Student accomodation provider Unite Group (UTG) said it was stepping up asset sales to boost income this year. The group reiterated rental growth and occupancy levels would both be at the lower end of forecasts in FY26.
Low end of guidance
So far, the company has sold £130 million of property assets and another £500 million are earmarked for sale. The firm expects asset sales this year to be between £300 million and £400 million.
Unite warned in February it had seen weaker student demand in a number of university towns and cities. The number of international and postgraduate students has fallen, while more undergraduates are choosing to live at home.
For the 2026/27 academic year, the firm expects occupancy to be at the low end of its 93% to 96% range. So far, only 74% of beds have been reserved for the current sales cycle against 76% this time last year.
Rents are expected to rise by around 2%, the low end of the firm’s target range, compared with 4% last year. The company is in ‘active discussions’ with several high-quality universities for new multi-year nomination agreements to secure future income.
The situation hasn’t been helped by the underperformance of Empiric, acquired last year for £634 million. Room booking for 2026/27 are just 33% of capacity against 48% last year and the group’s target of 85%.
Student accomodation used to be a big money-spinner but Unite appears to have over-extended itself. On top of that, Empiric – which was meant to be earnings-enhancing – is weighing the group down.
The firm says it’s selling assets to align itself with the best universities and raise the quality of the portfolio. Whether there’s a market for £500 million of property with lower occupancy rates and operating margins remains to be seen.
At the same time, the company is pressing on with its share buyback programme, which seems odd. Yes, the shares have collapsed since the warning in February, but who’s to say they are below fair value?
Read the press release here: https://www.unitegroup.com/investors
