%
Total committed pipeline 6,570 1,401 1,171 251 773 202 6.8%
Future pipeline
TP Paddington, London(2) Noms 2029 605 178 2 171 6.0%
Elephant & Castle, London(2) Noms 2028 501 127 4 122 6.5%
Total future pipeline 1,106 305 6 293 6.2%
Total pipeline (gross) 7,676 1,475 258 1,066 6.7%
Total pipeline (Unite share) 1,353 252 949 6.7%
1. Direct-let (DL), Nominated (Noms) and Joint Venture (JV)
2. Subject to obtaining planning consent
3. Yield on cost assumes the sale of academic space for c.£45 million
4. Unite share 51%. Yield on cost includes management fees in NOI and deducts
development management fee from costs
Investment activity aligned to the strongest universities
Acquisitions
Higher interest rates have increased our cost of capital. This increases the
attractiveness of income today compared to income in the future, to which we
now apply a higher discount rate. As a result, acquisition opportunities which
are immediately income-generating have increased in attractiveness compared to
developments, which deliver income in future years.
We expect increasing volumes of PBSA assets to come to market in 2025 and are
focused on opportunities in our strongest markets aligned to high-quality
universities, where we see the ability to deliver attractive rental growth
over the long term.
Following our capital raise in July, we acquired seven assets for £244
million from USAF as part of a property swap. The acquired assets are located
in strong markets (Bristol, Cardiff and Liverpool) and offer value-add
opportunities through refurbishment as existing nominations expire over the
next two to three years.
During the year, we also acquired the freehold interest of a 260-bed property
in London for £37 million, which the Group had previously sold and leased
back, from the freeholder. The property was acquired at below replacement
cost, off affordable rents and we are planning a refurbishment upon expiry of
a nomination agreement in 2026.
Disposals
We continue to manage the quality of the portfolio and our balance sheet
leverage by recycling capital through disposals. During the year we completed
the sale of six properties to PGIM Real Estate for £184 million (Unite share:
£76 million). The disposals were priced at a blended 6.2% yield and in line
with book value after deductions for fire safety works.
Following our capital raise in July, we sold two assets to USAF for £120
million as part of a property swap. The assets, located in Bristol and
Liverpool, offer modern, high-quality accommodation with 58% of beds let under
university nomination agreements.
We will continue to recycle capital from disposals to maintain LTV around our
c.30% target and net debt: EBITDA in the 6-7x range. The level of planned
disposals will adjust to reflect capital requirements for our development and
asset management activity as well as market pricing. We will target future
disposals of around £100-150 million p.a. (Unite share).
Asset management
We see significant opportunities to create value through asset management
projects in our existing estate. Refurbishment ranges from smaller projects
focused on upgrading communal areas and energy efficiency, through to full
building refurbishment or more significant works such as extension or
redevelopment. These projects have shorter lead times than new developments,
often carried out over the summer period, and deliver both attractive
risk-adjusted returns and significant enhancements to the student experience.
In the year, we delivered 11 refurbishment projects in strong markets
alongside other building upgrades. Investment across the projects totalled
£48 million (Unite share: £39 million) and delivered a 10% yield on cost
through rental uplifts and operating cost savings. The projects delivered
additional beds, upgraded existing rooms and enhanced the environmental
performance of the properties.
We have a significant pipeline of attractive asset management and building
improvement opportunities and will accelerate investment to c.£65 million
(Unite share: £45 million) during 2025, improving the experience of around
3,000 students for the 2025/26 academic year.
Build-to-rent (BTR)
We believe there is an opportunity to grow our platform in the wider living
sector by catering to the growing number of young professional renters living
in major UK cities. Our pilot BTR asset in Stratford has performed well and is
integrated into our operating platform of 1,700 PBSA beds in the area.
During the period, we committed to the planned refurbishment of our 180
Stratford pilot asset. The project will deliver new amenity space as well as a
rolling refurbishment of the 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 continue to review BTR opportunities though do not expect to increase our
capital commitment in the short term.
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 completed fire safety improvements on
7 properties across our estate and spent £76 million (Unite share: £31
million) on fire safety capex during the year.
Our year-end balance sheet includes committed fire safety spend of £118
million (£62 million Unite share), the costs for which will be incurred over
the next two years. Of this, £6 million (£5 million Unite share) is included
in provisions and £112 million (£57 million Unite share) is deducted from
the fair value of our investment properties.
During the year, we reached agreement with contractors for recovery of £32
million of remediation costs (Unite share: £23 million) in relation to three
properties. In total, we have now agreed settlements totalling £72 million
(Unite share: £51 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
properties. 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.
FINANCIAL PERFORMANCE
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.
Earnings and adjusted earnings
We delivered a strong operating performance in 2024, with adjusted earnings
increasing by 16% to £213.8 million (2023: £184.3 million), reflecting an
increase in net operating income and a reduction in finance costs, when
compared to the prior year. Adjusted EPS increased by 5% to 46.6p (2023:
44.3p), reflecting the increased share count following the capital raise in
July.
2024 2023
£m £m
Rental income 398.0 369.5
Property operating expenses (121.9) (113.0)
Net operating income (NOI) 276.1 256.5
NOI margin 69.4% 69.4%
Management fees 17.3 16.9
Overheads (38.4) (33.1)
Finance costs (44.0) (55.1)
Development and other costs (9.1) (9.1)
EPRA earnings 201.9 176.1
SaaS implementation costs 11.9 8.2
Adjusted earnings 213.8 184.3
Adjusted EPS 46.6p 44.3p
EPRA EPS 44.0p 42.4p
EBIT margin 68.1% 68.0%
A reconciliation of profit after tax to EPRA earnings and adjusted earnings is
set out in note 2.2b to the financial statements.
IFRS profit before attributable to owners of the parent company increased to
£441.9 million in the year (2023: £102.5 million), reflecting the increase
in adjusted earnings of £29.5 million, a revaluation gain of £239.6 million
(2023: £61.2 million loss) and a £3.5 million loss for interest rate swaps
and cancellation costs (2023: £17.2 million loss).
2024 2023
£m £m
Adjusted earnings 213.8 184.3
SaaS implementation costs (11.9) (8.2)
EPRA earnings 201.9 176.1
Valuation gains/(losses) and profit/(loss) on disposal 239.6 (61.2)
Changes in valuation of interest rate swaps and debt break costs (3.5) (17.2)
Non-controlling interest and other items 6.0 4.8
IFRS profit before tax 444.0 102.5
Adjusted earnings per share 46.6p 44.3p
IFRS diluted earnings per share 96.1p 24.6p
A reconciliation of profit before tax to adjusted earnings and EPRA earnings
is expanded in section 7 of the financial statements.
Rental growth and profitability
Rental income increased by £28.5 million to £398.0 million, up 8% compared
to 2023. Like-for-like rental income, excluding the impact of major
refurbishments, acquisitions, disposals and development completions, increased
by 8% during the year reflecting strong rental growth but modestly lower
occupancy for the 2024/25 academic year. Non-like-for-like income grew by
£4.3 million with additional rental income from acquisitions and development
completions exceeding the impact of income forgone through disposals.
Operating expenses increased by 6% for like-for-like properties, primarily
driven by increased utility and staff costs due to the expiry of cheaper
utility hedges and increases in the Real Living Wage.
This resulted in an 8% increase in net operating income to £276.1 million
(2023: £256.5 million) or 8% on a like-for-like basis.
FY 2024 FY 2023 YoY change
£m Wholly- owned Share of Fund/JV Total Wholly- owned Share of Fund/JV Total £m %
Rental income
Like-for-like properties 254.5 91.2 345.7 237.8 83.7 321.5 24.2 8%
Non-like-for-like properties 27.5 24.8 52.3 21.4 26.6 48.0 4.3
Total rental income 282.0 116.0 398.0 259.2 110.3 369.5 28.5 8%
Property operating expenses
Like-for-like properties (78.0) (28.4) (106.4) (74.5) (25.5) (100.0) (6.5) 6%
Non-like-for-like properties (9.2) (6.3) (15.5) (5.3) (7.7) (13.0) (2.5)
Total property operating expenses (87.2) (34.7) (121.9) (79.8) (33.2) (113.0) 8.9 8%
Net operating income
Like-for-like properties 176.5 62.8 239.3 163.3 58.2 221.5 17.8 8%
Non-like-for-like properties 18.3 18.5 36.8 16.1 18.9 35.0 1.8
Total net operating income 194.8 81.3 276.1 179.4 77.1 256.5 19.6 8%
Overheads increased by £5.3 million, primarily reflecting investment into our
technology platform. Excluding the impact of Software as a Service
implementation costs, as underlying overheads decreased by £0.3 million.
During the year SaaS implementation costs relating to our technology upgrade
programme of £15.9 million were incurred and a deferred tax credit of £4.0
million (2023: £11.0 million and £2.8 million). Recurring management fee
income from joint ventures increased to £17.3 million (2023: £16.9 million),
driven by increased property valuations and NOI in USAF and LSAV.
Our EBIT margin increased slightly to 68.1% (2023: 68.0%), reflecting the
offsetting impact of increases in rental income and operating costs. We are
targeting up to 50bps improvement in our EBIT margin in 2025, driven by rental
growth, completions of development and asset management projects and
efficiencies delivered through procurement and the enhanced use of technology.
We expect these factors to more than offset the impact of increases in staff
costs linked to higher National Insurance contributions and increases in the
Real Living Wage.
Finance costs reduced to £44.0 million in 2024 (2023: £55.1 million) with
the impact of lower borrowings following our capital raise more than
offsetting the impact of an increase in our average cost of debt to 3.6%
(2023: 3.3%) due to refinancing activity and higher rates on new debt.
Capitalised interest linked to our development pipeline increased to £15.5
million (2023: £8.4 million) due to increasing levels of development
activity.
EPRA NTA growth
EPRA net tangible assets (NTA) per share, our key measure of NAV, increased by
6% to 972p at 31 December 2024 (31 December 2023: 920p). EPRA net tangible
assets were £4,758 million at 31 December 2024, a £743 million increase from
£4,015 million in the prior year.
The main drivers of the £743 million increase in EPRA NTA and 52p increase in
EPRA NTA per share were our capital raise and retained profits and valuation
gains on our investment and development portfolio, which were partially offset
by further deductions for fire safety capex.
£m Diluted pence per share
EPRA NTA as at 31 December 2023 4,015 920
Investment portfolio 416 85
Yield movement (114) (23)
Multiple Dwellings Relief (55) (11)
Development portfolio 20 4
Fire safety capex net of claims (17) (3)
Capital raise 442 (9)
Other 51 9
EPRA NTA as at 31 December 2024 4,758 972
IFRS net assets increased by 18% in the year to £4,812 million (31 December
2023: £4,067 million), principally driven by net proceeds from the capital
raise, valuation gains and retained profits. On a per share basis, IFRS NAV
increased by 5% to 982p.
Property portfolio
The valuation of our property portfolio at 31 December 2024, including our
share of property assets held in USAF and LSAV, was £6,375 million (31
December 2023: £5,770 million). The £605 million increase in portfolio value
reflects the valuation movements outlined above, capital expenditure and
interest capitalised on developments.
Summary balance sheet
31 December 2024 31 December 2023
Wholly- owned £m Share of fund/JV £m Total Wholly- owned £m Share of fund/JV £m Total
£m £m
Rental properties(1) 4,025 1,827 5,852 3,728 1,782 5,510
Rental properties (leased) 72 - 72 85 - 85
Properties under development 451 - 451 175 - 175
Total property 4,588 1,827 6,375 3,988 1,782 5,770
Net debt (989) (521) (1,510) (1,030) (541) (1,571)
Lease liability (73) - (73) (84) - (84)
Other assets/(liabilities) 1 (35) (34) (49) (51) (100)
EPRA net tangible assets 3,487 1,271 4,758 2,825 1,190 4,015
IFRS NAV 3,547 1,265 4,812 2,848 1,219 4,067
LTV 24% 28%
1. Rental properties (owned) includes assets classified as held for sale in
the IFRS balance sheet
Return on equity (total accounting return)
Dividends paid of 36.0p (2023: 33.5p), together with growth in EPRA NTA,
resulted in a total accounting return of 9.6% in the year (2023: 2.9%). Our
adjusted EPS yield (measured against opening EPRA NTA) increased to 5.1% in
the year (2023: 4.8%), reflecting the growth in our recurring earnings.
