Unite (UTG) is forging ahead with the integration of its £1.4bn Liberty Living acquisition, adding a portfolio of 24,000 beds and achieving cost synergies of £5m to £6m in 2020. That's ahead of schedule, so the student accommodation group now expects £15m in synergies in 2021.
Unite looks to have shrugged off concerns surrounding the inflow of higher education students in a post-Brexit world. While it acknowledges that Brexit and the future of higher education funding do provide some uncertainty, the group is nevertheless seeking more development opportunities, including sites in zones 1 and 2 of London.
Like-for-like rental growth edged up to 3.4 per cent from 3.2 per cent a year earlier. Unite anticipates meeting its target range of 3-3.5 per cent for the 2020/21 year, owing to a lift in utilisation rates and price rises. Reservations should sit at 73 per cent, in line with its record 2018 level.
With a secured development and university partnerships pipeline of £681m, new openings net of disposals could add 16p-20p to earnings per share. Benefiting from its portfolio focus on high- and mid-ranked universities, it secured a £249m share of £298m in disposals in 2019.
Peel Hunt is forecasting an adjusted net asset value (NAV) of 902p per share for December 2020, up from 846p in 2019.
| UNITE GROUP (UTG) | ||||
| ORD PRICE: | 1,257p | MARKET VALUE: | £4.57bn | |
| TOUCH: | 1,256-1,258p | 12-MONTH HIGH: | 1,351p | LOW: 888p |
| DIVIDEND YIELD: | 2.6% | DEVELOPMENT PROPERTIES: | £412m | |
| PREMIUM TO NAV: | 49% | NET DEBT: | 51%** | |
| INVESTMENT PROPERTIES: | £4.8bn* | |||
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 579 | 105 | 23.1 | 15.0 |
| 2016 | 653 | 201 | 101.3 | 18.0 |
| 2017 | 717 | 229 | 95.3 | 22.7 |
| 2018 | 787 | 246 | 90.8 | 29.0 |
| 2019 | 845 | -101 | -31.5 | 33.2 |
| % change | +7 | - | - | +14 |
| Ex-div: | 13 Apr | |||
| Payment: | 15 May | |||
| *Includes joint ventures, **Includes lease liabilities of £105m | ||||
