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1. Company Snapshot

1.a. Company Description

Unite Students is the UK's largest owner, manager and developer of purpose-built student accommodation serving the country's world-leading Higher Education sector.Following our successful £1.4bn acquisition of Liberty Living's UK assets in November 2019, we now provide homes to 76,000 students across 177 properties in 27 leading university towns and cities.Our people are driven by a common purpose: to provide a 'Home for Success' for the students who live with us and to be the most trusted brand in the sector.


We do this through quality service, quality people and quality properties, all designed on the basis of an excellent insight into students' needs and preferences.Unite's accommodation is high quality, affordable, safe and secure, and located where students want to live.Students live predominantly in en-suite study bedrooms with rents covering all bills, insurance, 24-hour security and high-speed Wi-Fi. MyUnite, our mobile app, provides practical support such as instant messaging and maintenance requests.


We hold a five-star British Safety Council audit rating (out of five) following an Occupational Health and Safety audit.The audit measured our performance against a number of key safety management indicators, providing an international benchmark for safety management systems and indicating best practice for continual improvement.Our commitment to customer service is powered by an innovative, in-house operating platform.


It provides a wide range of benefits to our students, such as an optimised online booking process, as well as providing us with a unique ability to drive value from our portfolio through scale efficiencies and revenue management.Our other strategic priority is delivering growing and sustainable earnings, underpinned by a strong capital structure.A key part of this strategy is growing the number of beds let through partnerships with the strongest UK universities which are experiencing record levels of student demand.


We currently partner with 60 universities across the UK, guaranteeing that 52% of our rooms are let under 'nomination agreements' providing high visibility of forward occupancy and rental growth.Unite Students has spent years helping young people thrive in new situations and help them manage the big ‘Leap' to university life.Our insight has identified a significant gap between student expectations and reality.


To support this leap, we have developed the Leapskills programme, helping to prepare prospective students for independent living.The programme introduces students to a number of student life scenarios to provoke group discussion on conflict resolution, problem solving and gives a general insight into shared living to help closer match expectations to reality.Unite is the founder of and major donor to the Unite Foundation, a charitable trust established to support talented students facing challenging financial circumstances through the provision of free accommodation scholarships.


The Foundation has so far provided scholarships for 434 young people working in close collaboration with 27 partner universities.Unite is invested in and operates two specialist funds and joint ventures with institutional investment partners: the £3 billion Unite UK Student Accommodation Fund (USAF), and the £1 billion London Student Accommodation Vehicle (LSAV).Founded in 1991 in Bristol, Unite Group is an award-winning Real Estate Investment Trust (REIT), listed on the London Stock Exchange and a member of the FTSE 250 Index.

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1.b. Last Insights on UTG

Unite Group's recent performance was impacted by several factors. Despite reiterating its guidance for the current sales cycle and announcing a new share buyback program, the company faced a cautious tone in the market. The UK mid-cap sector experienced calm post-Budget trade, but Unite Group's fundamentals were overshadowed by broader market sentiment. Additionally, several Form 8.3 filings indicated changing shareholder positions, potentially influencing the stock. With no significant new product announcements or legal issues reported, the company's performance was likely affected by evolving business conditions and investor sentiment.

1.c. Company Highlights

2. Unite Group's Earnings Report: Navigating a Challenging Market

The company's financial performance in 2025 was marked by a 4.9% like-for-like income growth, driven by strong rate growth, resulting in revenues of £313.4 million. However, operating costs increased by 9%, partly due to the integration of Empiric. The actual EPS came out at £0.1669, in line with estimates. The company's net debt EBITDA is within the target range of 6x-7x, and the expected increase in the cost of debt to 4.3% in 2026 may impact profitability.

Publication Date: Feb -25

📋 Highlights
  • Occupancy Decline: Current occupancy at 68% (vs. 71% YoY), with 3 percentage points drop driven by weak occupancy in three cities due to students living at home and declining international postgraduates.
  • Cost Savings Target: GBP 30 million cost savings target by 2026, including GBP 20% reduction in central team costs and GBP 7 million annual savings from tech upgrades.
  • Repositioning Portfolio: GBP 300 million portfolio sale launched to accelerate repositioning, alongside GBP 100-200 million surplus capital annualized from disposals and reduced CapEx.
  • Income Growth Guidance: 2025 like-for-like income growth at 4.9%, but 2026 guidance cut to 0-2% due to nomination shortfalls and Empiric acquisition impacts.
  • Tech & Integration Savings: GBP 7 million annual operating cost savings from tech upgrades, with GBP 2 million already realized in 2025; GBP 17 million synergy target increased for Empiric by 2026.

Operational Performance

Occupancy stood at 68% versus 71% last year, with nominations back 4% year-on-year. However, bookings are up 25% year-on-year in recently opened and refurbished properties. Rental growth is currently at 2.4%, at the lower end of the company's guidance. The company is making good progress in stabilizing its recently opened and refurbished properties, and is confident that it can drive significant commercial improvements through its sales platform.

Valuation Metrics

With a P/E Ratio of 7.13 and a Dividend Yield of 6.19%, the company's valuation appears to be reasonable. The Net Debt / EBITDA ratio of 7.48x indicates a significant level of debt, but the company is confident that it can maintain leverage appropriate for its business. The EV/EBITDA ratio of 23.67 suggests that the company's enterprise value is relatively high compared to its EBITDA.