We expect to deliver a total accounting return of 8-10% in 2025 before the
impact of any property yield movements. This reflects our expectation of
growing recurring earnings, rental growth for the 2025/26 academic year and
valuation uplifts from our development and asset management pipeline.
Cash flow and net debt
The business generated £61 million of net cash in 2024 (2023: £176 million)
and net debt reduced to £1,510 million (2023: £1,571 million). The key
components of the movement in net debt were:
· Capital raise gross proceeds of £450 million
· Operational cash flow of £216 million on a see-through basis
· Acquisitions net of disposals of £63 million on a see-through
basis
· Total capital expenditure of £360 million on a see-through basis
· Dividends paid of £137 million
· A £46 million net outflow for other items
In 2025, we expect see-through net debt to increase as planned capital
expenditure on investment and development activity will exceed anticipated
property disposals.
Debt financing and liquidity
During the year, borrowing rates for new debt remained high, as markets
adjusted to a 'higher for longer' interest rate environment. We are well
protected from significant increases in borrowing costs for our existing debt
through our well-laddered debt maturity profile and forward hedging of
interest rates. However, we still expect to see our borrowing costs increase
over time as we refinance in-place debt and draw new borrowings at higher
prevailing rates.
We are focused on maintaining a strong and flexible balance sheet and will
continue to use leverage to support our growth and enhance risk-adjusted
returns. In response to the higher interest rate environment, we reduced our
medium-term target LTV to c.30% on a built-out basis (previously 30-35%). LTV
reduced to 24% at 31 December 2024 (31 December 2023: 28%), reflecting lower
net debt and increases in our property valuations.
We also continue to monitor our interest cover and net debt to EBITDA ratios.
In 2024, interest cover improved to 6.2x (2023: 4.6x) and net debt to EBITDA
reduced to 5.5x (2023: 6.1x), reflecting both the improved operational
performance of the business and the impact of lower leverage. We aim to
maintain an ICR ratio of 3.5-4.0x and a net debt to EBITDA ratio of 6-7x.
We remain committed to active portfolio management through capital recycling
and will continue to target disposals of around £100-150 million p.a. (Unite
share).
Following our capital raise, The Unite Group credit rating was upgraded to
BBB+ by Standard & Poor's reflecting our lower leverage targets, robust
capital position, growing cash flow and track record.
Key debt statistics (Unite share basis) 31 Dec 2024 31 Dec 2023
See-through net debt £1,510m £1,571m
LTV 24% 28%
Net debt: EBITDA ratio 5.5x 6.1x
Interest cover ratio 6.2x 4.6x
Average debt maturity 3.8 years 3.8 years
Average cost of debt 3.6% 3.3%
Proportion of investment debt at fixed rate 100% 100%
Funding activity
As at 31 December 2024, the wholly-owned Group had £1,024 million of cash and
debt headroom (31 December 2023: £579 million), comprising £274 million of
drawn cash balances and £750 million of undrawn debt (2023: £29 million and
£550 million respectively).
In February 2024, we increased our revolving debt capacity by £150 million to
£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 new loans
increase investment capacity and provide flexibility to capitalise on growth
opportunities.
The Group established a £2 billion Euro Medium Term Note (EMTN) Programme
during the year. Following establishment of the programme, the Group issued a
£400 million eight-year bond in June bearing a 5.625% coupon. In November,
the proceeds of the bond were partially used to repay the maturing £300
million Liberty Living bond with the balance held for general corporate
purposes.
During the year, 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 agreed terms with a lender for the refinancing of the USAF £395
million bond due to mature in June 2025, which we expect to complete in the
coming months.
Interest rate hedging arrangements and cost of debt
Our average cost of debt increased to 3.6% in the year (2023: 3.3%) as new
debt was issued at higher prevailing rates. At the year-end, 100% of the
Group's debt was subject to fixed or capped interest rates (31 December 2023:
100%), providing protection against future changes in interest rates. Based on
our hedging position, forecast drawings, planned refinancing and market
interest rates, we expect an average cost of debt of 4.1% for 2025 and 4.5%
for 2026. Reflecting an increased level of development activity, we expect a
corresponding increase in capitalised interest in 2025 to around £25-30
million (2024: £15.5 million).
Our average debt maturity is unchanged at 3.8 years (31 December 2023: 3.8
years) and we continue to proactively manage our debt maturity profile and
diversify our lending base.
Dividend
We are proposing a final dividend payment of 24.9p per share (2023: 23.6p),
totalling 37.3p for the full year (2023: 35.4p) and representing a 5% increase
compared to 2023. This represents a payout ratio of 80% of adjusted EPS. The
final dividend will be fully paid as a Property Income Distribution (PID) of
24.9p, which we expect to fully satisfy our PID requirement for the 2024
financial year.
Subject to approval at Unite's Annual General Meeting on 15 May 2025, the
dividend will be paid in either cash or new ordinary shares (a 'scrip dividend
alternative') on 30 May 2025 to shareholders on the register at close of
business on 22 April 2025. The last date for receipt of scrip elections will
be 8 May 2025.
During 2024, scrip elections were received for 26% and 1% of shares in issue
for the 2023 final dividend and 2024 interim dividend respectively. Further
details of the scrip scheme, the terms and conditions and the process for
election are available on the Company's website.
We plan to distribute 80% of adjusted EPS as dividends for the 2025 financial
year.
Tax and REIT status
The Group holds REIT status and is exempt from tax on its property business.
During the year, we recognised a corporation tax charge of £5.0 million
(2023: £1.2 million charge) with the increase primarily due to higher taxable
profits from interest income.
Funds and joint ventures
The table below summarises the key financials at 31 December 2024 for our
co-investment vehicles USAF and LSAV.
Property assets Net debt Other Net assets Unite share of NTA Total return Maturity Unite share
liabilities
£m £m £m £m £m
USAF 2,848 (696) (78) 2,074 604 8.5% Infinite 29%
LSAV 1,994 (636) (25) 1,333 666 10.3% 2032 50%
Property valuations increased by 4.5% for USAF and 6.0% in LSAV over the year,
on a like-for-like basis, with rental growth more than offsetting the loss of
Multiple Dwellings Relief. Property yields remained broadly stable across both
portfolios.
USAF is a high-quality, large-scale portfolio of 24,326 beds in leading
university cities. The fund has positive future prospects through rental
growth and investment opportunities in asset management initiatives in its
existing portfolio. USAF, in-line with other non-listed property funds, has
received redemption requests which are expected to be fulfilled by mid-2025
from the proceeds of the recently completed asset swap and planned disposals.
Fees
During the year, the Group recognised net fees of £17.3 million from its fund
and asset management activities (2023: £16.9 million). The increase in fee
income is due to growing income and property valuations, partially offset by
lower third-party assets under management following redemptions in USAF during
the year.
2024 2023
£m £m
USAF asset management fee 12.4 12.1
LSAV asset and property management fee 4.9 4.8
Total fees 17.3 16.9
Responsibility statement of the directors in respect of the annual financial
report
We confirm that to the best of our knowledge:
· The financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the company and
the undertakings included in the consolidation taken as a whole
· The strategic report includes a fair review of the development
and performance of the business and the position of the company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face
· The annual report and financial statements, taken as a whole, are
fair, balanced and understandable and provide the information necessary for
shareholders to assess the Group's position and performance, business model
and strategy.
Joe Lister
Michael Burt
Chief Executive
Chief
Financial Officer
25 February 2025
Forward-looking statements
The preceding preliminary statement has been prepared for the shareholders of
the Company, as a body, and for no other persons. Its purpose is to assist
shareholders of the Company to assess the strategies adopted by the Company
and the potential for those strategies to succeed and for no other purpose.
The preliminary statement contains forward-looking statements that are subject
to risk factors associated with, among other things, the economic, regulatory
and business circumstances occurring from time to time in the sectors and
markets in which the Group operates. It is believed that the expectations
reflected in these statements are reasonable, but they may be affected by a
wide range of variables that could cause actual results to differ materially
from those currently anticipated. No assurances can be given that the
forward-looking statements will be realised. The forward-looking statements
reflect the knowledge and information available at the date of preparation.
Nothing in the preliminary statement should be considered or construed as a
profit forecast for the Group. Except as required by law, the Group has no
obligation to update forward-looking statements or to correct any inaccuracies
therein.
Primary statements
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in shareholders' equity
Statement of cash flows
Section 1: Basis of preparation
Section 2: Results for the year
2.1 Segmental information
2.2 Earnings
2.3 Net assets
2.4 Revenue and costs
2.5 Tax
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 Net financing costs
4.4 Gearing
4.5 Covenant compliance
4.6 Equity
4.7 Dividends
Section 5: Working capital
5.1 Cash and cash equivalents
5.2 Credit risk
5.3 Provisions
Section 6: Post balance sheet events
Section 7: Alternative performance measures
Glossary
Company information
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2024
2024 2023
Note £m £m
Rental income 2.4 282.0 259.2
Other income 2.4 17.3 16.9
Total revenue 299.3 276.1
Cost of sales (86.4) (76.8)
Operating expenses (43.9) (41.6)
Expected credit losses (0.9) (3.0)
Results from operating activities before (losses)/gains on property 168.1 154.7
Profit/(loss) on disposal of property (9.8) 11.8
Net valuation gains/(losses) on property (owned and under development) 3.1 186.7 (37.2)
Net valuation losses on property (leased) 3.1 (1.9) (10.4)
Profit before net financing (costs)/gains and share of joint venture profit 343.1 118.9
Loan interest and similar charges 4.3 (19.4) (19.8)
Interest on lease liability 4.3 (8.8) (7.7)
Mark to market changes in interest rate swaps 4.3 (0.4) (17.2)
Swap cancellation and loan break costs 4.3 (3.1) -
Finance (costs) (31.7) (44.7)
Finance income 4.3 16.7 1.3
Net financing (costs)/gains (15.0) (43.4)
Share of joint venture profit 3.4b 115.9 27.0
Profit before tax 444.0 102.5
Current tax 2.5a (4.8) (1.2)
Deferred tax 2.5a 2.6 2.3
Profit for the year 441.8 103.6
Profit for the year attributable to
Owners of the Parent Company 441.9 102.5
Non-controlling interest (0.1) 1.1
441.8 103.6
Earnings per share
Basic 2.2c 96.3p 24.7p
Diluted 2.2c 96.1p 24.6p
All results are derived from continuing activities.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2024
Note 2024 2023
£m £m
Profit for the year 441.8 103.6
Share of joint venture movements in effective hedges 3.4b (2.3) (2.1)
Other comprehensive income for the year (2.3) (2.1)
Total comprehensive income for the year 439.5 101.5
Attributable to
Owners of the Parent Company 439.6 100.4
Non-controlling interest (0.1) 1.1
439.5 101.5
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 31 December 2024 Note 2024 2023 2022
£m £m £m
Assets
Investment property (owned) 3.1 4,025.5 3,694.3 3,623.4
Investment property (leased) 3.1 71.8 84.7 90.3
Investment property under development 3.1 451.4 174.7 202.7
Investment in joint ventures 3.4b 1,265.0 1,219.0 1,226.6
Other non-current assets 3.3b 14.8 12.7 15.4
Interest rate swaps 4.2 46.0 56.0 73.2
Right-of-use assets 3.3a 4.7 1.7 2.7
Deferred tax asset 2.5d 8.2 5.6 3.6
Total non-current assets 5,887.4 5,248.7 5,238.0
Assets classified as held for sale 3.1 92.6 25.7 -
Interest rate swaps 4.2 7.4 -
