Image source: © 2025 Krish Capital Pty. Ltd.

Highlights:

  • UTG affirms FY25 earnings guidance as lettings reach 85% for FY25-26 academic year
  • UTG's USAF and LSAV property valuations rise by 0.6% and 0.7% in Q2FY25
  • UTG receives planning approval for 2,000-bed Newcastle JV and submits application in Manchester

Unite Group plc (LSE:UTG), a major UK-based student accommodation provider, released a trading and valuation update for Q2 2025, reflecting ongoing progress in lettings, rental growth, development activity, and refinancing. The company continues to operate the Unite UK Student Accommodation Fund (USAF) and the London Student Accommodation Joint Venture (LSAV) two key vehicles in its portfolio strategy.

As of 30 June 2025, the company reported that 85% of its beds had been reserved for the FY25-26 academic year, compared to 94% during the same period last year. Management reiterated full-year adjusted EPRA earnings guidance in the range of 47.5 to 48.25 pence per share. Rental income growth of 4–5% is anticipated for the year, with expected occupancy of 97–98%.

The company noted that while lettings are tracking slightly behind the prior year, the sales cycle is unfolding later, consistent with previous market trends. Applications from UK 18-year-olds are up by 2%, and student visa applications have risen 29% year-to-date. Approximately 56% of Unite's rooms are under nomination agreements with university partners, maintaining a similar proportion as in FY24-25.

Sales momentum is expected to pick up in August and September, driven by domestic student placements after A-Level results and international arrivals. Unite remains aligned with high-demand university locations, which it views as a driver for stable long-term occupancy and rental yield performance.

The company commented on recent UK government policy updates, including the May 2025 Immigration White Paper, which proposed reducing post-study work visa durations from 24 to 18 months and hinted at a levy on international student income. While further details are expected in the Autumn Budget, management does not currently anticipate significant disruption to international student demand for high-ranking universities.

The upcoming Renters' Rights Bill, which may come into effect in the FY25-26 academic year, includes provisions that could exempt purpose-built student accommodation (PBSA) from certain rules, provided they comply with government-endorsed codes of practice. Unite has operated under such codes for years and continues to engage with regulators on implementation details.

The company expects the legislation to increase compliance costs in the HMO (Houses in Multiple Occupation) segment, potentially reducing supply and shifting more students toward PBSA options.

In terms of development, planning approval has been secured for the Castle Leazes site in Newcastle a 2,000-bed joint venture with Newcastle University. Site work is expected to commence later this year for a targeted completion in time for the FY28-29 academic year.

Unite has also submitted a joint planning application with Manchester Metropolitan University for a 2,300-bed project at Cambridge Halls. Entry into this joint venture is expected around the end of 2025.

Four additional development projects are awaiting pre-construction approvals from the Building Safety Regulator (BSR). Management noted that regulatory delays remain a challenge but added that efforts are underway to stay aligned with targeted delivery timelines.

Unite announced that USAF has refinanced its GBP 395 million 2025 bonds via a new GBP 400 million eight-year loan from Rothesay Life, priced at 5.6%. With no major maturities until 2029, the company retains its guidance for a 4.1% weighted average cost of debt for FY25.

In terms of valuations, USAF’s portfolio increased 0.6% quarter-over-quarter to GBP 2.94 billion, supported by 1.3% rental growth. The portfolio spans 24,326 beds across 61 properties in 19 university towns. LSAV’s portfolio rose 0.7% to GBP 2.09 billion, with 0.6% rental growth and stable yields at 4.5%. LSAV covers 9,710 beds in 14 London-based properties and Birmingham’s Aston Student Village.

As of 8 July 2025, Unite Group shares were trading 0.49% lower at GBX 814.50 per share.