Unite confident as focuses on high quality universities – Unite Group has published results for the year ended 31 December 2018. Highlights were:
- A 10% increase in EPRA NAV to 790p
- EPRA earnings up 25% to GBP88.4 million, 34.1p per share (2017: GBP70.5 million and 30.3p)
- 98% occupancy and like-for-like rental growth of 3.2% (2017: 99% and 3.4%)
- Increased dividend, up 28% to 29.0p, driven by growing earnings and higher payout
- Profit before tax up 7% to GBP245.8 million (2017: GBP229.4 million)
- Record level of reservations for 2019/20 academic year supports rental growth outlook
- Reservations for 2019/20 academic year at 75% in line with record levels in 2017
- Rental growth outlook for 2019/20 of 3.0-3.5% on a like-for-like basis
- Secured development and University partnerships pipeline of 6,579 beds for delivery over the next four years, generating an attractive 7.0% yield on cost
- Together with rental growth, these new openings net of disposals could add 13p to 17p to earnings per share on completion of the pipeline
- New EBIT margin target of 74% by end of 2021
- Disposal of 3,436 beds for GBP180 million (GBP85 million Unite share) to support increased focus on high-quality Universities
- LTV of 29% (2017: 31%), cost of debt reduced to 3.8% (2017: 4.1%)
Richard Smith, chief executive, commented: “2018 was another successful year for Unite. We made good progress against all of our core objectives and continued to deliver sustainable growth in our recurring earnings and cash flows. Our strong results remain underpinned by our brand, our sector-leading operating platform, the quality of our portfolio, our deep and valuable University relationships and sector fundamentals. These qualities set us apart in a sector that remains undersupplied and, more than ever, has a need for accommodation that is delivered efficiently and with a focus on value for money.
We continue to work in partnership with and align our portfolio to the strongest Universities in the UK, where student demand is both sustainable and at its greatest with 90% of our portfolio located at these Universities. This strategy has led to a further improvement in the quality and security of our income, with 60% of beds underpinned by agreements, in line with our target. University partnerships, alongside our development pipeline, are key drivers of continued growth and forward visibility of our earnings.
Looking ahead, we maintain our positive outlook for the business. Reservations for the 2019/20 academic year are in line with record levels for this time of year, supporting our like-for-like rental growth guidance of 3.0-3.5%. Our secured development and University partnerships pipeline of 6,579 beds being delivered over the next four years will further improve operating efficiency and generate significant earnings growth.
Whilst the backdrop of the ongoing Brexit negotiations and the impending review into Higher Education funding provide some uncertainty, our strategy of aligning to the best Universities and providing good-quality, value-for-money accommodation for resilient segments of the market reinforces our long-term confidence in the business. This confidence is reflected in our 28% increase in the full-year dividend.”
UTG : Unite confident as focuses on high quality universities