Outlook

The company expects a slower start to the sales cycle in 2026, with a reduction of 1,000-2,000 beds in nomination agreements. However, it is confident that it can pivot these beds to direct let sales if required. The company is targeting cost savings of £30 million across the Unite and Empiric businesses by the end of 2026, and has already reduced central team costs by 20%. The guidance for 2026 assumes that the company will be able to capture reversion on under-rented nomination agreements, and is forecasting 0-2% growth in like-for-like income for the academic year.

Growth Strategy

The company is focused on high-tariff universities, which have seen strong growth in numbers, and is confident that it can return to its core occupancy levels over time. The company is also exploring options to realize value from its uncommitted pipeline, and expects to generate around £100-200 million per annum of surplus capital from executing on its disposal plan and reducing development CapEx. As Mike Burt mentioned, "We've made good progress in our capital allocation framework, forming two university partnerships and starting construction of new on-campus beds."

3. NewsRoom

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Form 8.3

Jan -23

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Form 8.3

Jan -22

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Form 8.3

Jan -21

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Form 8.3

Jan -20

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Form 8.3

Jan -19

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Form 8.3

Jan -16

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Form 8.3

Jan -15

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Form 8.3

Jan -14

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.00%)

6. Segments

Operations

Expected Growth: 8%

Unite Group Plc's 8% operational growth is driven by increasing demand for student accommodation, strategic expansion into new markets, and effective cost management. Additionally, investments in technology and operational efficiencies have improved yields and margins. Strong partnerships with universities and a focus on customer experience have also contributed to the growth.

Reconciling Items

Expected Growth: 10%

Unite Group Plc's 10% growth driven by increasing demand for student accommodation, expansion into new markets, and strategic partnerships. Rising university enrollment, limited supply, and growing appeal of PBSA (Purpose-Built Student Accommodation) also contribute to growth. Effective cost management, investment in technology, and focus on customer experience further support revenue expansion.

7. Detailed Products

Student Accommodation

Unite Group Plc provides purpose-built student accommodation, offering a range of room types and amenities to students in the UK.

Nomad Student Homes

Nomad is Unite's brand for student accommodation, offering a range of room types and amenities to students in the UK.

Liberty Living

Liberty Living is Unite's brand for student accommodation, offering a range of room types and amenities to students in the UK.

Property Investment

Unite Group Plc invests in and manages a portfolio of student accommodation properties in the UK.

Property Development

Unite Group Plc develops new student accommodation properties in the UK, working with universities and local authorities.

8. Unite Group Plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Unite Group Plc operates in a niche market, providing student accommodation, which reduces the threat of substitutes. However, the company still faces competition from other student accommodation providers, which keeps the threat level at medium.

Bargaining Power Of Customers

Unite Group Plc has a large customer base, comprising of students, which reduces the bargaining power of individual customers. Additionally, the company has a strong brand presence, which further reduces the bargaining power of customers.

Bargaining Power Of Suppliers

Unite Group Plc relies on a network of suppliers for construction, maintenance, and other services. While the company has some bargaining power due to its scale, suppliers still have some negotiating power, keeping the threat level at medium.

Threat Of New Entrants

Unite Group Plc operates in a highly regulated industry, and new entrants would need to comply with various regulations, which creates a barrier to entry. Additionally, the company's established brand and scale of operations make it difficult for new entrants to compete.

Intensity Of Rivalry

Unite Group Plc operates in a competitive market, with several established players competing for market share. The company needs to continuously innovate and improve its services to maintain its market position, which increases the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 21.09%
Debt Cost 3.95%
Equity Weight 78.91%
Equity Cost 9.82%
WACC 8.58%
Leverage 26.73%

11. Quality Control: Unite Group Plc passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Cofinimmo

A-Score: 6.5/10

Value: 3.9

Growth: 2.3

Quality: 5.8

Yield: 10.0

Momentum: 8.5

Volatility: 8.7

1-Year Total Return ->

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LondonMetric Property

A-Score: 6.4/10

Value: 4.4

Growth: 5.7

Quality: 6.4

Yield: 8.8

Momentum: 4.0

Volatility: 9.3

1-Year Total Return ->

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MERLIN Properties

A-Score: 6.4/10

Value: 4.2

Growth: 4.0

Quality: 6.6

Yield: 7.5

Momentum: 7.5

Volatility: 8.3

1-Year Total Return ->

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Covivio

A-Score: 6.1/10

Value: 3.9

Growth: 4.2

Quality: 3.9

Yield: 9.4

Momentum: 6.0

Volatility: 9.0

1-Year Total Return ->

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LandSec

A-Score: 6.0/10

Value: 4.4

Growth: 3.2

Quality: 6.2

Yield: 8.8

Momentum: 5.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Unite

A-Score: 5.3/10

Value: 4.5

Growth: 6.3

Quality: 6.2

Yield: 6.9

Momentum: 0.5

Volatility: 7.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

4.96$

Current Price

4.96$

Potential

-0.00%

Expected Cash-Flows