Unite Students – Results for the year ended 31 December 2023
HIGHLIGHTS
Full occupancy in 2023/24, strong demand for 2024/25
· 99.8% occupancy and 7.4% rental growth for the 2023/24 academic year (2022/23: 99.3% and 3.5%)
· Strong reservations for 2024/25 80% (2023/24: 83%)
· 44.3p adjusted EPS in 2023, +8% YoY (2022: 40.9p)
Sustained earnings growth from our best-in-class platform
· Confident in delivering rental growth of at least 6% for 2024/25 (previously at least 5%)
· Guidance for 3-5% growth in adjusted EPS in 2024 to 45.5-46.5p
· Targeting 10-12% Total Accounting Return (TAR) in 2024, before yield movement
· Earnings growth to accelerate from 2026 as development completions increase
· £26 million technology upgrade to enhance customer experience and EBIT margins from 2025
Housing supply unable to meet student demand
· Significant need for high-quality, affordable student homes
· New PBSA supply 60% below pre-pandemic levels and over 100,000 reduction in HMO beds available
Investment activity aligned to the strongest universities
· Delivery of £60 million Morriss House development in Nottingham at 8.5% yield on cost
· Rental portfolio enhanced through £24 million of refurbishments at a 9% yield on cost
· £197 million of disposals held for sale to improve portfolio quality (Unite share: £79 million)
Record £1.3 billion development pipeline in the strongest markets
· £569 million committed pipeline in Russell Group cities at 6.5% yield on cost
· £250 million joint venture agreed with Newcastle University announced in February
· Future development pipeline of £452 million at 6.7% yield on cost in cities with tightest supply
· New London scheme added to future pipeline for delivery in 2028
· Targeting £50-75 million p.a. of refurbishment projects at 8%+ yield on cost
Strong balance sheet underpinned by resilient valuations
· £5,510 million portfolio valuation (Unite share), up 1.2% on a like-for-like basis (2022: £5,397 million)
· 7.4% rental growth offsetting 31bps yield expansion
· TAR of 2.9% (2022: 8.1%), reflecting 1% reduction in NTA to 920p (2022: 927p)
· Continued investment in fire safety, resulting in 9p of new commitments net of claims
· Net debt: EBITDA reduced to 6.1x (2022: 7.3x), with LTV of 28% (2022: 31%)
Delivering on sustainability targets
· Significant improvement in EPC ratings, over 99% of portfolio now A-C rated (2022: 80%)