8th Oct 2021 08:17
(Alliance News) - Unite Group PLC on Friday warned that full-year earnings per share will be at the lower end of guidance due to a reduction in occupancy and rental income.
The Bristol, England-based student accommodation firm said 94% of bed spaces are now let across its total portfolio as the lettings cycle for the 2021-22 academic year enters the final stages. This is up from 88% the year before but down from 98% two years ago - and below management expectations for 95% to 98% occupancy.
The FTSE 250 stock was trading 4.5% lower in London early Friday at 1,054.00 pence a share.
Unite noted that a record level of university applications has not translated into higher student intake as expected, as international travel restrictions continue to have an effect on demand from China. But the company said it hopes that this year's strong undergraduate intake in higher-ranked cities will support student numbers and rental growth prospects in these markets over the next three years.
Unite warned, however, that it expects 2021 earnings per share of around 27 pence to 30p, at the lower end of guidance. It added that lower rental income in terms two and three of the 2021/22 academic year will reduce rental income for the 2022 financial year by around GBP8 million to GBP10 million compared to management's previous forecasts.
"We will seek to mitigate this impact on 2022 EPRA EPS through ongoing sales activity by targeting international students who may delay their arrival to the UK until the new year and the reintroduction of summer business in 2022. In addition, we are targeting cost savings from operational efficiencies resulting from lower occupancy," the company said.
Turning to rent collections, Unite said it has now collected 96% of rent due for the 2020-21 academic year, excluding the impact of the ten-week rental discount offered to customers for the second semester. There remains 1% of rent still to be billed for the 2020-21 academic year.
At September 30, Unite UK Student Accommodation Fund's property portfolio was valued at GBP2.83 billion, reflecting a 1.1% increase on a like-for-like basis during the quarter. The portfolio comprises 29,627 beds in 76 properties across 20 university towns and cities in the UK.
London Student Accommodation Venture's property portfolio was independently valued at GBP1.76 billion, reflecting a 3.7% increase on a like-for-like basis during the quarter. The portfolio comprises 9,716 beds across 14 properties in London and Aston Student Village in Birmingham.
The valuation increase is driven by increased occupancy for the 2021-22 academic year and rental growth, Unite said.
By Evelina Grecenko; [email protected]
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