Unite Group Q1 Earnings Call Highlights

Key Points

• Unite says it is trading in line with guidance with 2026/27 reservations at 74% (vs 76% last year), reaffirming rental growth guidance of 2–3% and adjusted EPS guidance of £0.415–£0.43, while direct lets are tracking ~1–2 points above the market and incentives are being held back for now.
• The group is accelerating a portfolio repositioning and disposal program targeting £300–400m (with ~£130m under offer/completed and a further ~£500m marketed), which management says would improve occupancy and nominations by ~3 points and lift operating margins.
• Unite has deployed £85m of a £100m share buyback and expects to extend buybacks as disposals progress, with the 2026 EPS outlook assumed to include the full £100m of buybacks.

Unite Group LON: UTG said it is trading in line with guidance and reaffirmed its outlook during a Q1 trading update that also covered fund valuations, progress on disposals, and steps to accelerate portfolio repositioning.

Trading update: reservations, pricing and nominations

Chief Executive Joe Lister said the group is “trading in line with the guidance we shared in February,” with reservations for the 2026/2027 academic year at 74% compared with 76% at the same point last year. Lister said the reservation position supports rental growth guidance of 2%-3%.

On direct lets, Lister said Unite has benefited from “mid-market price points” and being proactive on pricing, and is currently tracking “about 1-2 points above the direct let market at this stage.” He added that incentives are being held back for now: “We’re keeping our powder dry on incentives at the moment,” while acknowledging promotional activity could increase later in the year.

Nominations stood at 54%, with Lister saying lower-tier universities have been more cautious in managing financial exposure. He characterized fluctuations as typical at this stage and said nominations could move “±1 to 2 points by the end of the cycle.” He added that higher-tariff universities are seeking additional beds and longer-term agreements, with firmer university numbers expected in July and further demand potentially in August following A-level results.

Hello Student performance and synergy delivery

Lister said Hello Student, the brand comprising the Empiric portfolio, is trading in line with the company’s prior update. He said sales are improving following early interventions, with reservations “up 11 points since the prelims” and an expectation to reach “mid-80s at the end of the cycle.”

He also said integration work is progressing and that Unite has secured “GBP 3 million of the GBP 9 million savings targeted for this year.” Lister said sales teams are focused on driving conversions, noting improved web bookings and a pickup in international and virtual sales. He highlighted “good demand from Chinese students in particular” and said the group is selling “around 700-800 direct let rooms a week” with the next few weeks described as important.

On tenancy lengths, Lister said the group has seen “a slight shortening of tenancies,” which created “about a 1% headwind” to overall rental growth and is reflected in the 2%-3% guidance. He said management focuses on annual contract value rather than rent and tenancy length separately.

On costs, Lister said Unite is fully hedged on energy for the current financial year and 70% for 2027, and that interest costs are fully hedged. He reaffirmed guidance at “the lower end of ranges for occupancy and rental growth,” while reiterating adjusted EPS guidance of GBP 0.415 to GBP 0.43.

Disposals and accelerated portfolio repositioning

Unite said it continues to progress a disposal program announced in November, targeting GBP 300 million to GBP 400 million as part of what it has described as a multi-year plan. Lister said GBP 130 million is “under offer or completed,” and the disposal of St Pancras Way to the Unite Students Accommodation Fund (USAF) is expected to close in May.

He added that a further GBP 500 million of assets are being marketed across “a portfolio of lower growth assets, development land, non-student assets, and from the Empiric portfolio.” While noting that selling assets “into this market is not straightforward,” Lister said he is encouraged by investor interest, stating that more than 70 investors are currently in a data room for the larger portfolio.

Management also quantified the potential impact of disposals on portfolio metrics, saying that executing on the plan would improve occupancy by three points, nominations by three points, and lift operating margins by removing what Lister described as “the drag that the tail of the portfolio is having on our overall performance.”

Lister said the company has appointed advisers to “accelerate the portfolio repositioning” to create a “higher quality portfolio,” aligned toward the “strongest universities.” He reiterated longer-term targets of 80% “high tariff alignment” and 60% nominations, with a portfolio focused on 18-20 cities.

In Q&A, CFO Michael Burt said the blended yield on the GBP 300 million-GBP 400 million disposal target is expected to be “about 5.5%-6.5%,” reflecting a mix that includes lower-growth assets he said may yield “more like 6%-7.5%,” alongside St Pancras Way and other non-strategic assets such as a London build-to-rent asset and development sites.

Asked about investor types reviewing the on-market portfolio, Lister said the mix is broad but that “the bulk” are “value investors” looking at assets in the 6%-7.5% range and potentially seeing opportunities to reposition assets and drive income.

On pricing for potential disposals, Burt said management will compare expected returns from selling at likely transaction prices with alternative uses of capital, and that this will inform decisions on price and pace.

Capital allocation and share buyback

Unite said it has deployed GBP 85 million of its GBP 100 million share buyback program. Lister said the company expects to extend buybacks as disposals progress, with proceeds split “roughly equally” between existing capital commitments and share buybacks.

On earnings, Burt reiterated that the 2026 adjusted EPS guidance assumes GBP 100 million of share buybacks and is supported by income expectations, cost delivery in the Unite business, and progress on Empiric synergies. He said it is “a little bit too early” to provide firm guidance for 2027, adding that the outcome of the current academic-year sales cycle will be a key influence and that the company will consider cost base and capital allocation choices to “get back to that earnings growth as soon as possible.”

Valuations: yield movement in Q1 and sector sentiment

Unite reported a softening of yields in Q1 fund valuations, with USAF moving out by 9 basis points and LSAV by 13 basis points. Lister said this was largely driven by outward movement in interest rates and sector sentiment amid a tougher trading environment, while noting increased yield differentiation based on asset quality and operating performance.

Burt added that the student accommodation market appears to have seen “a slight widening in yields versus wider real estate,” despite limited transaction evidence in the quarter. He said the change reflects valuers being “a little bit more cautious in sentiment,” tied in part to slower occupational trends. He also said there was “no change” in the occupancy assumptions used by valuers in Q1, though valuers were more cautious in reflecting rental growth at this stage of the cycle.

Lister said limited rental growth is being baked into valuations at this point in the sales cycle, with greater clarity typically emerging in Q2 and Q3 valuations. He added that the group expects a similar approach in its wholly owned valuations at the half-year.

In the Q&A, Lister also addressed the expected impact of the Renters Rights Act, saying purpose-built student accommodation operators would be exempt, while private landlords would face restrictions, including a six-month limit on signing tenancies ahead of the start date and allowing tenants to give two months’ notice at any time. He said the behavioral impact remains uncertain but viewed the changes as additional pressure on private landlords, contributing to what he expects to be a “steady reduction” in that part of the sector rather than a sudden drop.

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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