25 July 2023
If you are covering the half year results of student accommodation specialist, Unite Group, including a new £300m capital raise, please find comments below from Oli Creasey, equity research analyst at Quilter Cheviot:
“Unite Group, the publicly-listed student accommodation REIT, announced half-year results overnight. The student accommodation market is one that is especially robust, with rental growth expected as demand comfortably outstrips supply. Unite has forecast +7% rental growth for the next academic year and at least +5% for the year after. This is helping to underpin relatively tight investment yields – the yield across Unite’s portfolio has moved outwards slightly, but is still only 4.9% on average, with tighter yields available in London and other prime markets.
“Alongside its half year results, Unite has announced a £300m placing of shares, which has now closed at a price of 905p, a narrow discount to yesterday’s share price (-4.2%) and the reported NAV (-2.5%). The placing is significant for Unite, who is looking to fund new development projects in Bristol and London at a 6.7% development yield, but also for the wider REIT market, which hasn’t seen any material equity raised since May 2022. Unite is unusual as it’s just about the only UK REIT trading close to NAV, so while we are unlikely to see an immediate flurry of raises from other REITs, it is a sign of life in a market that has been in the doldrums for over a year now. Management and investors have shown confidence in this sub-sector, and we believe this could percolate out to other parts of the property market in due course.”