Inventories 3.2 13.6 26.2 12.8
Trade and other receivables 144.6 132.8 105.2
Cash and cash equivalents 5.1 274.3 37.5 38.0
Total current assets 532.5 222.2 156.0
Total assets 6,419.9 5,470.9 5,393.9
Liabilities
Current borrowings 4.1 - (299.4) -
Lease liabilities 4.6a (6.0) (5.4) (4.8)
Trade and other payables (255.5) (207.8) (191.5)
Current tax liability/(asset) (1.2) 0.6 (0.8)
Provisions 5.3 (5.1) (5.2) (29.5)
Total current liabilities (267.8) (517.2) (226.6)
Borrowings 4.1 (1,273.8) (782.2) (1,265.9)
Lease liabilities 4.6a (66.8) (78.4) (87.5)
Total non-current liabilities (1,340.6) (860.6) (1,353.4)
Total liabilities (1,608.4) (1,377.8) (1,580.0)
Net assets 4,811.5 4,093.1 3,813.9
Equity
Issued share capital 4.6 122.2 109.4 100.1
Share premium 4.6 2,876.9 2,447.6 2,162.0
Merger reserve 40.2 40.2 40.2
Retained earnings 1,770.8 1,466.0 1,479.0
Hedging reserve 1.4 3.8 6.2
Equity attributable to the owners of the Parent Company 4,811.5 4,067.0 3,787.5
Non-controlling interest - 26.1 26.4
Total equity 4,811.5 4,093.1 3,813.9
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended 31 December 2024
Note Attributable to owners of the
Issued share Share premium Merger reserve Retained earnings Hedging reserve Parent Non-controlling interest
capital £m £m £m £m £m £m Total
£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
Profit/(loss) for the year - - - 441.9 - 441.9 (0.1) 441.8
Other comprehensive income
for the year:
Share of joint venture mark to market movements on hedged instruments 3.4b - - - - (2.3) (2.3) - (2.3)
Total comprehensive income/(loss) - - - 441.9 (2.3) 439.6 (0.1) 439.5
for the year
Shares issued 4.8 12.8 429.3 - - - 442.1 - 442.1
Deferred tax on share-based payments - - - 0.1 - 0.1 - 0.1
Fair value of share-based payments - - - 2.1 - 2.1 - 2.1
Own shares acquired - - - (1.5) - (1.5) - (1.5)
Unwind of realised swap gain - - - - (0.1) (0.1) - (0.1)
Dividends paid to owners 4.7 - - - (137.8) - (137.8) - (137.8)
of the parent company
Disposals of non-controlling interest - - - - - - - (26.0) (26.0)
At 31 December 2024 122.2 2,876.9 40.2 1,770.8 1.4 4,811.5 - 4,811.5
Note Attributable to owners of the
Issued share Share premium Merger reserve Retained earnings Hedging reserve parent Non-controlling interest
capital £m £m £m £m £m £m Total
£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:
Share of joint venture mark to market movements on hedged instruments 3.3b - - - - (2.1) (2.1) - (2.1)
Total comprehensive income/(loss) - - - 102.5 (2.1) 100.4 1.1 101.5
for the year
Shares issued 4.6 9.3 285.6 - - - 294.9 - 294.9
Deferred tax on share-based payments - - - 0.2 - 0.2 - 0.2
Fair value of share-based payments - - - 2.2 - 2.2 - 2.2
Own shares acquired - - - (0.6) - (0.6) - (0.6)
Unwind of realised swap gain - - - - (0.3) (0.3) - (0.3)
Dividends paid to owners 4.7 - - - (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
For the year ended 31 December 2023
STATEMENT OF CASH FLOWS
For the year ended 31 December 2024
Note 2024 2023
£m £m
Net cash flows from operating activities 5.1 216.4 153.2
Investing activities
Redemption of minority interest 27.9 -
Payments for investment property (347.8) -
Capital expenditure on properties (267.9) (135.3)
Acquisition of intangible assets (5.1) (1.8)
Acquisition of plant and equipment (2.5) (0.9)
Proceeds from sale of investment property 123.1 -
Interest received 16.7 1.3
Dividends received 27.6 27.3
Net cash flows from investing activities (428.0) (109.4)
Financing activities
Proceeds from the issue of share capital 442.0 294.9
Payments to acquire own shares (1.5) (0.6)
Interest paid in respect of financing activities (35.6) (31.1)
Repayment of lease liabilities (8.8) (7.7)
Swap cancellation and loan break costs (3.1) -
Proceeds from non-current borrowings 543.7 -
Repayment of borrowings (350.5) (182.5)
Dividends paid to the owners of the parent company (124.2) (103.4)
Withholding tax paid on distributions (13.6) (12.0)
Dividends paid to non-controlling interest - (1.9)
Net cash flows from financing activities 448.4 (44.3)
Net increase/(decrease) in cash and cash equivalents 236.8 (0.5)
Cash and cash equivalents at start of year 37.5 38.0
Cash and cash equivalents at end of year 274.3 37.5
NOTES TO THE FINANCIAL STATEMENTS
Section 1: Basis of preparation
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2024 or 2023 but is derived
from those accounts. Statutory accounts for 2023 have been delivered to the
Registrar of Companies, and those for 2024 will be delivered in due
course. The auditors have reported on those accounts; their reports were (i)
unqualified (ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006 in respect of the accounts for 2024 or 2023.
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 2024/5 and 2025/26 academic years. This included a base case
assuming cash collection and performance for the 2024/25 academic year remains
in line with current expectations and sales performance for the 2025/26
academic year consistent with published guidance; and a reasonable worst-case
scenario where income for the 2025/26 academic year is impacted by reduced
sales, equivalent to occupancy of around 90%.
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 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 50% in the Group and 70% in
the funds before there would be a breach. The Group has capacity for property
valuations to fall by around 70% in the Group and 40% in the funds 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.
Apart from the undrawn RCF, £150m of which matures in March 2026, there is no
borrowing maturity in the wholly-owned group until 2027. Refinancing for the
USAF £395m secured bond is well progressed in advance of its maturity in June
2025. The LSAV Bank of America loan has two extension options at the
borrower's discretion. The Group are currently in the process of extending
which will take the maturity out to May 2026
The Directors have considered the impact of climate change in the context of
our strategic report and the Group's target of net zero carbon emissions by
2030. These considerations did not have a material impact on our financial
reporting. There is limited exposure and vulnerability of climate change on
the Group's investment property portfolio, carrying value of non-current
assets, and the estimates of future profitability used in our assessment of
the recoverability of deferred tax assets.
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.
Section 2: Results for the year
IFRS performance measures
2024 2023 2024 2023
£m
£m
pps
pps
Note
Profit after tax 2.2b 441.9 102.5 96.3p 24.7p
Net assets 2.3d 4,811.5 4,067.0 982p 931p
EPRA performance measures
2024 2023 2024 2023
£m
£m
pps
pps
Note
EPRA earnings 2.2c 201.9 176.1 44.0p 42.4p
Adjusted earnings* 2.2c 213.8 184.3 46.6p 44.3p
EPRA NTA 2.3d 4,758.4 4,014.7 972p 920p
* See glossary for definition and note 2.2b for reconciliation to IFRS
measure.
2.1 Segmental information
The Board of Directors monitors the business along two activity lines:
· 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. 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 Group's 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.
· 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.
The reportable segments for the years ended 31 December 2024 and 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 cost, 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 in 2021. The reconciliation between profit attributable to owners of
the Company and EPRA earnings is available in note 2.2b.
2.2a) EPRA earnings
2024
Unite Share of joint ventures Group on
EPRA basis
£m
Total
£m
USAF LSAV Total
£m £m £m
Rental income 282.0 59.0 57.0 116.0 398.0
Property operating expenses (87.2) (20.7) (14.0) (34.7) (121.9)
Net operating income 194.8 38.3 43.0 81.3 276.1
Management fees 21.9 (4.6) - (4.6) 17.3
Overheads (37.5) (0.5) (0.4) (0.9) (38.4)
Interest on lease liabilities (8.8) - - - (8.8)
Net financing costs (6.9) (11.5) (16.8) (28.3) (35.2)
Operations segment result 163.5 21.7 25.8 47.5 211.0
Property segment result (3.8) - - - (3.8)
Unallocated to segments (4.8) (0.2) (0.3) (0.5) (5.3)
EPRA earnings 154.9 21.5 25.5 47.0 201.9
Software as a service cost 11.9 - - - 11.9
Adjusted earnings 166.8 21.5 25.5 47.0 213.8
Included in the above is rental income of £20.3 million and property
operating expenses of £11.5 million relating to sale and leaseback
properties. Included in the above is also rental income of £4.0 million and
property operating expenses of £1.2 million, relating to a build-to-rent
property. Unallocated to segments includes the fair value of share-based
payments of (£2.3 million), contributions to the Unite Foundation and social
causes of (£0.6 million), a deferred tax credit of £2.6 million and a
current tax charge of (£5.1 million). Depreciation and amortisation totalling
(£5.7 million) is included within overheads. The software as a service costs
are presented net of deferred tax of £4.0 million.
2023
Unite Share of joint ventures Group on
EPRA basis
Students
Total
£m
£m
USAF LSAV Total
£m £m £m
Rental income 259.2 57.5 52.8 110.3 369.5
Property operating expenses (79.8) (20.0) (13.2) (33.2) (113.0)
Net operating income 179.4 37.5 39.6 77.1 256.5
Management fees 21.4 (4.5) - (4.5) 16.9
Overheads (32.2) (0.4) (0.5) (0.9) (33.1)
Interest on lease liabilities (7.7) - - - (7.7)
Net financing costs (22.9) (9.4) (15.1) (24.5) (47.4)
Operations segment result 138.0 23.2 24.0 47.2 185.2
Property segment result (2.7) - - - (2.7)
Unallocated to segments (6.0) (0.2) (0.2) (0.4) (6.4)
EPRA earnings 129.3 23.0 23.8 46.8 176.1
Software as a service cost 8.2 - - - 8.2
Adjusted earnings 137.5 23.0 23.8 46.8 184.3
Included in the above is rental income of £19.0 million and property
operating expenses of £10.2 million relating to sale and leaseback
properties. Included in the above is also rental income of £3.8 million and
property operating expenses of £1.2 million, relating to a build-to-rent
property. Unallocated to segments includes the fair value of share-based
payments of (£3.4 million), costs due to leadership changes of (£2.9
million), contributions to the Unite Foundation and social causes of (£1.6
million), a deferred tax credit of £2.5 million and current tax charge of
(£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 of £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
disposal of properties and swap/debt break costs which are included in the
profit reported under IFRS. EPRA earnings and adjusted earnings reconcile to
the profit attributable to owners of the Company as follows:
Note 2024 2023
£m £m
(Loss)/profit attributable to owners of the Parent Company 441.9 102.5
Net valuation (gains)/losses on investment property (owned) 3.1 (186.7) 37.2
Losses/(gains) on property disposals (owned) 9.8 (11.8)
Net valuation losses on investment property (leased) 3.1 1.9 10.4
Amortisation of fair value of debt recognised on acquisition (4.1) (4.3)
Share of joint venture (gains)/losses on investment property 3.4b (67.0) 21.9
Share of joint venture property disposals 3.4b 2.4 3.5
Swap cancellation and loan break costs 4.3 3.1 -
Mark to market changes on interest rate swaps 4.3 0.4 17.2
Current tax relating to property disposals 0.2 (0.1)
Deferred tax 2.5d - (0.2)
Non-controlling interest share of reconciling items* - (0.2)
EPRA earnings 201.9 176.1
Software as a service cost previously capitalised 11.9 8.2
Adjusted earnings 213.8 184.3
* The non-controlling interest, arises as a result of the Company not owning
100% of the share capital of one of its subsidiaries, USAF (Feeder) Guernsey
Limited. This non-controlling interest was disposed of in 2024. More detail is
provided in note 3.4.
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 basic, EPRA EPS and adjusted EPS for the year ended 31
December 2024 and 2023 are as follows:
2024 2023 2024 2023
£m
£m
pps
pps
Note
Earnings
Basic 441.9 102.5 96.3p 24.7p
Diluted 96.1p 24.6p
EPRA 2.2b 201.9 176.1 44.0p 42.4p
Diluted EPRA 43.9p 42.2p
Adjusted earnings 2.2b 213.8 184.3 46.6p 44.3p
Diluted adjusted earnings 46.5p 44.2p
2024 2023
Weighted average number of shares (thousands)
Basic 458,969 415,733
Dilutive potential ordinary shares (share options) 1,087 1,165
Diluted 460,056 416,898
Movements in the weighted average number of shares have resulted from the
issue of shares arising from the capital raise in July 2024, employee
share-based payment schemes and the scrip dividend.
In 2024, there were 37,319 options excluded from the potential dilutive shares
that did not affect the diluted weighted average number of shares (2023:
16,505).
2.3 Net assets
2.3a) EPRA NTA
EPRA NTA 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.
