As a provider of purpose-built student accommodation, Unite (UTG) is part of one of the healthiest sectors in the real-estate market, and net asset value grew by a tenth in the first half (see table). The property portfolio registered a £28.3m valuation uplift, although this was lower than the previous year, which accounts for the drop in headline profits.
Crucially, rental income grew by 6 per cent to £92.4m, driven by organic growth and acquisitions. This came despite joint-venture disposals, which netted Unite £181m, at a 3 per cent premium to book value. It also disposed of higher-priced studio accommodation schemes to focus on more affordable, shared flats where students can socialise as well as study.
Reservations for the 2017-18 academic year were up to 91 per cent, which is a record for this time of year, and 59 per cent of this income is underpinned by university nomination agreements. This is where a university guarantees to fill the building built by Unite at a prescribed rent. There is an annual inflation-linked rental uplift and existing agreements on average have six years to run. Over 85 per cent of rental income now comes from the UK’s top universities.
Analysts at Peel Hunt are forecasting adjusted net asset value of 695p at the year ending December 2017 (from 579p in 2016).
| UNITE (UTG) | ||||
| ORD PRICE: | 689p | MARKET VALUE: | £1.66bn | |
| TOUCH: | 688.5-689.5p | 12-MONTH HIGH: | 696p | LOW: 542p |
| DIVIDEND YIELD: | 2.8% | DEVELOPMENT PROP: | £263m | |
| PREMIUM TO NAV: | 4% | |||
| INVESTMENT PROP: | £1.8bn* | NET DEBT: | 43% | |
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 605 | 123 | 48.3 | 6 |
| 2017 | 663 | 84 | 36.7 | 7.3 |
| % change | +10 | -32 | -24 | +22 |
| Ex-div: | 05 Oct | |||
| Payment: | 03 Nov | |||
| *Including joint ventures | ||||
