Unite director buys into recovery rally

Student landlord Unite (UTG) is among the heap of UK real estate groups that have benefited from renewed confidence following the vaccine breakthrough. In fact, the shares are trading at their highest point in over a year, having gained almost a fifth in value since the start of November. It is a recovery rally that non-executive director Richard Akers has also bought into, purchasing shares worth almost £94,000. 

Investors have cause for encouragement. In April, reservations for the 2021/2022 academic year stood at 73 per cent of beds in the portfolio. While that was behind a rate of 80 per cent for 2020/21 at the same point last year, it is up from 66 per cent in mid-March.

The accommodation provider was already ahead of rival Empiric Student Property (ESP) in March thanks to a greater focus on the domestic market, which has eased the impact of international travel restrictions on overseas student numbers. 

Core investment vehicle, the Unite UK Student Accommodation Fund, posted a 0.5 per cent increase in value on a like-for-like basis during the quarter, while the London Student Accommodation Joint Venture received a 1.3 per cent rise. Both reflected not only improved performance so far, but expectations of a return to full occupancy. 

Consensus forecasts put adjusted earnings at 28.4p this year, before recovering back above 2019 levels in 2022. Similarly EPRA NAV is expected to be higher than the pre-pandemic level by the end of next year at 917p a share. At 1,163p, that leaves the shares trading at a 27 per cent premium, edging closer towards the pre-pandemic peak valuation. Move to hold. 

Last IC view: Buy, 952p, 28 Jan 2021