Unite Students’ portfolio valuations up from previous year

Unite Students announce their current trading update, reporting that their property portfolio valuations are up from the previous year.

Salisbury Court student accommodation communal area - Unite Students | PBSA News
Salisbury Court student accommodation communal area.

Owner, manager and developer of student accommodation – Unite Students – announces an update on current trading, alongside quarterly property valuations for the Unite UK Student Accommodation Fund (USAF) and the London Student Accommodation Joint Venture (LSAV) as at 31 December 2021.

Latest guidance from the Department for Education confirms that education settings will remain open for face-to-face teaching under the Government’s Plan B measures to combat Covid-19. In Unite Students’ properties, over 70% of checked-in students have already returned to their accommodation, which is in line with a typical year. The company expect the remaining students to arrive shortly, following the start of the spring term.

Unite Students’ quarterly fund valuations

At 31 December 2021, USAF’s property portfolio comprises 29,523 beds in 75 properties across 20 university towns and cities in the UK. The portfolio was independently valued at £2.9m, which the company reports is a 1.6% increase on a like-for-like basis during the quarter and a 4.6% increase for the year.

LSAV’s investment portfolio comprises 9,716 beds across 14 properties in London and Aston Student Village in Birmingham. The portfolio was independently valued at £1,8m – up 3.1% in the quarter on a like-for-like basis and up 10.4% for the year.

Unite Students have reported that USAF and LSAV portfolios are now valued at weighted average yields of 5.2% and 4.1% respectively. As at 31 December 2021, the company expect the valuations of their wholly owned portfolio to reflect yield compression in H2 2021 comparable to the USAF portfolio.

2022/23 reservations

Across the Group’s entire property portfolio, Unite Students reports that 60% of rooms have now sold for the next academic year – which is up from 58% at the same time last year. Unite Students expect strong student demand for the 2022/23 academic year – from both domestic and international students.

However they anticipate a slightly later sales cycle for international students than in a typical year due to uncertainty relating to the pandemic. As a result, the company has increased its focus on retaining existing direct-let customers – who pay the company directly opposed to by universities.

“Bookings for the 2022/23 academic year have started positively with 60% of rooms already sold, demonstrating the continued strength of student demand and our success in increasing the retention of existing customers. This supports our guidance of a return to full occupancy and 3%-3.5% rental growth for the 2022/23 academic year. Reflecting this positive outlook, we continue to see strong investment demand for UK student accommodation, as reflected in the valuation performance for USAF and LSAV in 2021.”

Joe Lister, Chief Financial Officer, Unite Students

Unite Students also continue to make good progress in the delivery of its secured pipeline – as well as in sourcing new development opportunities. There remains a positive flow of development opportunities in London and prime regional cities which meet the company’s return requirements, so they expect to add further schemes to the secured pipeline during H1 2022.