2024 Unite Share of joint ventures Group on
EPRA basis
Students
£m
USAF LSAV Total Total
£m £m £m £m
Investment properties (owned)* 4,025.5 829.6 996.9 1,826.5 5,852.0
Investment properties (leased) 71.8 - - - 71.8
Investment properties (under development) 451.4 - - - 451.4
Total property portfolio 4,548.7 829.6 996.9 1,826.5 6,375.2
Debt on properties (1,263.7) (273.1) (338.0) (611.1) (1,874.8)
Lease liabilities (72.8) - - - (72.8)
Cash 274.3 70.4 20.0 90.4 364.7
Net debt (1,062.2) (202.7) (318.0) (520.7) (1,582.9)
Other assets and (liabilities) 11.7 (22.6) (12.6) (35.2) (23.5)
EPRA net assets 3,498.2 604.3 666.3 1,270.6 4,768.8
Intangible assets (10.4) - - - (10.4)
EPRA NTA 3,487.8 604.3 666.3 1,270.6 4,758.4
Loan to value** 22% 24% 32% 29% 24%
Loan to value post IFRS 16 23% 24% 32% 29% 25%
2023 Unite Share of joint ventures Group on
EPRA basis
Students
£m
Total
£m
USAF LSAV Total
£m £m £m
Investment properties (owned)* 3,727.8 827.8 954.7 1,782.5 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 1,782.5 5,769.7
Debt on properties (1,067.6) (243.5) (337.0) (580.5) (1,648.1)
Lease liabilities (83.8) - - - (83.8)
Cash 37.5 18.2 21.5 39.7 77.2
Net debt (1,113.9) (225.3) (315.5) (540.8) (1,654.7)
Other assets and (liabilities) (39.0) (22.3) (29.7) (52.1) (91.0)
EPRA NTA 2,834.3 580.2 609.5 1,189.7 4,024.0
Intangible assets (9.3) - - - (9.3)
Net Tangible Assets
Net Tangible Assets 2,825.0 580.2 609.5 1,189.7 4,014.7
Loan to value** 26% 27% 33% 30% 28%
Loan to value post IFRS 16 28% 27% 33% 30% 29%
* Investment property (owned) includes assets classified as held for sale in
the IFRS balance sheet.
** LTV calculated excluding investment properties (leased) and the
corresponding lease liabilities.
2.3b) Movement in EPRA NTA during the year
Contributions to EPRA NTA by each segment during the year is as follows:
2024
Note Unite Students Share of joint ventures Group on
EPRA basis
£m
Total
£m
USAF LSAV Total
£m £m £m
Operations
Operations segment result 2.2a 163.5 21.7 25.8 47.5 211.0
Add back amortisation of intangibles 3.3b 4.0 - - - 4.0
Total Operations 167.5 21.7 25.8 47.5 215.0
Property
Rental growth 269.6 29.7 46.4 76.1 345.7
Yield movement (107.0) (2.8) (4.3) (7.1) (114.1)
Disposals (losses) (5.5) (2.4) - (2.4) (7.9)
Investment property gains (owned) 157.1 24.5 42.1 66.6 223.7
Investment property loss (leased) 3.1a (1.9) - - - (1.9)
Disposals losses investment property (leased) (4.3) - - - (4.3)
Investment property gains (under development) 3.1a 24.1 - - - 24.1
Pre-contract/other development costs 2.2a (3.8) - - - (3.8)
Total Property 171.2 24.5 42.1 66.6 237.8
Unallocated
Shares issued 442.1 - - - 442.1
Investment in joint ventures 28.3 (18.7) (9.6) (28.3) -
Dividends paid (137.8) - - - (137.8)
Swap cancellation and debt break costs (3.5) - - - (3.5)
Purchase of intangibles (5.1) - - - (5.1)
Share based payment charge (2.4) - - - (2.4)
Other 2.5 (3.4) (1.5) (4.9) (2.4)
Total Unallocated 324.1 (22.1) (11.1) (33.2) 290.9
Total EPRA NTA movement in the year 662.8 24.1 56.8 80.9 743.7
Total EPRA NTA brought forward 2,825.0 580.2 609.5 1,189.7 4,014.7
Total EPRA NTA carried forward 3,487.8 604.3 666.3 1,270.6 4,758.4
* Investment property gains (owned) includes gains on assets classified as
held for sale in the IFRS balance sheet.
The £2.4 million Other balance within the Unallocated segment includes the
purchase of own shares of (£1.5 million), contributions to the Unite
Foundation and other social causes of (£0.6 million) and tax credits of £2.6
million.
2023
Note Unite Students Share of joint ventures Group on
EPRA basis
£m
Total
£m
USAF LSAV Total
£m £m £m
Operations
Operations segment result 2.2a 137.8 23.3 24.1 47.4 185.2
Add back amortisation of intangibles 3.3b 5.2 - - - 5.2
Total Operations 143.0 23.3 24.1 47.4 190.4
Property
Rental growth 185.2 41.8 56.1 97.9 286.7
Yield movement (215.9) (34.4) (85.7) (120.1) (339.6)
Disposal (losses) 11.8 (3.7) 0.3 (3.4) 8.4
Investment property (losses)/gains (owned)* (18.9) 3.7 (29.3) (25.6) (44.5)
Investment property losses (leased) 3.1 (10.4) - - - (10.4)
Investment property losses (under development) 3.1 (6.6) - - - (6.6)
Pre-contract/other development costs 2.2a (2.8) - - - (2.8)
Total Property (38.7) 3.7 (29.3) (25.6) (64.3)
Unallocated
Shares issued 294.9 - - - 294.9
Investment in joint ventures 27.3 (21.8) (5.5) (27.3) -
Dividends paid (117.3) - - - (117.3)
Abortive acquisition costs (1.6) - - - (1.6)
Share based payment charge (3.4) - - - (3.4)
Other (0.4) (0.2) (0.2) (0.4) (0.8)
Total Unallocated 199.6 (22.0) (5.7) (27.7) 172.0
Total EPRA NTA movement in the year 303.9 5.0 (10.9) (6.1) 298.0
Total EPRA NTA brought forward 2,521.1 575.2 620.4 1,195.6 3,716.7
Total EPRA NTA carried forward 2,825.0 580.2 609.5 1,189.7 4,014.7
* Investment property gains (owned) includes gains on assets classified as
held for sale in the IFRS balance sheet.
The £0.8 million other balance within the unallocated segment includes the
purchase of own shares of (£0.6 million), contributions to the Unite
Foundation and other social causes of (£1.6 million), tax credits of £1.1
million and other costs of (£0.3 million).
2.3c) Reconciliation to IFRS
To determine EPRA NTA, net assets reported under IFRS are adjusted 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 adjusted 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 adjusted 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:
2024
NTA NRV NDV
£m
£m
£m
Note
Net assets reported under IFRS 4,811.5 4,811.5 4,811.5
Mark to market interest rate swaps (53.6) (53.6) -
Unamortised swap gain (1.0) (1.0) (1.0)
Mark to market of fixed rate debt - - 31.7
Unamortised fair value of debt recognised on acquisition 11.1 11.1 11.1
Current tax 0.8 0.8 -
Intangibles per IFRS balance sheet (10.4) - -
Real estate transfer tax - 467.4 -
EPRA reporting measures 4,758.4 5,236.2 4,853.3
2023
NTA NRV NDV
£m
£m
£m
Note
Net assets 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 -
.4
Intangibles per IFRS balance sheet (9.3) - -
Real estate transfer tax - 306.7 -
EPRA reporting measures 4,014.7 4,330.7 4,116.0
2.3d) NAV, NTA, NRV and NDV per share
The Board uses EPRA NTA to monitor the performance of the Property segment on
a day-to-day basis.
Note 2024 2023 2024 2023
£m
£m
pps
pps
Net assets 4,811.5 4,067.0 982p 931p
EPRA NTA 2.3a 4,758.4 4,014.7 974p 931p
EPRA NTA (diluted) 2.3a 4,761.4 4,018.6 972p 920p
EPRA NRV 2.3c 5,236.2 4,330.7 1,071p 994p
EPRA NRV (diluted) 5,239.2 4,334.6 1,069p 992p
EPRA NDV 2.3c 4,853.3 4,116.0 993p 944p
EPRA NDV (diluted) 4,856.3 4,119.9 994p 943p
Number of shares (thousands) 2024 2023
Basic 488,792 435,855
Outstanding share options 1,308 1,165
Diluted 490,100 437,019
2.4 Revenue and costs
The Group earns revenue from the following activities:
Note 2024 2023
£m £m
Rental income* Operations segment 2.2a 282.0 259.2
Management fees Operations segment 17.3 17.1
299.3 276.3
Impact of non-controlling interest on management fees - (0.2)
Total revenue 299.3 276.1
* EPRA earnings includes £398.0 million (2023: £369.5 million) of rental
income, which is comprised of £282.0 million (2023: £259.2 million)
recognised on wholly owned assets and a further £116.0 million (2023: £110.3
million) from joint ventures, which is included in share of joint venture
profit/(loss) in the consolidated income statement.
The cost of sales included in the consolidated income statement includes
property operating expenses of £86.4 million (2023: £76.8 million).
2.5 Tax
As a REIT, rental profits and gains on disposal of investment properties are
exempt from corporation tax. The Group pays UK corporation tax on the profits
from its residual business, including management fees received from joint
ventures, together with UK income tax on rental income that arises from
investments held by offshore subsidiaries in which the Group holds a
non-controlling interest.
2.5a) Tax - income statement
The total taxation charge/(credit) in the income statement is analysed as
follows:
2024 2023
£m £m
Corporation tax on residual business income arising in UK companies 4.9 1.0
Income tax on UK rental income arising in non-UK companies 0.1 0.4
Prior year adjustments (0.2) (0.2)
Current tax charge 4.8 1.2
Origination and reversal of temporary differences (2.6) (2.3)
Adjustments in respect of prior periods - -
Deferred tax (credit) (2.6) (2.3)
Total tax charge/(credit) in income statement 2.2 (1.1)
The movement in deferred tax is shown in more detail in note 2.5d.
In the income statement, a tax charge of £2.2 million arises on a profit
before tax of £444.0 million. The taxation charge that would arise at the
standard rate of UK corporation tax is reconciled to the actual tax charge as
follows:
2024 2023
£m £m
Profit before tax 444.0 102.5
Income tax using the UK corporation tax rate of 25% (2023: 23.5%) 111.0 24.1
Property rental business profits exempt from tax in the REIT Group (42.7) (45.7)
Property revaluations not subject to tax (66.6) 16.2
Mark to market changes in interest rate swaps not subject to tax (0.4) 3.0
Unrealised gains on investments (0.4) -
Effect of other permanent differences 1.4 1.3
Effect of tax deduction transferred to equity on share schemes 0.1 0.2
Rate difference on deferred tax - -
Prior years adjustments (0.2) (0.2)
Total tax charge/(credit) in income statement 2.2 (1.1)
As a UK REIT, the Group is exempt from UK corporation tax on the profits from
its property rental business. Accordingly, the element of the Group's profit
before tax relating to its property rental business has been separately
identified in the reconciliation above.
No deferred tax asset has been recognised in respect of the Group's
accumulated tax losses on the basis that they are not expected to be utilised
in future periods. At 31 December 2024 these losses totalled £15.3 million
(2023: £15.3 million).
Although the Group does not pay UK corporation tax on the profits from its
property rental business, it is required to distribute 90% of the profits from
its property rental business after accounting for tax adjustments as a
Property Income Distribution (PID). PIDs are charged to tax in the same way as
property income in the hands of the recipient. For the year ended 31 December
2024, the required PID is expected to be fully paid by the end of 2025.
2.5b) Tax - other comprehensive income
Within other comprehensive income a tax charge totalling £nil (2023: £nil)
has been recognised.
2.5c) Tax - statement of changes in equity
Within the statement of changes in equity a tax charge totalling £nil million
(2023: £0.2 million charge) has been recognised representing deferred tax. An
analysis of this is included below in the deferred tax movement table.
2.5d) Tax - balance sheet
The table below outlines the deferred tax (assets)/liabilities that are
recognised in the balance sheet, together with their movements in the year:
2024
At 31 December 2023 Charged/(credited) Charged/(credited) At 31 December 2024
in income
in equity
£m
£m
£m £m
Investments 0.4 (0.4) - -
Property, plant and machinery (4.9) (2.3) - (7.2)
Share schemes (1.1) - 0.1 (1.0)
Tax value of carried forward losses recognised - 0.1 (0.1) -
Net tax (assets)/liabilities (5.6) (2.6)* - (8.2)
* The £2.6 million credit above includes tax movements totalling £2.3
million in respect of Property, plant and machinery which are included in
EPRA, which is why they are not included in the IFRS reconciliation in note
2.2b.
