What Unite Group (UTG) Said on Its Q3 Earnings Call

Key Points

• Reservations reached 96% for the 2026/27 academic year, at the top end of guidance, as demand strengthened at leading universities. Revenue per occupied room fell 0.3% because of a shift toward undergraduates, who typically have shorter tenancies, while newly let rents declined just over 2%.
• Unite is focusing on stronger universities and direct sales, adding 5,000 beds sold directly to returning students as postgraduate international demand weakened. Hello Student, acquired through Empiric, reached 92% occupancy, and Unite expects to achieve its £18 million integration-synergy target.
• The company completed £200 million of disposals and remains on track for its £300 million–£400 million target, while property valuations fell 3.7% in the third quarter. Proceeds will primarily reduce leverage and fund developments, with potential surplus capital available for further share buybacks.

Unite Group LON: UTG said it achieved reservations of 96% for the 2026/2027 academic year, at the upper end of guidance provided in July, as the U.K. student accommodation operator benefited from demand at stronger universities and adjusted its sales strategy for a changing mix of students.

Management said annual rents were “down a little,” largely because the company accommodated more undergraduate students and fewer postgraduates, resulting in shorter tenancy periods. Revenue per occupied room fell 0.3%, with multi-year university nomination agreements producing rent growth of more than 3.5%, while newly let beds, including direct lets and new agreements, saw rents decline by just over 2%.

The company said occupancy exceeded 95% in each of its strongest cities, while lower occupancy elsewhere was primarily driven by supply conditions. It also reported that Empiric, acquired in January and operating under the Hello Student brand, reached 92% occupancy, materially ahead of the prior year.

Shift toward stronger universities and undergraduates

Management said student demand has increasingly concentrated around leading universities, with institutions including Manchester, University College London, King’s College London, Liverpool and Newcastle recruiting strongly. Unite said this supports its strategy of concentrating its portfolio around stronger universities and cities where accommodation demand and rental-growth prospects are more favorable.

International postgraduate demand continued to decline outside the highest-ranked institutions, which management attributed principally to the reduction in the post-study work visa period from three years to 18 months. However, the company said international undergraduate recruitment increased, particularly from China, helping to partly offset weaker postgraduate demand.

The company said it responded to universities’ greater caution around committing to nominated rooms by selling an additional 5,000 beds directly to returning students, gaining share from the houses in multiple occupation, or HMO, market. It also adjusted pricing earlier in the cycle rather than waiting for the university clearing period.

Its developments were fully let, and management cited improved performances in Nottingham, Bristol and Edinburgh. Unite also said it shifted its commercial focus toward securing occupancy early while protecting overall income and pricing.

Empiric integration and flexible-letting opportunity

Unite said Hello Student has benefited from its operating platform. When the company acquired Empiric in January, bookings were 13 percentage points behind the prior year. Management said it broadened the sales network, introduced a dedicated international sales team and used local-market knowledge to improve occupancy and income beyond the prior year and its expectations.

The company said it has completed the bulk of the integration and expects to deliver its previously announced £18 million synergy target. It is preparing for its first full sales cycle at Hello Student, including an early rebooker campaign intended to improve customer retention at lower cost and support cross-selling from the Unite portfolio.

Management also identified an opportunity to increase income from flexible lettings, including semester, summer and short-term stays. Flexible-letting income has risen to about 2% of revenue, up around 50 basis points this year. The company said shortened tenancies, particularly in London, Manchester and Edinburgh, could support a further 0.5 percentage-point contribution to income growth in 2027.

University agreements and portfolio strategy

Unite said it has agreed 4,300 new beds through university arrangements with institutions including UCL, the London School of Economics and Bristol. These agreements represented a 10% increase over current passing rents, according to management.

University nominations account for 54% of the portfolio, and multi-year agreements have an average remaining term of five years. Unite said 9% of its multi-year agreements mature this year and it has already renewed the equivalent of 7% of that amount. Negotiations over single-year agreements are expected to continue through the fourth quarter and early first quarter.

The company continues to target nomination agreements representing 50% to 60% of its portfolio. Management said it expects its focus on stronger institutions to improve the overall quality of its nomination arrangements over time.

Unite’s target future portfolio consists of 55,000 to 60,000 beds across 20 cities. The company said those assets have outperformed the disposal portfolio in both occupancy and rental growth, while new supply beyond 2027 in those markets appears limited because development economics remain challenging.

Disposals, valuations and capital allocation

Unite said it has completed £200 million of asset sales so far this year and remains on track to meet its £300 million to £400 million disposal target. The total includes the recent sale of its King’s Place development land. A further £225 million of assets are under offer.

The transaction market remains difficult, management said, citing higher funding costs, increased buyer focus on current passing income and due-diligence periods of two to three months. The company said it would remain pragmatic but disciplined and would hold assets longer where that produces a better outcome for shareholders.

Value-add buyers have shown the greatest interest in the initial disposal program, according to management, particularly for lower-occupancy or lower-rented assets being sold below replacement cost. Around one-quarter to one-third of the £300 million to £400 million planned disposals is expected to consist of non-student assets, including development sites and a build-to-rent property.

Property valuations declined 3.7% in the third quarter, largely reflecting higher interest rates. Management said roughly one-third of the valuation decline was tied to weaker income at lower-performing properties, which are mainly within the disposal pool.

The company said it is using disposal proceeds to reduce leverage toward its target of six to seven times net debt to EBITDA. Its marginal cost of debt was estimated at 6% to 6.5%. Unite said roughly half of disposal proceeds are expected to be needed to fund remaining on-site developments through 2028, while surplus capital beyond leverage management and development funding could be allocated to share buybacks. The company previously bought back £165 million of shares this year.

Management said it would provide an update on 2027 earnings guidance early in 2027, after it gains greater visibility on nomination renewals and its upcoming rebooker campaign.

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.

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