27th Feb 2019 08:48
LONDON (Alliance News) - Unite Group PLC said Wednesday 2018 was "another successful year" for the student accommodation provider, but the company was wary of the uncertainty caused by Brexit and an upcoming review into UK higher education funding.
At December 31, Unite's EPRA net asset value per share stood at 790 pence compared to 720p the year before, a 9.7% increase.
Unite upped its full year dividend by 28% to 29.0p from the 22.7p distributed in 2017.
The company's pretax profit increased 7.1% in 2018 to GBP245.8 million from GBP229.4 million in 2017. Unite's rental income increased by 10% to GBP188.3 million from GBP170.8 million in 2017.
Unite's EPRA earnings increased 25% to GBP88.4 million from GBP70.5 million. The company said the growth in earnings was underpinned by its nomination agreement with universities on 60% of beds, which was flat on the year before.
Unite has 50% of new nominations secured for 2018 openings, which is expected to increase to 70% in 2019.
The company said its university partnerships pipeline will deliver 6,579 beds in the next four years, at a 7.0% yield on cost. These new openings are expected to add between 13p to 17p to Unite's earnings per share, came to 34.1p in 2018.
"2018 was another successful year for Unite. We made good progress against all of our core objectives and continued to deliver sustainable growth in our recurring earnings and cash flows. Our strong results remain underpinned by our brand, our sector-leading operating platform, the quality of our portfolio, our deep and valuable university relationships and sector fundamentals. These qualities set us apart in a sector that remains undersupplied and, more than ever, has a need for accommodation that is delivered efficiently and with a focus on value for money," said Chief Executive Richard Smith.
Unite disposed of 3,436 beds in 2018 for GBP180 million, with GBP85 million coming to Unite. The company said the disposals were to fund its renewed focus on "high-quality" universities - 90% of Unite's portfolio is located at "high and mid ranked" universities.
The company's loan-to-value ratio decreased to 29% from 31% at the end of 2017. The student accommodation manager and developer had net debt of GBP856 million at the end of 2018 compared to GBP803 million the year before.
Unite ended 2018 with a 98% occupancy rate and like-for-like rental growth of 3.2%, which is down slightly on the 3.4% achieved in 2017.
The company's reservations for the 2019-2020 academic year sit at 75%, in line with the record levels achieved in 2017. Rental outlook growth for the same academic period, on a like-for-like basis, is 3.0% to 3.5%.
Unite said its outlook remains "positive" but commented that Brexit and the UK prime minister's recently announced "major" review into post-18 education funding in the country will cause "uncertainty".
Smith added: "Whilst the backdrop of the ongoing Brexit negotiations and the impending review into higher education funding provide some uncertainty, our strategy of aligning to the best universities and providing good-quality, value-for-money accommodation for resilient segments of the market reinforces our long-term confidence in the business. This confidence is reflected in our 28% increase in the full-year dividend."
Shares in Unite Group were down 2.0% on Wednesday at 907.50 pence each.
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