2023
At 31 December 2022 Charged/(credited) Charged/(credited) At 31 December 2023
in income
in equity
£m
£m
£m £m
Investments 0.4 - - 0.4
Property, plant and machinery and provisions (2.8) (2.1) - (4.9)
Share schemes (1.2) (0.4) 0.5 (1.1)
Tax value of carried forward losses recognised - 0.2 (0.2) -
Net tax (assets) (3.6) (2.3)* 0.3 (5.6)
* The £2.3 million credit above includes tax movements totalling £2.5
million in respect of Property, plant and machinery, Share schemes, and Losses
which are included in EPRA, which is why they are not included in the IFRS
reconciliation in note 2.2b; removing them results in achieving the £0.2
million movement which is excluded as per EPRA's best practice
recommendations.
Section 3: Asset management
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 these groups 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 measured 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 measured 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. The 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. They
are presented as current assets in the IFRS balance sheet.
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 facade 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 years ended 31 December 2024 and
2023.
The Group has transferred the 2024 addition in respect of committed spend on
fire safety and façade works taking place in 2025 and 2026 to property
valuations, which is presented as a deduction to fair value below.
The valuations are based on:
Information provided by the Group such as current rents, occupancy, operating
costs, terms and conditions of leases and nomination agreements and capital
expenditure. 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, such as 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 leadership of the
Property function and the CFO. This includes a review of the fair value
movements over the year.
The fair value of the Group's wholly-owned properties and the movements in the
carrying value of the Group's wholly-owned property portfolio during the year
ended 31 December 2024 are shown in the table below.2024
2024 Investment Investment Investment property under development Total
property property £m £m
(owned) (leased)
£m £m
At 1 January 2024 3,694.3 84.7 174.7 3,953.7
Additions 282.9 - 64.9 347.8
Cost capitalised 68.3 2.2 198.8 269.3
Interest capitalised - - 15.5 15.5
Transfer from investment property under development 37.0 - (37.0) -
Transfer from work in progress - - 17.9 17.9
Transfer to assets held for sale (92.6) - - (92.6)
Disposals (112.2) (13.2) (7.5) (132.9)
Valuation gains 228.4 - 33.9 262.3
Valuation losses (65.8) (1.9) (9.8) (77.5)
Net valuation gains/(losses) 162.6 (1.9) 24.1 184.8
Committed fire safety and external facade works (14.8) - - (14.8)
Carrying and market value at 31 December 2024 4,025.5 71.8 451.4 4,548.7
The fair value of the Group's wholly owned properties and the movements in the
carrying value of the Group's wholly owned property portfolio during the year
ended 31 December 2023 are shown in the table below.
2023 Investment Investment Investment property under development Total
property property £m £m
(owned) (leased)
£m £m
At 1 January 2023 3,623.4 90.3 202.7 3,916.4
Additions - - - -
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 from work in progress - - - -
Disposals (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 facade works (20.2) - - (20.2)
Carrying 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 2024 are comprised of £92.6
million. Assets held for sale are reported within the Property segment and
represent a portfolio of properties (split across the Group and joint
ventures) intended to be sold within the next 12 months.
Total interest capitalised in investment properties (owned) and investment
properties under development at 31 December 2024 was £81.9 million (2023:
£66.4 million) on a cumulative basis.
Total internal costs capitalised in investment properties (owned) and
investment properties under development was £84.4 million at 31 December 2024
(2023: £77.1 million) on a cumulative basis.
Investment property (under development) includes interests in land not
currently under construction totalling £13.5 million (2023: £8.3 million).
Recurring fair value measurement
All investment and development properties are classified as Level 3 in the
fair value hierarchy.
Class of asset 2024 2023
£m £m
London - rental properties 1,286.7 1,154.9
Prime regional - rental properties 1,314.2 1,156.0
Major regional - rental properties 1,346.7 1,246.0
Provincial - rental properties 100.7 104.0
London - development properties 269.5 86.2
Prime regional - development properties 157.7 57.0
Major regional - development properties 13.0 22.0
London build-to-rent 69.8 66.9
Prime regional build-to-rent - development properties 11.2 9.5
Investment property (owned) 4,569.5 3,902.5
Investment property (leased) 71.8 84.7
Market value (including assets classified as held for sale) 4,641.3 3,987.2
Investment property (classified as held for sale) (92.6) (33.5)
Market value 4,548.7 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 valuations also reflect 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 creditworthiness.
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.
Fair value using unobservable inputs (Level 3)
2024 2023
£m £m
Opening fair value 3,953.7 3,916.4
Additions 347.8 -
Gains and (losses) recognised in income statement 184.8 (47.5)
Transfer to assets held for sale (92.6) (33.5)
Capital expenditure 302.7 138.5
Disposals (132.9) -
Committed fire safety and external facade works (14.8) (20.2)
Closing fair value 4,548.7 3,953.7
Investment property (owned) 92.6 33.5
Closing fair value (including assets classified as held for sale) 4,641.3 3,987.2
Quantitative information about fair value measurements using unobservable
inputs (Level 3)
2024
Fair value Valuation Unobservable inputs Range Weighted average
technique
£m
London - 1,286.7 RICS Red Book Net rental income (£ per week) £214 - £479 £351
rental properties
Estimated rental growth (% p.a.)
Discount rate (yield) (%) 2% - 3% 3%
4.2% - 4.8% 4.5%
Prime regional - 1,314.2 RICS Red Book Net rental income (£ per week) £160 - £342 £221
rental properties
Estimated rental growth (% p.a.)
Discount rate (yield) (%) 2% - 9% 4%
4.3% - 7.1% 5.1%
Major regional - 1,346.7 RICS Red Book Net rental income (£ per week) £87 - £224 £158
rental properties
Estimated rental growth (% p.a.)
Discount rate (yield) (%) 2% - 6% 3%
5.1% - 7.9% 6.2%
Provincial - 100.7 RICS Red Book Net rental income (£ per week) £119 - £171 £133
rental properties
Estimated rental growth (% p.a.)
Discount rate (yield) (%) 2% - 6% 4%
7.2% - 38.1% 14.7%
London - 269.5 RICS Red Book Estimated cost to complete (£m) £71m - £171m £123m
development properties
Estimated rental growth (% p.a.)
Discount rate (yield) (%) 3.0% 3%
Net rental income (£ per week)
4.4.% - 4.5% 4.5%
£299 - £485 £345
Prime regional - 157.7 RICS Red Book Estimated cost to complete (£m) £22m - £263m £165m
development properties
Estimated rental growth (% p.a.)
Discount rate (yield) (%) 3% 3%
Net rental income (£ per week)
4.4% - 5.2% 4.6%
£247 - £271 £258
Major regional - 13.0 RICS Red Book Estimated cost to complete (£m) £107m £107m
development properties
Estimated rental growth (% p.a.)
Discount rate (yield) (%) 3% 3%
Net rental income (£ per week)
5.4% 5.4%
£236 £236
4,488.5
Investment property - 69.8 RICS Red Book Net rental income (£ per week) £490 £490
Estimated rental growth (% p.a.)
build-to-rent
Discount rate (yield) (%) 3% 3%
4.6% 4.6%
Development property - 11.2 RICS Red Book Estimated cost to complete (£m) £17m £17m
Estimated rental growth (% p.a.)
build-to-rent
Discount rate (yield) (%) 3% 3%
Net rental income (£ per week)
4.4% 4.4%
£226 £226
Investment property 71.8 Discounted cash flows Net rental income (£ per week) £119 - £233 £156
(leased) Estimated rental growth (% p.a.) 1% - 5% 3%
Discount rate (yield) (%) 10.0% 10.0%
Fair value at 31 December 2024 4,641.3
2023
Fair value Valuation Unobservable inputs Range Weighted average
technique
£m
London - 1,154.9 RICS Red Book Net rental income (£ per week) £206 -£424 £324
rental properties
Estimated rental growth (% p.a.)
Discount rate (yield) (%) 2% - 4% 3%
4.0% - 4.7% 4.3%
Prime regional - 1,156.0 RICS Red Book Net rental income (£ per week) £152 -£270 £189
rental properties
Estimated rental growth (% p.a.)
Discount rate (yield) (%) 2% - 5% 3%
4.3% - 6.7% 4.9%
Major regional - 1,246.0 RICS Red Book Net rental income (£ per week) £84 - £189 £135
rental properties
Estimated rental growth (% p.a.)
Discount rate (yield) (%) 2% - 5% 3%
4.9% - 7.2% 5.7%
Provincial - 104.0 RICS Red Book Net rental income (£ per week) £103 - £162 £136
rental properties
Estimated rental growth (% p.a.)
Discount rate (yield) (%) 2% - 3% 3%
7.0% - 21.7% 8.9%
London - 86.2 RICS Red Book Estimated cost to complete (£m) Net rental income (£ per week) £102.2m - £185.3m £51.4m
development properties
Estimated rental growth (% p.a.)
Discount rate (yield) (%) £304 £242
3% 3%
4.4% - 5.2% 4.7%
Prime regional - 57.0 RICS Red Book Estimated cost to complete (£m) Net rental income (£ per week) £50.0m - £52.0m £51.4m
development properties
Estimated rental growth (% p.a.)
Discount rate (yield) (%) £234 - £236 £242
3% 3%
4.4% - 5.2% 4.7%
Major regional - 22.0 RICS Red Book Estimated cost to complete (£m) Net rental income (£ per week) £19.4m - £124.1m £97.6m
development properties
Estimated rental growth (% p.a.)
Discount rate (yield) (%) £214 £214
3% 3%
5.2% 5.2%
3,826.1
Investment property - 66.9 RICS Red Books Net rental income (£ per week) £412 £412
Estimated rental growth (% p.a.)
build-to-rent
Discount rate (yield) (%) 3% 3%
4.1% 4.1%
Development property - 9.5 RICS Red Book Net rental income (£ per week) £12.6m £12.6m
Estimated rental growth (% p.a.)
build-to-rent
Discount rate (yield) (%) 3% 3%
4.4% 4.4%
Investment property 84.7 Discounted Net rental income (£ per week) £106 - £207 £168
(leased)
cash flows
Estimated rental growth (% p.a.)
Discount rate (yield) (%) 1.8% - 2.7% 2.3%
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.
Class of assets Fair value at +5% -5% +25 bps -25 bps
31 December 2024
change in estimated net rental income
change in estimated net rental income
change in net initial yield
change in net initial yield
£m
£m
£m
£m
£m
Rental properties
London 1,286.7 1,338.5 1,208.5 1,204.4 1,350.7
Prime regional 1,314.2 1,369.1 1,236.8 1,240.7 1,372.0
Major regional 1,364.7 1,402.7 1,267.1 1,278.3 1,396.6
Provincial 100.7 105.9 95.6 98.0 103.8
Development properties
London 269.5 281.7 257.6 256.8 284.0
Prime regional 157.7 166.3 150.6 150.3 167.5
Major regional 13.0 12.8 11.6 11.7 12.8
Build-to-rent properties
London 69.8 71.6 64.8 64.7 72.1
Prime regional 11.2 11.8 10.6 10.6 11.9
Market value 4,569.5 4,760.4 4,303.2 4,315.5 4,771.4
3.2 Inventories
2024 2023
£m £m
Interests in land 13.5 25.3
Other stocks 0.1 0.9
Inventories 13.6 26.2
At 31 December 2024 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 Group's share of assets/results 2024 (2023) Objective Partner Legal entity in which
Group has interest
The UNITE UK Student Accommodation Fund (USAF) 29.1%* Operate student accommodation throughout the UK Consortium of investors UNITE UK Student Accommodation Fund,
a Jersey Unit Trust
(29.5%*)
London Student Accommodation 50% Operate student accommodation GIC Real Estate Pte, Ltd Real estate investment vehicle of LSAV Unit Trust, a Jersey Unit Trust and LSAV (Holdings) Ltd, incorporated in
Venture (LSAV)
in London and Birmingham
the Government of Singapore Jersey
(50%)
* At the start of the year, part of the Group's interest was held through a
subsidiary, USAF (Feeder) Guernsey Limited, in which there was an external
investor. This was disposed of during the year. In 2023, a non-controlling
interest occurred on consolidation of the Group's results representing the
external investor's share of profits and assets relating to its investment in
USAF. In 2023, the ordinary shareholders of Unite Group PLC were beneficially
interested in 28.15% of USAF.
