Unite Group reports jump in profit as student accommodation shortage drives rents higher

Student landlord Unite Group has reported a jump in earnings for 2023 on the back of strong occupancy levels and higher rents.

Earnings came in at £184m for 2023, up 13 per cent from the year before. Earnings per share rose eight per cent to 44.3p – its target was between 43p and 44p.

Unite is the UK’s biggest listed student landlord and owns and operates 70,000 beds across the country.

The group’s rental income jumped nine per cent to £370m last year, which it said was due to higher occupancy, rental growth and an increased share of the Unite UK Student Accommodation Fund.

The group’s net asset value declined slightly by one per cent to 920p, but the company proposed a final dividend of 23.6p for the year, taking the full-year distribution to 35.4p.

Unite raised its guidance to six per cent rental growth for the 2024/25 academic year, previously guiding at least five per cent.

Unite’s operating expenses rose 18 per cent for like-for-like properties, which it pinned on higher utility and staffing bills as rooms returned to full occupancy, as well as an increase in bad debt provisions.

The UK’s supply of student housing remains tight, with analysts at Stifel noting that development deliveries remain 60 per cent below pre-Covid levels despite growth in demand.

Unite chief executive Joe Lister said on Tuesday: “The supply-demand imbalance of student accommodation is acute and continues to intensify. We play a leading role in tackling this shortage, easing pressure on the wider housing market and freeing up homes for families.

“Our development and asset management pipeline stands at a record £1.3bn and we are taking an innovative approach to delivering more homes for students. University partnerships provide a compelling opportunity to deliver new, high-quality accommodation and our first joint venture with Newcastle University is only possible for a business of our reputation, scale and development expertise.”

Unite’s pipeline includes £569m in Russell Group cities, a £250m joint venture with Newcastle University £569 and £452m earmarked for future projects in cities with the tightest supply, as well as a new London scheme slated for 2028.