Unite Students maintains 2025 EPS outlook, sees 4-5% rental growth
Investing.com -- Unite Students (LON:UTG) on Tuesday reaffirmed its adjusted EPS guidance for FY2025 at 47.5-48.25p and maintained its rental growth forecast of 4-5%, according to its Q2 trading update.
The company said 85% of beds for the 2025/26 academic year have been sold, down from 94% at the same point last year. It still targets 97–98% occupancy.
Nomination agreements from universities account for 56% of total beds, compared to 57% last year.
Unite attributed the lower figures to a later sales cycle, aligned with pre-pandemic trends, and said demand remains strong, with U.K. 18-year-old university applications up 2% and total applications up 29% year-on-year through May.
Rental growth helped drive modest valuation gains across the company’s two major property funds.
The Unite U.K. Student Accommodation Fund (USAF) portfolio was valued at £2.94 billion as of June 30, reflecting a 0.6% like-for-like increase.
Rental income grew 1.3% during the quarter, with yields unchanged at 5.2%. The USAF portfolio includes 24,326 beds across 61 properties in 19 cities.
The London Student Accommodation Joint Venture (LSAV) portfolio rose 0.7% in value to £2.09 billion, with 0.6% quarterly rental growth and stable yields at 4.5%. LSAV comprises 9,710 beds in 14 properties across London and Birmingham.
USAF recently refinanced £395 million in bonds maturing in 2025 with a new £400 million eight-year secured loan from Rothesay Life, priced at a 5.6% interest rate.
Unite said the transaction was factored into its EPS guidance, which assumes a 4.1% weighted average cost of debt for 2025.
On development, Unite secured planning for a 2,000-bed scheme with Newcastle University, with delivery of the first phase expected in 2028/29.
A joint planning application with Manchester Metropolitan University for 2,300 beds was submitted in May, with entry into that venture expected by end-2025. Four additional planning applications are under review by the Building Safety Regulator.
Policy updates pose mixed signals. The May Immigration White Paper proposed reducing the post-study visa period from 24 to 18 months and introducing a levy on international student income.
Unite said it does not expect these changes to materially affect demand. Further details are expected in the Autumn Budget.
Meanwhile, the Renters’ Rights Bill, expected to become law this year, will exempt purpose-built student accommodation (PBSA) from new housing rules if it complies with approved codes of practice.
This exemption would likely apply from the 2026/27 academic year. Unite expects the bill to increase costs for students in the shared housing (HMO) sector and reduce its supply, which could benefit PBSA operators over time.
The company said its outlook remains positive, supported by strong application trends and growing university partnerships.
Don't miss out on the next big opportunity! Stay ahead of the curve with ProPicks – 6 model portfolios fueled by AI stock picks with a stellar performance this year..
In 2024 alone, ProPicks' AI identified 2 stocks that surged over 150%, 4 additional stocks that leaped over 30%, and 3 more that climbed over 25%. That's an impressive track record.
With portfolios tailored for Dow stocks, S&P stocks, Tech Stocks, and Mid Cap stocks, you can explore various wealth-building strategies.
So if UTG is on your watchlist, it could be very wise to know whether or not it made the ProPicks lists.