3.3a) Net assets and results of the joint ventures
The summarised balance sheets and results for the year, and the Group's share
of these joint ventures are as follows:
2024
Summarised balance sheet USAF LSAV Total
£m £m £m
Gross MI Share Gross Share Gross Share
Investment property 2,847.3 - 829.6 1,993.8 996.9 4,841.1 1,826.5
Cash 241.6 - 70.4 40.0 20.0 281.6 90.4
Borrowings (non-current) (937.3) - (273.1) (276.0) (138.0) (1,213.3) (411.1)
Borrowings (current) - - - (400.0) (200.0) (400.0) (200.0)
Swap assets - - - - - - -
Other current assets 7.9 - 2.3 22.8 11.4 30.7 13.7
Other current liabilities (85.7) - (25.0) (47.8) (23.9) (133.5) (48.9)
Net assets 2,073.8 - 604.2 1,332.8 666.4 3,406.6 1,270.6
Minority interest - - - - - - -
Swap liabilities - - - - - - -
EPRA net assets 2,073.8 - 604.2 1,332.8 666.4 3,406.6 1,270.6
Summarised income statement
Rental income 207.5 - 58.8 112.2 56.1 319.7 114.9
Other income 0.7 - 0.2 1.8 0.9 2.5 1.1
Total income 208.2 - 59.0 114.0 57.0 322.2 116.0
Cost of sales (73.1) - (20.7) (28.0) (14.0) (101.1) (34.7)
Operating expenses (2.6) - (0.7) (1.4) (0.7) (4.0) (1.4)
Results from operating activities before (losses)/gains on property 132.5 - 37.6 84.6 42.3 217.1 79.9
Profit/(loss) on disposal of property (8.5) - (2.4) - - (8.5) (2.4)
Net valuation movement 81.4 - 26.2 81.5 40.8 162.9 67.0
Net financing (costs)/gains (40.5) - (11.5) (33.6) (16.8) (74.1) (28.3)
Profit before tax 164.9 - 49.9 132.5 66.3 297.4 116.2
Taxation (0.1) - - (0.6) (0.3) (0.7) (0.3)
Profit for the year after tax 164.8 - 49.9 131.9 66.0 296.7 115.9
Other comprehensive income (0.7) - (0.3) (3.6) (2.0) (4.3) (2.3)
Total comprehensive (expense)/income 164.1 - 47.6 128.3 64.0 292.4 113.6
Dividends received from the joint ventures during the year - - 13.8 - 13.8 - 27.6
* Investment property includes assets classified as held for sale in the IFRS
balance sheet.
2023
Summarised balance sheet USAF LSAV Total
£m £m £m
Gross MI Share Gross Share Gross Share
Investment property 2940.8 38.7 827.8 1,909.4 954.7 4,850.2 1,821.2
Cash 64.7 0.9 18.2 43.0 21.5 107.7 40.6
Debt (865.0) (11.4) (243.5) (674.0) (337.0) (1,539.0) (591.9)
Swap assets 1.4 - 0.4 3.6 1.8 5.0 2.2
Other current assets 12.4 0.2 3.5 (2.8) (1.4) 9.6 2.3
Other current liabilities (92.1) (1.2) (25.8) (56.6) (28.4) (148.7) (55.4)
Net assets 2,062.2 27.2 580.6 1,222.6 611.2 3,284.8 1,219.1
Minority interest - (27.2) - - - - (27.2)
Swap liabilities (1.4) - (0.4) (3.6) (1.7) (5.0) (2.1)
EPRA net assets 2,060.7 - 580.1 1,219.0 609.5 3,279.8 1,189.7
Summarised income statement
Rental income 203.4 2.7 57.3 103.6 51.8 307.0 111.8
Other income 0.9 - 0.2 2.0 1.0 2.9 1.2
Total income 204.3 2.7 57.5 105.6 52.8 309.9 113.0
Cost of sales (70.6) (1.5) (19.9) (26.4) (13.2) (97.0) (34.6)
Operating expenses (2.4) - (0.6) (1.2) (0.6) (3.6) (1.2)
Results from operating activities before (losses)/gains on property 131.3 1.2 37.0 78.0 39.0 209.3 77.2
Profit/(loss) on disposal of property (13.1) - (3.7) 0.6 0.3 (12.5) (3.4)
Net valuation movement 20.3 - 7.4 (59.2) (29.6) (38.9) (22.2)
Net financing (costs)/gains (33.5) - (9.5) (30.0) (15.0) (63.5) (24.5)
Profit before tax 105.0 1.2 31.2 (10.6) (5.3) 94.4 27.1
Taxation (0.1) - - (0.2) (0.1) (0.3) (0.1)
(Loss)/Profit for the year after tax 104.9 1.2 31.2 (10.8) (5.4) 94.1 27.0
Other comprehensive income (2.3) - (0.7) (1.2) (0.6) (3.5) (1.3)
Total comprehensive (expense)/income 102.6 1.2 30.5 (12.0) (6.0) 90.6 25.7
Dividends received from the joint ventures during the year - 0.8 21.8 - 5.4 - 28.0
Net assets and profit for the year above include the non-controlling interest,
whereas EPRA NTA excludes the non-controlling interest.
3.3b) Movement in carrying value of the Group's investments in joint ventures
The carrying value of the Group's investment in joint ventures increased by
£46.0 million during the year ended 31 December 2024 (2023: £7.6 million
decrease), resulting in an overall carrying value of £1,265.0 million (2023:
£1,219.0 million).
The following table shows how the decrease has arisen:
2024 2023
£m £m
Recognised in the income statement:
Operations segment result 47.5 47.4
Non-controlling interest share of Operations segment result (0.2) 1.3
Management fee adjustment related to trading with joint venture 4.8 4.5
Net valuation (losses)/gains on investment property 67.0 (21.9)
Property disposals (2.4) (3.5)
Ineffective swap (0.4) (0.4)
Other (0.5) (0.4)
115.9 27.0
Recognised in equity:
Movement in effective hedges (2.3) (2.1)
Other adjustments to the carrying value:
Profit adjustment related to trading with joint venture (4.8) (4.5)
Disposal of non-controlling interest (27.9) -
Additional capital invested in USAF (7.4) -
Distributions received (27.5) (28.0)
Increase/(Decrease) in carrying value 46.0 (7.6)
Carrying value at 1 January 1,219.0 1,226.6
Carrying value at 31 December 1,265.0 1,219.0
3.3c) 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. No performance fees were
recognised in the year (2023: £nil).
2024 2023
£m £m
USAF 16.9 16.6
4.8 4.8
21.4 21.4
LSAV 4.9 4.8
Asset management fees 21.8 21.4
Total fees 21.8 21.4
On an EPRA basis, fees from joint ventures are shown net of the Group's share
of the cost to the joint ventures.
The Group's share of the management fees to the joint ventures is £4.6
million (2023: £4.5 million), which results in management fees from joint
ventures of £17.3 million being shown in the Operating segment result in note
2.2a (2023: £16.9 million).
During the year, the Group purchased 7 properties from USAF for gross proceeds
of £235.5m and sold 2 properties to USAF for total gross proceeds of
£118.5m. Both sale and purchase were transacted at fair value which was the
same as the carrying value. As part of these transactions, the Group paid
£117.0m of cash to USAF reflecting the net difference in value between these
assets, this balance is presented within investing activities in the
Consolidated Statement of Cashflows.
Section 4: Funding
4.1 Borrowings
The table below analyses the Group's borrowings which comprise bank and other
loans by when they fall due for payment:
Group Company
2024 2023 2024 2024
Carrying value Carrying value Carrying value Carrying value
£m £m £m £m
Current
In one year or less, or on demand - 299.4 - -
Non-current
In more than one year but not more than two years 147.6 - 147.6 -
In more than two years but not more than five years 572.3 320.7 572.3 45.7
In more than five years 543.8 447.6 543.8 423.0
1,263.7 1,067.6 1,263.7 468.7
Unamortised fair value of debt recognised on acquisition 10.1 14.0 - -
Total borrowings 1,273.8 1,081.6 1,263.7 468.7
In addition to the borrowings currently drawn as shown above, the Group has
available undrawn facilities of £750.0 million (2023: £550.0 million). A
further overdraft facility of £10.0 million (2023: £10.0 million) is also
available.
The carrying value and fair value of the Group's borrowings is analysed below:
Group 2024 2023
Carrying value Fair value Carrying value Fair value
£m £m £m £m
Level 1 IFRS fair value hierarchy 975.0 956.6 875.0 852.3
Other loans and unamortised arrangement fees 288.7 275.4 192.6 180.3
Total borrowings 1,263.7 1,232.0 1,067.6 1,032.6
Company 2024 2023
Carrying value Fair value Carrying value Fair value
£m £m £m £m
Level 1 IFRS fair value hierarchy 975.0 956.6 275.0 268.4
Other loans and unamortised arrangement fees 288.7 274.4 193.7 180.3
Total borrowings 1,263.7 1,232.0 468.7 448.7
The fair value of loans classified as Level 1 in the IFRS fair value hierarchy
is determined using quoted prices in active markets for identical liabilities.
The following table shows the changes in liabilities arising from financing
activities:
2024
Group At 1 January 2024 Financing cash flows Interest expense Fair Value adjustments Other At 31 December 2024
changes
Borrowings 1,081.6 193.2 - (4.1) 3.1 1,273.8
Lease liabilities 83.8 (19.8) 8.8 - - 72.8
Interest rate swaps (56.0) - - 0.4 2.2 (53.4)
Total liabilities from financing activities 1,109.4 173.4 8.8 (3.7) 5.3 1,293.2
Company
Borrowings 468.6 800.0 - 0.2 (5.1) 1,263.7
Interest rate swaps (56.0) - - 0.4 2.2 (53.4)
Total liabilities from financing activities 412.5 800.0 - 0.6 (2.9) 1,210.3
2023
Group At 1 January 2023 Financing cash flows Interest expense Fair Value adjustments Other At 31 December 2023
changes
Borrowings 1,265.9 (182.5) - (4.3) 2.5 1,081.6
Lease liabilities 92.3 (16.2) 7.7 - - 83.8
Interest rate swaps (73.2) - - 17.2 - (56.0)
Total liabilities from financing activities 1,285.0 (198.7) 7.7 12.9 2.5 1,109.4
Company
Borrowings 649.6 (182.5) - 0.8 0.8 468.7
Interest rate swaps (73.2) - - 17.2 - (56.0)
Total liabilities from financing activities 576.4 (182.5) - 18.0 0.8 412.7
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 which at 31
December 2024 are not designated in accounting hedge relationships:
2024 2023
£m £m
Current 7.4 -
Non-current 46.0 56.0
Fair value of interest rate swaps 53.4 56.0
The fair value of interest rate swaps has been calculated by a third-party,
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. At 31 December 2024, the fair value above comprises
current assets of £7.4 million and non-current assets of £46.0 million
(2023: non-current assets of £56.0 million).
4.3 Net financing costs/(gains)
2024 2023
Recognised in the income statement: £m £m
Interest income (16.7) (1.3)
Finance income (16.7) (1.3)
Gross interest expense on loans 39.0 32.5
Amortisation of fair value of debt recognised on acquisition (4.1) (4.3)
Interest capitalised (15.5) (8.4)
Loan interest and similar charges 19.4 19.8
Interest on lease liabilities 8.8 7.7
Mark to market changes on interest rate swaps 0.4 17.2
Swap cancellation and loan break costs 3.1 -
Finance costs 31.7 44.7
Net financing costs 15.0 43.4
The average cost of the Group's wholly-owned debt at 31 December 2024 is 3.1%
(2023: 2.7%). The overall average cost of debt on an EPRA basis is 3.6% (2023:
3.2%).
4.4 Gearing
LTV is a key indicator that the Group uses to manage its indebtedness. The
Group also monitors gearing, which is calculated using EPRA net tangible
assets (NTA) and adjusted net debt. Adjusted net debt excludes IFRS 16 lease
liabilities, the unamortised fair value of debt recognised on acquisition and
mark to market of interest rate swaps as shown below.
