Unite’s profit rises 150% as students return after Covid lockdowns
Profit at Unite soared by 150% during H1 as values rise and students return to their digs after Covid lockdowns.
The student property specialist said pretax profit rose to £334m from £130m for H1 2021, driven by adjusted earnings and a valuation gain of £215m in the period.
Unite reported a 5% increase in property values on H1 last year, while it secured a £1bn pipeline of 6,192 beds, generating a 6% yield on cost. The company said its 2022 development completions were now fully let.
Profit at Unite soared by 150% during H1 as values rise and students return to their digs after Covid lockdowns.
The student property specialist said pretax profit rose to £334m from £130m for H1 2021, driven by adjusted earnings and a valuation gain of £215m in the period.
Unite reported a 5% increase in property values on H1 last year, while it secured a £1bn pipeline of 6,192 beds, generating a 6% yield on cost. The company said its 2022 development completions were now fully let.
Chief executive Richard Smith said: “We have seen continued momentum in the first half, as earnings and dividends have grown strongly and reservations for the 2022/23 academic year are now ahead of pre-pandemic levels.”
However, macro-economic issues were a worry, Unite said. Inflationary pressure had added to build costs, which typically account for around 50% and 80% of its total development costs in London and regional markets, respectively.
While the 2022 and 2023 schemes are secured under fixed-price build contracts and remain in line with budget, it said cost increases were affecting schemes yet to be procured for delivery in 2024 and 2025.
“As a result, we now expect the yield on cost for our 2024 and 2025 schemes to be reduced by 20bps compared to our initial assumptions,” said Unite. “These schemes remain attractive, and we will seek to mitigate the impact of increasing build costs through design efficiency and increased rental levels where possible.”
Smith added: “Our business model offers inflationary protection but, like others, we are not immune from the impact of rising costs and interest rates. Despite increased economic uncertainty, we remain confident in our ability to deliver significant growth over the medium to long term.”
Unite earned £236m from disposals during H1, at a blended yield of 5.7%, as it focused the portfolio on the strongest university cities and properties where it could sustain rental growth.
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Photo: Unite, Baltic Wharf
