Unite Group (LON:UTG) reiterated its guidance for the current sales cycle and announced a new share buyback program as management provided a trading update alongside fourth-quarter fund valuations. CEO Joe Lister, joined by CFO Mike Burt and COO Karan Khanna, told investors the company remains “early in the sales cycle,” but said the group is on track to meet occupancy and rental growth targets set out at its investor event in November.
Reservations and demand indicators
Lister said reservations for the next academic year were at 64%, compared with 67% at the same point last year. Despite the year-on-year decline at this stage, Unite reiterated its expectation to achieve 93% to 96% occupancy and 2% to 3% rental growth.
Direct sales were described as in line with last year, representing 8% of total beds sold. The company said it remained proactive in sales and marketing and reported it was ahead of last year in some weaker markets.
Universities, however, were described as taking a more cautious approach early in the cycle. Lister said some institutions were delaying or pausing renewals and take-up under nominations agreements, with nominations currently sitting at 56%. He attributed the hesitancy to financial pressures on universities and a reluctance to take on risk before the UCAS window closes, to avoid paying for unfilled rooms. Unite said it expects demand for beds under these arrangements to pick up over the next few months as universities firm up student numbers.
The company said it would provide further updates in late February and early April, adding it would be “more proactive” with its guidance ranges than last year.
Capital allocation and development decisions
Unite reiterated its revised capital allocation framework from November, which management said would see the company transition to being a net seller as disposals accelerate and development becomes more selective. Lister said surplus capital would be allocated to university partnerships and share buybacks.
As part of that approach, Unite launched a share buyback program of up to £100 million. Management said the move reflected confidence in the company’s long-term returns and focus on shareholder value, and that it would be funded by capital freed up from deferred development activity while maintaining balance sheet strength.
To support that funding, Unite said it has deferred delivery of its Freestone Island scheme in Bristol and decided not to proceed with the TP Paddington scheme, which now has planning consent.
Disposals plan and leverage outlook
Unite reiterated its target of £300 million to £400 million of disposals in 2026 and said it is beginning to execute against that plan. Lister outlined three avenues for disposals:
- Exploring the sale of assets to joint ventures
- Preparing a portfolio to bring to market in the next few weeks
- Engaging with buyers on potential single-asset sales
He acknowledged there are several portfolios on the market more broadly, but said “assets are trading” and pointed to the company’s track record of executing sales.
Asked about how loan-to-value might trend given valuations and the buyback, management did not provide guidance on next year’s valuations but said net debt is expected to be “broadly stable.” The CFO pointed to the planned 2026 disposals and annual capital investment of about £150 million to £200 million for university partnerships and developments, with surplus capital reinvested.
Valuations and yields
On fourth-quarter valuations, Unite said results reflected lower-than-anticipated rental growth and “a slight softening of yields.” Management provided fund-level detail:
- USAF: a 4 basis point yield increase and a 0.6% decline in the quarter; up 0.8% for the year
- LSAV: slightly stronger rental growth, offset by 16 basis points of yield compression, resulting in a 1.3% decline in the quarter; up 0.6% for the year
Based on discussions with valuers, Unite said it expects the group’s property yields to be broadly in line with the increase seen across the USAF portfolio.
In Q&A, management addressed the London market, noting limited transactions during the quarter and describing the valuation moves as sentiment-driven due to slightly weaker occupancy expectations for the 2025–2026 academic year. Lister said London remains one of Unite’s strongest operational markets and added that investor interest remains significant, with portfolios that include London assets generally attracting the most traction.
University agreements, supply, and financing conditions
On nominations agreements, management said Unite works with more than 60 universities. It estimated that around a dozen universities—within the roughly 12% of beds renewing under single-year or maturing longer-term agreements—had amended or deferred confirmation of bed numbers. Unite also noted some new universities have approached it for beds.
In response to a question about rent levels in nominations agreements, management said discussions with universities cover both volume and price. For multi-year agreements, Unite said annual inflators are “fairly procedural” and are supporting rental growth of around 3% to 4%. For single-year deals, management described a more commercial negotiation but said it was not seeing significant pressure from universities to reduce prices.
Management did flag some pressure around tenancy length, saying universities’ increased focus on U.K. undergraduates has led some newer contracts to move from 51-week terms to 44-week terms in certain strong markets, though this was described as affecting a relatively small proportion of incremental beds.
On broader market supply, Unite said it expects a similar level of supply in 2026 as in 2025, but anticipates deliveries will start to reduce from 2027 onward as off-campus schemes become harder to make viable. Management emphasized its own medium-term pipeline is centered on on-campus university partnerships “unlocked through the relationships with the universities.”
Regarding financing conditions, Unite said it has been active in the private credit market tied to its university partnerships and described lender appetite for PBSA as “very healthy.” Management said it had not seen a change in lender behavior, that spreads have been stable over the past three to six months, and that on a 12-month view spreads have tightened by about 25 basis points.
Unite said it will provide detailed earnings guidance for 2026 at its February preliminary results, including the impact of Empiric. It also clarified that the earnings guidance discussed at the November capital markets event assumed costs would be flat in 2026 versus 2025 and included the central staff cost savings referenced in the current statement. Management expects the £100 million buyback to be executed over three to six months.
About Unite Group (LON:UTG)
Unite Students is the UK’s largest owner, manager and developer of purpose-built student accommodation, serving the country’s world-leading Higher Education sector. We provide homes to 70,000 students across 157 properties in 23 leading university towns and cities. We currently partner with over 60 universities across the UK.
Our people are driven by a common purpose: to provide a ‘Home for Success’ for the students who live with us. Unite’s accommodation is safe and secure, high quality and affordable.