The Group's gearing ratios are calculated as follows:
Note 2024 2023
£m £m
Cash and cash equivalents 5.1 274.3 37.5
Current borrowings 4.1 - (299.4)
Non-current borrowings 4.1 (1,273.8) (782.2)
Lease liabilities 4.6a (72.8) (83.8)
Interest rate swaps 4.2 53.4 56.0
Net debt per balance sheet (1,018.9) (1,071.9)
Lease liabilities 4.6a 72.8 83.8
Unamortised fair value of debt recognised on acquisition 2.3c 11.1 15.2
Adjusted net debt (935.0) (972.9)
Reported net asset value 2.3c 4,811.5 4,067.0
EPRA NTA 2.3c 4,758.4 4,014.7
Gearing
Basic (net debt/reported net asset value) 21% 26%
Adjusted gearing (adjusted net debt/EPRA NTA) 20% 24%
Loan to value 2.3a 24% 28%
4.5 Covenant compliance
The Group monitors its covenant position and the forecast headroom available
on a monthly basis. At 31 December 2024, the Group was in full compliance with
all of its borrowing covenants.
The Group's unsecured borrowings carry several covenants. The covenant regime
is IFRS based and gives the Group substantial operational flexibility,
allowing property acquisitions, disposals and developments to occur with
relative freedom.
2024 2023
Covenant Actual Covenant Actual
Gearing <1.50 0.21 <1.50 0.27
Unencumbered assets ratio >1.70 4.48 >1.70 3.71
Secured gearing <0.25 - <0.25 -
Development assets ratio <30% 8% <30% 3%
Joint venture ratio <55% 22% <55% 23%
Interest cover >2.00 81.56 >2.00 8.23
The Liberty Living Finance PLC bond issuer substitution to Unite Group PLC was
completed in December 2024 bringing the £300m 2029 bond under The Unite Group
PLC.
4.6 Equity
The Company's issued share capital has increased during the year as follows:
Called up, allotted and fully paid 2024 2023
ordinary shares of £0.25p each
No. of Ordinary shares Share Premium No. of Ordinary shares Share Premium
shares
shares
£m £m £m £m
At 1 January 435,854,542 109.4 2,447.6 400,317,225 100.1 2,162.0
Shares issued (capital raise) 50,000,000 12.1 430.1 33,149,172 8.6 286.3
Shares issued (scrip dividend) 2,808,461 0.7 (0.7) 2,232,001 0.6 (0.6)
Shares issued options exercised 129,071 - (0.1) 156,144 0.1 (0.1)
At 31 December 488,792,074 122.2 2,876.9 435,854,542 109.4 2,447.6
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company. All shares rank equally with regard to the Company's residual assets.
4.7 Dividends
During the year, the Company paid the final 2023 dividend of £64.0 million -
23.6p per share - and an interim 2024 dividend of £52.0 million - 12.4p per
share (2023: final 2022 dividend 21.7p and an interim dividend 11.8p).
After the year-end, the Directors proposed a final dividend per share of 24.9p
(2023: 23.6p), bringing the total dividend per share for the year to 37.3p
(2023: 35.4p). No provision has been made in relation to this dividend.
The Group has modelled tax adjusted property business profits for 2024 and
2025 and the PID requirement in respect of the year ended 31 December 2024 is
expected to be satisfied by the end of 2025.
Section 5: Working capital
5.1 Cash and cash equivalents
The Group's cash position at 31 December 2024 was £274.3 million (2023:
£37.5 million). Of this balance, £180m was cash equivalents money market
deposits, £94.3m was cash.
The Group's cash balances include £1.1 million (2023: £1.1 million) whose
use at the balance sheet date is restricted by funding agreements to pay
operating costs.
The Group generates cash from its operating activities as follows:
Note
2024 2023
£m £m
Profit for the year 441.8 103.6
Adjustments for:
Depreciation and amortisation 3.3 5.7 6.3
Fair value of share-based payments 2.4 3.4
Change in value of investment property (owned and under development) 3.1 (186.7) 37.2
Change in value of investment property (leased) 3.1 1.9 10.4
Net finance costs 4.3 2.7 18.5
Interest payments for leased assets 8.8 7.7
Swap break and debt exit costs 3.1 -
Mark to market changes in interest rate swaps 0.3 17.2
Loss/(profit) on disposal of investment property 9.8 (11.8)
Share of joint venture profit 3.4b (115.9) (27.0)
Trading with joint venture adjustment 3.4b 4.6 4.5
Tax charge/(credit) 2.5a 2.1 (1.1)
Cash flows from operating activities before changes in working capital 180.6 168.8
Decrease/(increase) in trade and other receivables (12.0) (24.8)
(Increase)/decrease in inventories (5.3) (13.5)
Increase/(decrease) in trade and other payables 48.2 24.4
Cash flows from operating activities 211.5 155.0
Tax paid/(received) 4.9 (1.8)
Net cash flows from operating activities 216.4 153.2
Cash flows consist of the following segmental cash inflows/(outflows):
Operations £210.4 million (2023: £178.0 million), Property (£249.6 million)
(2023: (£354.0 million)) and Unallocated £276.0 million (2023: £175.5
million).
The Unallocated amount includes a net cash outflow of dividends paid of
£137.8 million (2023: £117.3 million) and a cash inflow of £442.0 million
(net of fees) as a result of the capital raise in July 2024 (£295.0 million).
5.2 Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations. It arises principally from the Group's cash balances, the Group's
receivables from customers and joint ventures and loans provided to the
Group's joint ventures.
At the year-end, the Group's maximum exposure to credit risk was as follows:
2024 2023
Note £m £m
Cash 5.1 274.3 37.5
Trade receivables 5.2 37.5 34.8
Amounts due from joint ventures (excluding loans that are capital in nature) 5.2 56.7 49.4
368.5 121.7
Included within trade receivables is £20.3 million of receivables relating to
joint venture debtors (2023: £16 million).
5.2a) Cash
The Group operates investment guidelines with respect to surplus cash.
Counterparty limits for cash deposits are largely based upon long-term ratings
published by credit rating agencies and credit default swap rates. Deposits
are placed with financial institutions with A- or better credit ratings.
5.2b) Trade receivables
The Group's customers can be split into two groups - (i) students
(individuals) and (ii) commercial organisations including universities. The
Group's exposure to credit risk is influenced by the characteristics of each
customer.
5.2c) Joint ventures
Amounts receivable from joint ventures fall into two categories - working
capital balances and investment loans. The Group has strong working
relationships with its joint venture partners, and the joint ventures have
strong financial performance, retain net asset positions and are cash
generative, and therefore the Group views this as a low credit risk balance.
No impairment has therefore been recognised in 2024 or 2023.
5.3 Provisions
The Group continues 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 £5.6 million
(Unite Group Share: £5.3 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 not recognised any assets in respect of future claims, but
expect to recover 50-75% of remediation costs through claims from contractors.
The Group has recognised provisions for the cost of these cladding works as
follows:
Gross Unite Share
£m
£m
Wholly owned USAF LSAV Total Wholly owned USAF LSAV Total
At 31 December 2022 29.5 55.6 28.2 113.3 29.5 15.6 14.1 59.2
Adjustment due to re-estimates (3.6) (3.3) - (6.9) (3.6) (0.9) - (4.5)
Additions 21.3 51.5 22.2 95.0 21.3 14.5 11.1 46.9
Utilisation (21.8) (49.7) (6.9) (78.4) (21.8) (14.0) (3.5) (39.3)
Transferred to valuations (20.2) (48.2) (12.3) (80.7) (20.2) (13.6) (6.2) (40.0)
At 31 December 2023 5.2 5.9 31.2 42.3 5.2 1.6 15.5 22.3
Adjustment due to re-estimates (0.1) (2.0) - (2.1) (0.1) (0.6) - (0.7)
Additions - - - - - - - -
Utilisation - (3.4) (4.6) (8.0) - (0.9) (2.2) (3.1)
Transferred to valuations - - (26.6) (26.6) - - (13.3) (13.3)
At 31 December 2024 5.1 0.5 - 5.6 5.1 0.1 - 5.2
Section 6: Post balance sheet events
The Group has reviewed events up to 25 February 2025 and have determined that
no material post balance sheet events have occurred.
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. The APMs below have been calculated on
a see through/Unite Group share basis, as referenced to the notes to the
financial statements. Reconciliations to equivalent IFRS measures are included
in notes 2.2b and 2.2c. Definitions can also be found in the glossary.
Adjusted earnings of the Group excludes the non-recurring impact of one-off
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 2024 2023
£m
£m
EBIT
Net operating income (NOI) 2.2a 276.1 256.5
Management fees 2.2a 17.3 16.9
Overheads 2.2a (22.5) (22.1)
270.9 251.3
EBIT margin %
Rental income 2.2a 398.0 369.5
EBIT 7 270.9 251.3
68.1% 68.0%
EBITDA
Net operating income 2.2a 276.1 256.5
Management fees 2.2a 17.3 16.9
Overheads 2.2a (22.5) (22.1)
Depreciation and amortisation 5.7 6.3
276.6 257.6
Net debt
Cash 2.3a 364.7 77.2
Debt 2.3a (1,874.8) (1,648.1)
(1,510.1) (1,570.9)
EBITDA: Net debt
EBITDA 7 276.6 257.6
Net debt 7 (1,510.1) (1,570.9)
Ratio 5.5 6.1
Interest cover (Unite Group share)
EBIT 7 270.9 251.3
Net financing costs 2.2a (35.2) (47.4)
Interest on lease liability 2.2a (8.8) (7.7)
Total interest (43.9) (55.1)
Ratio 6.2 4.6
Reconciliation: IFRS profit before tax to EPRA earnings and adjusted earnings
Note 2024 2023
£m
£m
IFRS profit before tax 444.0 102.5
Net valuation (gains)/losses on investment property (owned) 2.2b (253.7) 59.1
Property disposals (owned) 2.2b 12.2 (8.3)
Net valuation losses on investment property (leased) 2.2b 1.9 10.4
Amortisation of fair value of debt recognised on acquisition 2.2b (4.1) (4.3)
Changes in valuation of interest rate swaps 2.2b 0.4 17.2
Swap cancellation and debt exit fees 3.1 -
Non-controlling interest, tax and other items (1.9) (0.4)
EPRA earnings 201.9 176.1
Software as a service cost 11.9 8.2
Adjusted earnings 213.8 184.3
Adjusted EPS yield
Note 2024 2023
Adjusted EPS (A) 46.6p 44.3p
EPRA NTA 1 January (B) 920p 927p
Adjusted EPS yield (A/B) 5.1% 4.8%
Total accounting return
Note 2024 2023
Opening EPRA NTA (A) 2.3d 920p 927p
Closing EPRA NTA 2.3d 972p 920p
Movement in EPRA NTA 52p (7p)
2023 final dividend 4.7 23.6p 21.7p
2024 interim dividend 4.7 12.4p 11.8p
Total movement in NTA (B) 88.0p 25.9p
Total accounting return (B/A) 9.6% 2.9%
EPRA Performance Measures
Summary of EPRA performance measures
2024 2023 2024 2023
£m
£m
pps
pps
EPRA earnings 201.9 176.1 44.0p 42.4p
Adjusted earnings* 213.8 184.3 46.6p 44.3p
EPRA NTA 4,758.4 4,014.7 972p 920p
EPRA NRV 5,236.2 4,330.7 1,069p 992p
EPRA NDV 4,853.3 4,116.0 994p 943p
EPRA net initial yield 4.8% 4.8%
EPRA topped-up net initial yield 4.8% 4.8%
EPRA like-for-like gross rental income 2.6% 2.6%
EPRA vacancy rate 2.0% 0.3%
EPRA cost ratio (including vacancy costs) 35.2% 35.2%
EPRA cost ratio (excluding vacancy costs) 34.9% 34.9%
* Adjusted earnings calculated as EPRA earnings less software as a service
cost and abortive costs.
EPRA like-for-like rental income (calculated based on total portfolio value of
£9.1 billion)
£m Like for like properties Development property Other properties* Total EPRA
2024
Rental income 345.7 6.8 45.5 398.0
Property operating expenses (106.4) (2.1) (13.4) (121.9)
Net rental income 239.3 4.7 32.1 276.1
2023
Rental income 321.5 2.0 46.0 369.5
Property operating expenses (100.0) (0.4) (12.6) (113.0)
Net rental income 221.5 1.6 33.4 256.5
Like-for-like net rental income £m 17.8
Like-for-like net rental income % 8.0%
Like-for-like gross rental income £m 24.2
Like-for-like gross rental income % 7.5%
*Other properties include acquisitions, disposals, major refurbishments and
changes in ownership.
