Unite Group (LON: UTG) shares fell to their lowest level since 2014 in early trade today after its third-quarter update showed rents slipping and property valuations dropping. The student accommodation landlord kept its earnings guidance but said higher interest rates are prolonging its asset sales.
At 8.45am the shares were down about 3.5% at 426.85p, from 442.2p yesterday, their lowest since November 2014. That is about 23% below the closing high of 557.5p on the 27th of July, and about 24% down this year.
Unite sold 95.6% of its beds for 2026/27, against 95.3% a year earlier and inside its 94% to 96% guidance. Like-for-like income grew only 0.6%, as a modest occupancy gain was offset by a 0.3% fall in annual rent per bed. A shift towards undergraduates, who take shorter tenancies, hit pricing on direct lets.
Its Empiric (Hello Student) business sold 92% of beds, up from 87%, with income growth of about 5%. Full-year adjusted earnings per share guidance was reiterated at 41.5p to 43.0p.
The weaker point was valuations at the 30th of September. Unite’s two property funds, USAF and LSAV, fell 4.0% to £2,815m and 3.4% to £1,900m over the quarter. Yields rose about 10 basis points in each, and income fell. Year to date, USAF is down 7.9% and LSAV down 9.1%.
The release attributed the falls to higher investor return requirements and to lower rental values where 2026/27 income came in below valuers’ earlier assumptions.
Disposal proceeds fund committed development spend and reduce leverage. Unite has completed £200m of sales this year at a weighted average yield of 3.0% and a 6% discount to book value, with £225m under offer against a £300m to £400m target. It said transaction timelines remain protracted because of uncertainty created by higher interest rates.
Chief executive Joe Lister said:
We are making good progress on our strategy to increase alignment to the UK’s strongest universities and are on track to deliver £300-400 million (Unite share) of disposals this year in a market which continues to adjust to higher interest rates.
Joe Lister, chief executive, Unite Group
Pro forma net debt to EBITDA, a measure of borrowing against earnings, was 7.3x against 7.5x at the end of June and a 6x to 7x target. Surplus capital is earmarked for share buybacks and university partnerships.
