23rd Jul 2024 20:25
(Alliance News) - Unite Group PLC plans to raise GBP450 million to fund new development and acquisition opportunities in the UK student accommodation market.
The Bristol, England-based owner and manager of student accommodation announced the news alongside first half results which showed growth in sales and profit.
In the six months to June 30, Unite posted pretax profit of GBP293.8 million, more than doubled from GBP112.2 million the year prior.
Revenue climbed a more modest 7.4% to GBP158.9 million from GBP148.0 million. Diluted earnings per share multiplied to 64.4 pence from 27.8p.
Adjusted earnings rose 14% to GBP125.3 million from GBP110.2 million.
The EPRA net tangible asset per share at June 30 was 969p, rising from 928p a year ago. The IFRS net asset value per share at the same date was 973p, up from 952p.
United increased the dividend to 12.4p from 11.4p, a rise of 8.8%.
Chief Executive Joe Lister said: "We have had a strong first half, with 14% growth in adjusted earnings underpinned by full occupancy, rental growth and substantial investment into our platform and portfolio."
As a result of the strong earnings, Unite raised full-year EPS guidance to the upper end of the 45.5p to 46.5p range, growth of up to 5% from 44.3p in 2023.
The company expects earnings growth to accelerate from 2026 as development completions increase.
Unite also unveiled plans to raise GBP450 million via a placing, retail offer and subscription.
The company said the funds will enable it to continue to invest in its platform and enhance future earnings growth.
Proceeds will be used to buy seven income producing assets from the Unite Student Accommodation Fund, fund its equity commitment to the Newcastle University joint venture, and commit to two secured development schemes and two new development opportunities, all with planning approval.
The capital raise is expected to be accretive to earnings and total accounting returns from 2025.
"This supports acceleration to high-single digit percentage EPS growth, and around 10% total accounting returns per annum (pre-yield movement), over the medium term while maintaining balance sheet strength," Unite said.
The placing is being conducted through an accelerated bookbuild which will determine the price. A separate retail offer will be launched, while certain Unite directors intend to subscribe for GBP125,000 worth shares.
Unite said fund raise would provide total investment firepower of around GBP700 million, which is expected to be fully allocated by the year end.
CEO Lister said Unite was "uniquely positioned" to take advantage of a significant market opportunity to support the growth of the UK Higher Education sector.
"This opportunity is underpinned by demographic growth and strong international student demand as well as a growing recognition from universities that they will need strategic partners to help them meet their housing needs," he added.
Shares in Unite fell 0.9% to 924.00 pence in London on Tuesday.
By Jeremy Cutler, Alliance News reporter
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.