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Full year results for the year to 31 December 2016 – 22 February 2017

21 February 2017

The Unite Group plc, the UK’s leading manager and developer of student accommodation, announces its full year results for the year ended 31 December 2016.


Continued delivery of strong financial performance driven by operational focus

  • Adjusted EPRA earnings up 24% to £61.3 million or 27.7p (2015: £49.5 million, 23.1p). Including the yield element of the USAF performance fee, EPRA earnings £62.7 million (2015: £61.3 million)
  • Profit before tax £201.4 million (2015: £388.4 million), generating basic EPS of 101.3p compared to 164.2p in 2015 due to lower level of revaluation surplus as a result of yield compression in 2015
  • Increased dividend pay-out ratio to 75% of EPRA earnings (excluding USAF performance fees). Final dividend declared up 26% to 12.0p (2015: 9.5p). Full year dividend of 18.0p (2015: 15.0p)
  • Like-for-like rental growth of 3.8% for the full year (2015: 3.8%)
  • EPRA NAV per share up 12% to 646p (2015: 579p) making, together with dividends declared, a total accounting return of 15% for the year
  • LTV at 34% with net debt at £776 million (2015: 35% and £731 million) and cost of debt reduced to 4.2% (2015: 4.5%)

Earnings growth visibility underpinned by rental growth, sector fundamentals, efficiencies and high quality development programme

  • Operational portfolio increased to 49,000 beds valued at £4.3 billion; Unite share £2.1billion (2015: 46,000 beds, valued at £3.8 billion; Unite share £1.8 billion)
  • Student number growth, Unite’s operational capability and high quality University relationships support occupancy and rental growth outlook of 3.0-3.5% in 2017
  • Delivery of PRISM supporting margin improvement to 73.1% and overhead efficiency to 40 basis points (2015: 72.5% and 48 basis points). On track to deliver both targets of 75% and 25-30 basis points of gross asset value by the end of 2017
  • High quality development portfolio of 7,000 beds with development yield of 8.4%, together with rental growth, could add 15 to 20p to earnings over the next few years
  • Acquisition of Aston University’s 3,100 bed on-campus portfolio for £227 million (£113 million on a see-through basis) in February 2017 will contribute to earnings growth and further enhance portfolio quality
  • Disposal of 4,175-bed regional portfolio in February 2017 for £295 million; Unite share £102 million to provide funding for ASV acquisition and development pipeline

Outlook remains positive

  • Unite’s brand, operating system, quality portfolio, University relationships and sector fundamentals underpin future performance
  • Reservations for 17/18 academic year at 73%, a record level for this time of year (2015: 67%)
  • University intake continues to grow with record intake in 2016, with high to mid-ranked Universities performing most strongly with acceptances up 3%
  • EU referendum is not expected to significantly impact student numbers and supports Unite strategy to focus on its relationships with high to mid-ranked Universities
  • Further opportunities to extend development pipeline and growth through University relationships
  • Conversion to REIT status on 1 January 2017 supports earnings and dividend growth

Richard Smith, Chief Executive of Unite Group, commented:

“These are another excellent set of results that reflect the quality of our people, properties and service execution that sets us apart in our sector. Looking forward, we will maintain the quality of our portfolio through development and also strategic acquisitions such as our recent purchase of Aston Student Village, our first on-campus. Students and Universities remain our core focus and we will continue to invest in our operational capabilities, providing excellent service and ensuring consistently high satisfaction levels. This strategy, plus the ongoing strength of UK Higher Education, student numbers and the demand for beds means we are confident in further growth.”

Read the complete Preliminary Results Statement