Unite Group swings back to profit in first half

Student accommodation company Unite Group reported an 18% improvement in EPRA earnings in its first half on Tuesday, to £88.3m, as EPRA earnings per share improved 8% to 22.2p.

The FTSE 250 company said its EPRA profit for the six months ended 30 June included £15.7m from partial recognition of the performance fee for the LSAV joint venture in London.

Rent collection stood at 96% for the 2020-2021 academic year, as the board confirmed guidance for EPRA earnings per share of 27p to 30p for the full year, compared to 25.5p a year earlier, excluding the LSAV performance fee.

It declared an interim dividend of 6.5p, up from nil a year earlier, and was targeting at least 65% payout of EPRA earnings per share, excluding the LSAV performance fee for the full year.

On a statutory basis, profit before tax totalled £130.4m, swinging from a loss of £73.9m in the first half of last year, which the company said was driven by EPRA earnings and a valuation gain of £54.3m in the period.

Its total accounting return for the first half was 3.9% , compared to -2.3% a year earlier.

“The business has once again shown its resilience in the first half and is now positioned for growth. Recognising the challenges faced by students, we have provided financial support during the pandemic totalling over £100m,” said chief executive officer Richard Smith.

“We are confident that record university applications for 2021-22 will translate into strong demand for our accommodation.

“Our recent sales performance has been strong, supported by the removal of restrictions on in-person teaching.”

Smith said that, while there remained some uncertainty over travel restrictions for international students, the company has “minimal exposure” to students due to arrive from red list countries and had offered students arriving from amber list countries, including China, the opportunity to arrive at their accommodation up to three weeks early to self-isolate at no extra cost.

Assuming no fundamental change to travel restrictions, he added that United was “well-positioned”, expecting 95% to 98% occupancy and 2% to 3% rental growth in 2021-2022.

“Despite the backdrop of Covid-19, and uncertainty created by the anticipated review of higher education funding, we remain confident in our ability to deliver significant earnings growth and attractive total returns over the medium to long term.”

At 0931 BST, shares in the Unite Group were down 0.82% at 1,132p.