REG - Unite Group PLC - TRADING UPDATE AND Q1 FUND VALUATIONS

UniteAnnouncement

12/04/2023 07:00

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RNS Number : 8865V  Unite Group PLC (The)  12 April 2023

PRESS RELEASE

12 April 2023

THE UNITE GROUP PLC

('Unite Students', 'Unite', the 'Group', or the 'Company'
(http://www.investegate.co.uk/unite-group-plc--utg-/rns/outcome-of-usaf-fund-raising/201403310700235435D/)
)

TRADING UPDATE AND Q1 FUND VALUATIONS

 

Unite Students, the UK's leading owner, manager and developer of student
accommodation, today announces an update on current trading and quarterly
property valuations for the Unite UK Student Accommodation Fund ('USAF') and
the London Student Accommodation Joint Venture ('LSAV') as at 31 March 2023.

 

Richard Smith, Unite Students Chief Executive Officer, commented:

"We continue to make strong progress with bookings for the 2023/24 academic
year with 90% of rooms already sold, demonstrating the strength of student
demand and the attractiveness of our fixed-priced all-inclusive offer.
Reservations are significantly ahead of recent sales cycles, reflecting strong
demand from both new and existing students as well as new nomination
agreements with universities. This progress reinforces our confidence in
delivering rental growth of 6-7% for the 2023/24 academic year. Rental growth
also continues to support our property valuations as the market adjusts to a
higher funding cost environment.

 

The supply of purpose-built student accommodation cannot keep pace with
growing student demand at the same time as HMO landlords are leaving the
sector. We are therefore tracking a number of new development opportunities at
attractive returns, which we are uniquely positioned to deliver through our
university relationships and development capability. "

 

2023/24 lettings performance

We have seen continued strong progress in sales since our preliminary results
with 90% of rooms now sold for the 2023/24 academic year (2022/23: 78%).
Demand remains strong from both University partners and students booking
accommodation on a direct-let basis with reservations ahead of 2022/23 in
almost all markets.

 

This is supportive of our guidance for full occupancy and rental growth of
6-7% for the 2023/24 academic year (2022/23: 99% and 3.5%).

 

Development pipeline

The Group is committed to four development schemes, totalling £339 million of
cost and delivering a blended yield on cost of 6.7% for the PBSA elements. The
£200 million remaining costs to complete these projects will be funded
through the Group's cash and committed debt headroom of £437 million at 31
March.

 

Since our preliminary results we have made good progress in further improving
the returns on our uncommitted pipeline of four schemes through reductions in
land prices, in some cases, and greater certainty over build costs. We are
also tracking a pipeline of other new development opportunities offering
attractive returns. We hope to commit to a number of these schemes during
2023.

 

Funding update

USAF has agreed terms, and been granted full credit approval, for a new £400
million secured loan to refinance the £380 million June 2023 USAF bond
maturity. Based upon prevailing market interest rates, we expect an all-in
cost of debt of approximately 5.0-5.5%. This is consistent with our guidance
for a 3.6% cost of debt in 2023 on a see-though basis.

 

Quarterly fund valuations

At 31 March 2023, USAF's property portfolio was independently valued at
£2,888 million, unchanged on a like-for-like basis during the quarter.

 

LSAV's property portfolio was independently valued at £1,918 million,
reflecting a (0.1%) decrease on a like-for-like basis during the quarter.

 

The valuation movement in the quarter is driven by increased rental growth
with offsetting increases in property yields.

 

The USAF and LSAV portfolios are now valued at weighted average yields of 5.1%
and 4.2% respectively, increased by 5 and 10bps respectively from 31 December
2022.

 

                                    Drivers of LfL capital growth (Q1)
       Valuation       Valuation    Rental growth  Yield movement  Total

       December 2022   March 2023
 USAF  £2,888m         £2,888m      1.0%           (1.0%)          0.0%
 LSAV  £1,921m         £1,918m      2.4%           (2.5%)          (0.1%)

 

 

ENDS

 

 

 

For further information, please contact:

 

Unite Students

Unite press
office
Tel: +44 117 450 6300

 

Powerscourt

Justin Griffiths / Victoria
Heslop
Tel: +44 20 7250 1446

 

 

About Unite Students

Unite Students is the UK's largest owner, manager and developer of
purpose-built student accommodation (PBSA) serving the country's world-leading
higher education sector. We provide homes to 70,000 students across 157
properties in 23 leading university towns and cities. We currently partner
with over 60 universities across the UK.

Our people are driven by a common purpose: to provide a 'Home for Success' for
the students who live with us. Unite Students' accommodation is safe and
secure, high quality, and affordable. Students live predominantly in en-suite
study bedrooms with rents covering all bills, insurance, 24-hour security and
high-speed Wi-Fi. We also achieved a five-star British Safety Council rating
in our last audit.

We are committed to raising standards in the student accommodation sector for
our customers, investors and employees. This is why our Sustainability
Strategy, launched in 2021, includes a commitment to become net zero carbon
across our operations and developments by 2030.

Founded in 1991 in Bristol, the Unite Group is an award-winning Real Estate
Investment Trust (REIT), listed on the London Stock Exchange. For more
information, visit Unite Group's corporate website www.unitegroup.com
(http://www.unitegroup.com/) or the Unite Students'
site www.unitestudents.com (https://www.unitestudents.com/)

 

 

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