Unite offers rent discount to students learning from home

Student accommodation developer and operator Unite Group announced a rent discount on Monday, as a result of the current Covid-19 lockdown, as it also reported 'modest' rises in its quarterly valuations.

The FTSE 250 company said students would be able to apply for a discount of 50% of their rent for a total of four weeks and, in addition, would be given a four-week complimentary extension of their tenancy agreement at the end of the academic year, to extend their stay into the summer.

It came as the company also released its quarterly valuation update, reporting that as at 31 December, the Unite UK Student Accommodation Fund (USAF) property portfolio was independently valued at £2.8bn, down 0.3% on a like-for-like basis during the quarter and 1.8% weaker for the year.

The portfolio consists of 30,209 beds in 79 properties across 22 university towns and cities in the UK.

It said the London Student Accommodation Joint Venture (LSAV), meanwhile, was independently valued at £1.32bn, down 0.1% in the quarter on a like-for-like basis and down 0.9% for the year.

LSAV's portfolio comprises 8,354 beds across 12 properties in London, and the Aston Student Village in Birmingham.

“The fourth quarter valuations reflect the removal of the temporary reduction in stamp duty for residential properties, which is due to come to an end on 31 March,” the United board said in its statement.

“Removing this impact, valuations were up modestly over the quarter for both USAF and LSAV, reflecting a sales performance for 2020-2021 in line with the valuers' assumptions.”

It said the rental discount and tenancy extension will be available to all students checked-in but not living in their accommodation between 18 January and 14 February.

The company said the government's latest guidance recommended that most students start their second term online until at least mid-February.

There were, however, exceptions for certain practical courses including medicine, veterinary science, teacher training and social work.

As such, university campuses were expected to remain open, with Covid-19 testing being offered to all students on their return to or arrival at campuses.

The form said the loss of rental income associated with the discount and tenancy extension was expected to result in a reduction to EPRA earnings of up to £8m, or 2p per share, for the 2021 financial year.

It said it was monitoring its banking covenants “closely”, and retained “significant” headroom against all debt covenants.

Based on checked-in occupancy of 80% for the 2020-2021 academic year, and expected rent collection from students and universities for the second and third terms, the board said it expected to maintain compliance with all debt covenants.

“The new rent discount recognises the challenges and disruption that students face following the government's latest lockdown announcement, and we feel that taking this action is the right thing to do,” said chief executive officer Richard Smith.

“Universities remain open, unlike the first lockdown, and we continue to have thousands of students living with us as of today.

“Some students studying specific subjects have already returned to University and more will be returning for face-to-face tuition during January as per Government guidelines, while for other students our accommodation is their only home.”

Smith confirmed that all of Unite’s properties remained open and operational.

“Against the backdrop of the government Covid-19 guidelines, we are working closely with our University partners.

“We will continue to support students and maintain our focus to keep all students and staff safe across our properties during the pandemic.”

At 1022 GMT, shares in Unite Group were down 1.92% at 989.5p.