Quarterly valuation update for the Unite UK Student Accommodation Fund and the London Student Accommodation Joint Venture – 08 July 2020
7 July 2020
Unite Students, the UK’s leading owner, manager and developer of student accommodation, announces the quarterly property valuation of the Unite UK Student Accommodation Fund (‘USAF’) and the London Student Accommodation Joint Venture (‘LSAV’) as at 30 June 2020.
At 30 June 2020, USAF’s property portfolio was independently valued at £2,789 million; unchanged over the quarter. The portfolio comprises 30,209 beds in 79 properties across 22 University towns and cities in the UK.
LSAV’s investment portfolio was independently valued at £1,316 million; also unchanged over the quarter. LSAV’s investment portfolio comprises 8,354 beds across 12 properties in London and Aston Student Village in Birmingham.
This represents a 2.2% value reduction in the USAF portfolio and a 1.5% reduction in the LSAV portfolio over the first half of the year on a like-for like basis, reflecting income deductions relating to zero summer income and the anticipated impact of Covid-19 disruption on 2020/21 income.
Overall, the USAF portfolio is valued at an average yield of 5.3% and the LSAV portfolio at an average yield of 4.4%, both of which are broadly unchanged over the quarter. In light of current market uncertainty created by Covid-19, the valuations have been reported on the basis of ‘material valuation uncertainty’ in line with recent RICS guidance.
Reservations across the Group for the 2020/21 academic year are currently at 81% (2019/20: 90%), reflecting delays by some students and Universities in making their accommodation choices at this stage. We expect a higher than usual volume of sales activity later in the booking cycle.
We are targeting 90% occupancy for 2020/21 (2019/20: 98%), underpinned by the income security provided by our multi-year nomination agreements. Overall, we expect a 10-20% reduction in rental income for 2020/21 compared to 2019/20 (prior to the impact of cancellations in 2019/20 due to Covid-19).
HE sector update
Most undergraduate applicants have now chosen their preferred University for 2020/21, following the 18 June deadline for accepting an offer. UCAS data showed a 1% increase in the number of applicants with an offer to start University this Autumn compared to 2019/20. This reflects a 3% increase in acceptances by UK 18-year olds as increased participation rates more than offset the impact of fewer young people in the population.
The number of students with a deferred start date was down 1% compared to 2019/20 as of 18 June, reflecting the clear desire of young people to attend University, weaker employment prospects and fewer gap year opportunities for school leavers.
Joe Lister, Unite Students Chief Financial Officer, commented:
“UCAS applications data and our own research underlines that students are keen to start or get back to University as soon as it’s safe to do so. We have growing visibility and confidence over our income for the 2020/21 academic year, reflective of the strength of our University relationships and underlying student demand for our offering. This is demonstrated by the stability in our valuations for USAF and LSAV in the second quarter.”
For further information, please contact:
Richard Smith / Joe Lister / Michael Burt Tel: +44 117 302 7005
Unite press office: Tel: 07754 749 301
Justin Griffiths / Victoria Heslop Tel: +44 20 7250 1446