Unite taps into student demand

Reservations at Unite are already high, with 92 per cent of all available rooms reserved - up from 90 per cent a year earlier - and rental growth for the current year is expected to be at least 3 per cent. At the half-year stage, Unite’s share of rental income - including that from its joint ventures - grew 10 per cent to £64m, while cost savings lifted the net operating income margin from 75.6 per cent to 75.9 per cent.

Four new development projects for 2,300 beds are under way, too. Planning consent has also been secured for two developments in London for 1,600 beds and two further schemes for 1,000 beds in regions outside of London. In addition, the group's USAF co-investment vehicle acquired a regional portfolio of 3,000 beds, while a maturing joint venture and other disposals saw 1,900 beds sold. Over all, the development programme of contractually secured projects is expected to boost net asset value by 32p per share upon completion.

Meanwhile, low regional land values imply income yields (essentially, expected rents as a proportion of land values) of around 9.5 per cent, which will then re-rate to 6.5 per cent upon the development's completion. This signals significant asset growth, which broker Peel Hunt estimates will boost net asset value (NAV) by 12 per cent annually for the next three years. The broker expects full-year adjusted NAV of 428p a share (from 380p in 2013).