Unite Group Reaffirms Confidence in Empiric Acquisition Despite Occupancy Dip

Unite Group (LON: UTG) has reiterated its confidence in the acquisition of Empiric Student Property plc, despite Empiric's recent trading update revealing slightly lower-than-expected occupancy rates.

The student accommodation provider anticipates the acquisition will still deliver earnings and dividend accretion, underpinned by projected annual run-rate synergies of at least £13.7 million.

Empiric's trading update indicated an occupancy rate of 89% for the 2025/26 academic year (October 2024: 95%) and like-for-like rental growth of 4.5%. While the occupancy figure is below Unite's initial expectations, rental growth aligns with projections. The update also noted increased demand from UK domestic students, partially offsetting a decline in bookings from Chinese students.

Unite emphasized that its appraisal of the Empiric acquisition already factored in lower occupancy and rental growth compared to the previous academic year, which was reflected in the offer terms. The company believes there is still potential to improve occupancy through further letting activity for the Spring intake of postgraduate courses.

The strategic rationale behind the acquisition centers on Empiric's established platform for expansion among returning students. Unite plans to integrate Empiric's portfolio and leverage its operational platform, strong university relationships, and enhanced customer retention strategies to improve occupancy rates over the next three years.

Unite remains confident in achieving its target cost savings, drawing on its experience from the acquisition of Liberty Living in 2019, which successfully delivered £18 million in annual synergies. The company is actively preparing for integration following the completion of the acquisition.

Following approval of the transaction by Empiric shareholders, the Competition and Markets Authority (CMA) has commenced its Phase 1 investigation. Unite anticipates the scheme will become effective by the second quarter of 2026, subject to the remaining terms and conditions outlined in the Scheme Document.

Unite will host an event for institutional investors and analysts on November 27th at Deutsche Numis' office. The event will provide updates on the Higher Education sector, a review of the 2025/26 sales cycle, the outlook for 2026/27, and future investment plans.