EPRA earnings and net asset value ahead in first half at Unite Group

The FTSE 250 firm described the half as having a “robust financial performance”, with increased earnings, net asset value and dividend

EPRA earnings were up £6.5m or 22% to £36.1m, while EPRA earnings per share were up 15% to 16.3p.

Unite’s EPRA net asset value per share grew 7% to 620p, equating to a total accounting return of 8.7%

The company’s board increased the interim dividend by 9% to 6p per share, and reiterated that its policy remains to distribute 65% of full-year recurring EPRA earnings by way of dividend each year.

Leverage was maintained at 35% loan-to-value during the period, with an IFRS profit after tax of £106.7m, down significantly from £208.3m a year ago, which Unite put down to lower level of yield compression than in 2015

The company added 2,100 beds to the secured pipeline for delivery in 2018 and 2019 during the half, and said student numbers are expected to reach record levels again in 2016/17

89% of rooms were already reserved reserved as at 25 July, up from 88% a year ago, with rental growth levels in line with last year.

Unite said it expects rental growth for the next academic year to continue in the 3-4% range

The company also said it remained on track to convert to a REIT at the start of 2017

“Throughout the first half of 2016 we have continued to deliver a strong performance on all fronts, delivered through our market leading brand, best in class operating platform, high quality portfolio and our relationships with the strongest universities,” said Unite Students chief executive Richard Smith.

“Despite the uncertainty caused by the result of the EU referendum, the fundamentals of our business and the student accommodation sector remain strong.”

Smith said the demand-supply outlook for student accommodation remained favourable, and its earnings growth trajectory is underpinned by it efficiencies of scale and a high-quality development pipeline focused on cluster flat accommodation with a lower price point, where it says rental growth outlook is strongest.

“We continue to assess the broader impacts on the market and maintain a disciplined approach to investment and development activities,” Smith said.

“We remain confident of delivering meaningful year-on-year earnings and dividend growth over the next few years and are well placed to benefit from opportunities that may emerge from this period of uncertainty."