Unite Group lifts rental guidance after solid 2023

(Sharecast News) - Student accommodation provider Unite Group has delivered a confident outlook and upgraded guidance after seeing record adjusted earnings for 2023, though reported profits dropped by more than two thirds as a result of big losses related to changes in property valuations. Adjusted earnings were up 13% year-on-year at £184.3m, helped by 99.8% occupancy and 7.4% rental growth for the 2023/24 academic year. Adjusted earnings per share improved 8% to 44.3p.

The company declared a final dividend of 23.6p, bringing the total payout to 35.4p, up from 32.7p in 2022, representing a payout ratio of 80% of adjusted earnings.

Looking ahead to the next academic year, reservations currently stand at 80%, ahead of the typical leasing pace, while Unite said it now expects rental growth of "at least 6%", up from an earlier forecast of 5%. Unite also ended the year with a record £1.3bn development pipeline.

"This is a strong set of results, driven by full occupancy, rental growth and substantial investment into our platform and portfolio," said chief executive Joe Lister.

"Our pipeline of developments, asset management projects and our new university partnership present a substantial growth opportunity for the business."

However, IFRS profit before tax slumped by 71% to £102.5m in 2023, dragged lower by a £61.2m revaluation loss compared with a revaluation profit of £119.2m in 2022. The company also recorded a a £17.2m revaluation loss for interest rate swaps, compared with a £70.7m previously.