Unite Group reported strong returns over 2024 boosted by growing university applications (including overseas student demand) and dwindling supply of quality accommodation.
The company posted 8.2% rental growth for the 2024/25 academic year and 97.5% occupancy (2023/24: 7.4% and 99.8%), with adjusted earnings per share up 5.2% to 46.6p.
EPRA net tangible assets (NTA) was up 5.7% to 972p per share (2023: 920p), with the value of its portfolio growing 4.8% on a like-for-like basis to £6.0bn (2023: £5.5bn).
NAV total return (including dividends) was an impressive 9.6%.
Loan to value (LTV) reduced to 24% (from 28%), mainly due to the valuation increase. The cost of debt was 3.6%, but is expected to increase to 4.1% in 2025. The net debt to EBITDA ratio reduced to 5.5x (2023: 6.1x).
Other highlights
University applications by UK 18-year-olds increased 2% for the 2025/26 academic year, while international student numbers up 3%, with 9% growth from China.
The company said international student demand was 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. However, Unite said that it was not expecting any further visa changes in the near term, with a more supportive government, and the most recent visa issuance was up 14% year-on-year.
The company acquired £281m (£210m Unite share) of value-add properties in the year and made £304m (£161m Unite share) of disposals.
A fully funded and committed development pipeline worth £1,048m is under construction or planned in Russell Group university cities, at a yield on cost of 6.8%. It is estimated that these will add £71m to net operating income as they complete over the next four years.
2025/26 outlook
The company said that it has reserved 70% of beds for the 2025/26 academic year (down from the 79% achieved at this point last year, reflecting a normalisation sales cycle later in the year.
Nomination agreements (where universities reserve the beds for its first year students) accounts for 57% of beds reserved for 2025/26 (2024/25: 57%).
Supply and demand characteristics remain strong, with new purpose built student accommodation (PBSA) supply 60% below pre-pandemic levels and the competing housing in multiple occupancy (HMO) sector in decline.
The company said that it was on-track to deliver rental growth of between 4% and 5% for 2025/26 with 97%-98% occupancy. It has guided adjusted earnings per share of between 47.5p and 48.25p in 2025 and is targeting a NAV total return of between 8% and 10%, before any yield movement on the value of its portfolio.
Joe Lister, chief executive, 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.”