EPRA vacancy rate
2024 2023
£m £m
Estimated rental value of vacant space 6.5 0.9
Estimated rental value of the whole portfolio 320.3 283.9
EPRA vacancy rate 2.0% 0.3%
EPRA net initial yield
2024 2023
Net operating income (£m) 305.5 278.3
Property market value (£m) 5,948.2 5,510.4
Notional acquisition costs (£m) 392.2 288.6
6,340.3 5,799.0
EPRA Net initial yield (%) * 4.8% 4.8%
Difference in projected versus historical GOI 0.3% 0.2%
Unite net initial yield 5.1% 5.0%
* No lease incentives are provided by the Group and accordingly the Topped Up
Net Initial Yield measure is also 4.8% (2023: 4.8%).
EPRA cost ratio
2024 2023
£m £m
Property operating expenses 87.2 79.8
Overheads* 21.6 21.2
Development/pre contract 3.8 2.7
Unallocated expenses* 8.8 8.8
121.4 112.5
Share of JV property operating expenses 34.7 33.2
Share of JV overheads expenses 0.9 0.9
Share of JV unallocated expenses 0.5 0.4
157.5 147.0
Less: Joint venture management fees (17.3) (16.9)
Total costs (A) 140.2 130.1
Group vacant property costs** (0.9) (0.8)
Share of JV vacant property costs** (0.3) (0.3)
Total costs excluding vacant property costs (B) 138.9 129.0
Rental income 282.0 259.2
Share of JV rental income 116.0 110.3
Total gross rental income (C) 398.0 369.5
Total EPRA cost ratio (including vacant property costs) (A)/(C) 35.2% 35.2%
Total EPRA cost ratio (excluding vacant property costs) (B)/(C) 34.9% 34.9%
* Excludes software as a service costs net of deferred tax and abortive costs.
** 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 yield movement
NOI yield Yield movement (bps)
% H1 H2 FY
Wholly-owned 5.2 8 7 15
USAF 5.2 (1) 2 1
LSAV 4.5 - 2 2
Rental properties (Unite share) 5.1 7 11 18
Property related capital expenditure
FY2024 FY2023
Wholly owned Share of Group Wholly owned Share of Group
JVs share JVs share
London 13.0 18.5 31.5 4.3 20.5 24.8
Prime regional 12.4 6.1 18.5 19.3 4.8 24.1
Major regional 36.8 13.8 50.6 24.6 3.0 27.6
Provincial 2.6 4.5 7.1 5.2 1.3 6.5
Total rental properties 64.8 42.9 107.7 53.4 29.6 83.0
Acquisitions* 282.9 34.5 317.4 2.1 - 2.1
Developments 263.7 - 263.7 58.8 - 58.8
Capitalised interest 15.5 - 15.5 8.4 - 8.4
Total property related capex 626.9 77.4 704.3 122.7 29.6 152.3
* Includes Wholly owned to USAF transfer of 2 properties and USAF to Wholly
owned transfer of 7 properties
EPRA LTV
2024 2023
£m £m
Investment property (owned) 5,852.0 5,510.4
Investment property (under development) 451.4 174.7
Intangibles 10.4 9.3
Total property value and other eligible assets 6,313.8 5,694.4
Cash at bank and in hand 364.7 77.2
Borrowings (1,874.8) (1,648.1)
Net other payables (33.9) (100.3)
EPRA net debt (1,544.0) (1,671.2)
EPRA loan to value 24.4% 29.3%
Glossary
Adjusted earnings EPRA EPRA net initial yield (NIY)
An alternative performance measure based on EPRA earnings, adjusted to remove The European Public Real Estate Annualised NOI generated by the Group's rental properties expressed as a
the impact of abortive acquisition costs and the LSAV performance fee which
percentage of their fair value, taking into account notional acquisition
was settled in 2021. The items have been excluded from adjusted earnings to Association, who produce best practice recommendations for financial costs.
improve the comparability of results year-on-year. reporting.
EPRA topped up net initial yield (NIY)
Adjusted earnings per share / EPS EPRA cost ratio
EPRA Net Initial Yield adjusted to include the effect of the expiration of
The earnings per share based on adjusted earnings and weighted average number The ratio of property operating expenses, overheads and management fees, rent free periods (or other unexpired lease incentives such as discounted rent
of shares in issue (basic). against rental income, calculated on an EPRA basis. periods or step rents).
Adjusted EPS yield EPRA earnings EPRA vacancy rate
Adjusted EPS as a percentage of opening EPRA NTA (diluted). EPRA earnings exclude movements relating to changes in values of investment The ratio of the estimated market rental value of vacant spaces against the
properties, profits/losses from the disposal of properties, swap/debt break estimated market rental value of the entire property portfolio (including
costs, interest rate swaps and the related tax effects. vacant spaces).
Adjusted net debt
Net debt per the balance sheet, adjusted to remove IFRS 16 lease liabilities EPRA earnings per share / EPS ESG
and the unamortised fair value of debt recognised on the acquisition of
Liberty Living. The earnings per share based on EPRA earnings and weighted average number of Environmental, Social and Governance.
shares in issue (basic).
Basis points (BPS)
Full occupancy
EPRA like-for-like rental growth
A basis point is a term used to describe a small percentage, usually in the
Fully occupancy is defined as occupancy in excess of 97%.
context of change, and equates to 0.01%. The growth in rental income measured by reference to the part of the portfolio
of the Group that has been consistently in operation, and not under
development nor subject to disposal, and which accordingly enables more
meaningful comparison in underlying rental income levels. GRESB
Diluted earnings / EPS
GRESB is a benchmark of the Environmental, Social and Governance (ESG)
Where earnings values per share are used "basic" measures divide the earnings
performance of real assets.
by the weighted average number of issued shares in issue throughout the EPRA Net Tangible Assets (NTA)
period, whilst the diluted measure also takes into account the effect of share
options which have been granted and which are expected to be converted into EPRA NTA includes all property at market value but excludes the mark to market
shares in the future. of financial instruments, deferred tax and intangible assets. EPRA NTA Gross asset value (GAV)
provides a consistent measure of NAV on a going concern basis.
The fair value of rental properties, leased properties and development
properties.
Diluted NTA/NAV
EPRA Net Tangible Assets per share
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 The diluted NTA per share figure based on EPRA NTA. The Group
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 Wholly owned balances plus Unite's interests relating to USAF and LSAV.
additional number of shares that will be issued and the value of additional
consideration that will be received in issuing them). EPRA Net Reinstatement Value (NRV)
EPRA NRV includes all property at market value but excludes the mark to market Group debt
of financial instruments, deferred tax and real estate transfer tax. EPRA NRV
Direct let assumes that entities never sell assets and represents the value required to Wholly owned borrowings plus Unite's share of borrowings attributable to USAF
rebuild the entity. and LSAV.
Properties where short-hold tenancy agreements are made directly between Unite
and the student.
EPRA Net Disposal Value (NDV) HMO
EBITDA EPRA NDV includes all property at market value, excludes the mark to market of Houses in multiple occupation, where buildings or flats are shared by multiple
financial instruments but includes the fair value of fixed interest rate debt tenants who rent their own rooms and the property's communal spaces on an
The Group's adjusted EBIT, adding back depreciation and amortisation. and the carrying value of intangible assets. EPRA NDV represents the individual basis.
shareholders' value in a disposal scenario.
IFRS NAV per share
IFRS equity attributable to the owners of the parent company from the
consolidated balance sheet divided by the total number of shares of the Parent
Company in issue at the reporting date.
Interest cover ratio (ICR)
Calculated as EBIT divided by the sum of net financing costs and IFRS 16 lease
liability interest costs.
Lease Net debt to EBITDA Resident ambassadors
Properties which are leased to universities for a number of years. Net debt as a proportion of EBITDA. Student representatives who engage with students living in the property to
create a community and sense of belonging.
Like-for-like metrics Net financing costs (EPRA)
SaaS - Software as a Service
Like-for-like is the change in metric, on a gross basis, calculated using Interest payable on borrowings less interest capitalised into developments and
properties owned throughout the current and previous period. finance income. Software that allows users to connect to and use cloud-based software via
remote access.
Loan to value (LTV) Net operating income (NOI)
See-through (also Unite share)
Net debt as a proportion of the value of the rental properties, excluding The Group's rental income less property operating expenses.
balances in respect of leased properties under IFRS 16. Prepared on a
Wholly owned balances plus Unite's share of balances relating to USAF and
see-through basis. In the opinion of the Directors, this measure enables an LSAV.
appraisal of the indebtedness of the business, which closely aligns with key
covenants in the Group's agreements. Net-zero carbon
Net zero carbon operations by 2030 covers scope 1 and 2 emissions from our Senior Leadership
buildings, including all building energy used by our student tenants, as well
Loan to value post IFRS 16 as selected scope 3 emissions as per the BBP Climate Change Commitment. Directors (including the executive committee and Company Secretary) and Heads
of Function.
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
see-through basis. NOI margin
The Group's NOI expressed as a percentage of rental income.
TCFD
LTV (EPRA)
The Taskforce on Climate-related Financial Disclosures develops voluntary,
Net debt as a proportion of the value of the rental properties including Nomination agreements consistent climate-related financial risk disclosures for use by companies in
balances in respect of leased properties and all other assets and liabilities.
providing information to investors, lenders, insurers and other stakeholders.
Agreements at properties where Universities have entered into a contract to
reserve rooms for their students, usually guaranteeing occupancy. The
Universities usually either nominate students to live in the building and
LSAV Unite enters into short-hold tenancies with the students or the University Total accounting return
enters into a contract with Unite and makes payment directly to Unite.
The London Student Accommodation Joint Venture (LSAV) is a joint venture
Growth in diluted EPRA NTA per share plus dividends paid, expressed as a
between Unite and GIC, in which both hold a 50% stake. LSAV has a maturity percentage of diluted EPRA NTA per share at the beginning of the period. In
date of September 2032.
the opinion of the Directors, this measure enables an appraisal of the return
Provincial generated by the business for shareholders during the year.
Properties located in Bournemouth, Coventry, Loughborough, Medway, Portsmouth
Major regional and Swindon.
Total shareholder return
Properties located in Aberdeen, Birmingham, Cardiff, Glasgow, Leeds,
Leicester, Liverpool, Newcastle, Nottingham, Sheffield and Southampton.
The growth in value of a shareholding over a specified period, assuming
Prime regional dividends are reinvested to purchase additional shares.
Properties located in Bristol, Durham, Bath, Edinburgh, Manchester and Oxford.
Net asset value (NAV)
USAF/the fund
The total of all assets less the value of all liabilities at each reporting
date. Property operating expenses The Unite UK Student Accommodation Fund (USAF) is Europe's largest fund
focused purely on income-producing student accommodation investment assets.
Operating costs directly related to rental properties, therefore excluding
central overheads The fund is an open-ended infinite life vehicle with unique access to Unite's
Net debt (EPRA)
development pipeline. Unite acts as fund manager for the fund, as well as
owning a significant minority stake.
Borrowings net of cash. IFRS 16 lease liabilities are excluded from net debt
on an EPRA basis. In the opinion of the Directors, net debt is a useful Rental growth
measure to monitor the overall cash position of the Group.
Calculated as the year-on-year change in the average annual price for sold WAULT
beds. In the opinion of the Directors, this measure enables a more meaningful
comparison in rental income as it excludes the impact of changes in occupancy. Weighted average unexpired lease term to expiry.
Net debt per balance sheet
Borrowings, IFRS 16 lease liabilities and the mark to market of interest rate
swaps, net of cash. Rental properties (leased) / Sale and leaseback Wholly owned
Properties that have been sold to a third party investor then leased back to Balances relating to properties that are 100% owned by The Unite Group PLC or
the Group. Unite is also responsible for the management of these assets on its 100% subsidiaries.
behalf of the owner.
Company information
Unite Group
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 EC4 3HQ
Financial Advisers
J.P. Morgan Cazenove
25 Bank Street, London E14 5JP
Deutsche Numis Securities
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
122 Leadenhall Street
City of London, EC3V 4AB
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