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Full year results for the year to 31 December 2015 – 23 February 2016

10 November 2016

The Unite Group plc, the UK’s leading developer and manager of student accommodation, announces its full year results for the year ended 31 December 2015.


Excellent financial performance on all fronts

  • EPRA earnings up 84% to £61.3 million from £33.3 million. Excluding the yield related element of the USAF performance fee, Adjusted EPRA earnings up 49% to £49.5 million.
  • EPRA earnings per share up 66% to 28.6 pence from 17.2 pence in 2014. Excluding the yield related element of the USAF performance fee, Adjusted EPRA EPS up 34% to 23.1 pence.
  • EPRA NAV per share up 33% to 579 pence (2014: 434 pence) making, together with dividends paid, a total return of 37% for the year. The calculation of EPRA NAV per share now reflects an assumption that the convertible bond will fully convert, resulting in dilution of 10 pence.
  • Full year dividend of 15.0 pence up 34% (2014: 11.2 pence). Final dividend declared of 9.5 pence (2014: 9.0 pence).
  • Like for like rental growth of 3.8% for the full year (2014: 3.3%).
  • Average yield compression across the portfolio of 70bps for the year (2014: 15bps) to 5.55% net initial yield as at December 2015.
  • IFRS profit before tax increased to £388.4 million (2014: £108.4 million)

Continued momentum in scale and quality of portfolio

  • Operational portfolio increased to 46,000 beds valued at £3.8 billion; Unite share £1.8 billion (2014: 43,000 beds valued at £2.9 billion, Unite share £1.5 billion).
  • Development portfolio increased to 6,800 beds valued at £230 million (2014: 6,700 beds valued at £114 million.
  • Planning consents in place or well progressed for all 2017 projects (2,300 beds) and secured 2018 pipeline proceeding well (1,400 beds).
  • Net debt broadly flat at £731 million (2014: £697 million) and see-through loan-to-value ratio reduced to 35% (2014: 43%).

Strong brand and scalable operating platform an increasing source of competitive advantage

  • Independent customer satisfaction and University trust scores at highest ever levels.
  • Initial phases of new operating system, Prism, successfully launched and full launch on track for April 2016.
  • Overhead efficiency measure improved to 48bps from 61bps and on track to achieve 25-30bps target by 2017.  

Outlook remains positive

  • Student numbers continue to grow (intake up 3.9% for 2015/16), supported by Government policy, with mid to higher ranked Universities performing more strongly.
  • Increased focus on earnings and lower leverage underpins the intention to convert to REIT status in early 2017 and increase dividend pay-out ratio by 10% thereafter.
  • Rental growth for 2016 expected to be at least as strong as that achieved for 2015.
  • Unite’s development activity in strong regional locations remains feasible despite increasing competition for sites. Yields on cost of around 8.5% remain achievable although these returns may moderate towards 8.0% for 2019 deliveries.
  • The delivery of our development pipeline together with rental growth and capacity for further development, could see our earnings per share grow by a further 16 to 21 pence over the next few years.

Mark Allan, Chief Executive of Unite Group, commented:

“2015 was another year of strong performance for Unite Students. We have continued to deliver against our consistent, focused strategy and as a result remain well placed to benefit from strong market fundamentals in the UK student accommodation sector.

“Looking forward, we continue to see opportunities to grow our business in a way which will enhance both financial returns and portfolio quality. The keys to this will be leveraging our valuable, market leading brand and scalable platform coupled with continued discipline in our investment and development activities.”