RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024

PRESS RELEASE

25 February 2025

THE UNITE GROUP PLC

('Unite Students', 'Unite', the 'Group', or the 'Company')

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024

GROWING EARNINGS, ENCOURAGING OUTLOOK FOR 2025/26 AND SIGNIFICANT GROWTH OPPORTUNITIES

Joe Lister, Chief Executive of Unite Students, commented:

"The business performed strongly in 2024 and demonstrated resilience in a challenging market. We continue to deliver growth in our earnings over the year and our record development pipeline supports this into the medium term. This is underpinned by our strong university relationships, sustainable rental growth and substantial investment in our portfolio.

The outlook for 2025 is encouraging with growing momentum, driven by increasing demand and a more supportive policy environment for international students. Additionally, private HMO landlords continue to leave the sector, creating a shortage of student housing. We are well-positioned to respond, with a robust development pipeline and new university joint-venture partnerships. This not only provides students with high-quality homes but also frees up family housing in local communities. We are excited by the opportunities that lie ahead for the business."

HIGHLIGHTS

Strong rental growth for 2024/25, demonstrating value of our platform

· 8.2% rental growth and 97.5% occupancy for the 2024/25 academic year (2023/24: 7.4% and 99.8%)

· Occupancy significantly ahead of 94% sector average, underpinned by nomination agreements

· +5% YoY growth in adjusted EPS to 46.6p (2023: 44.3p)

Growing student demand continues to outpace constrained housing supply

· 2% increase in university applications by UK 18-year-olds for 2025/26

· More supportive environment for international students with most recent visa issuance up 14% YoY

· 70% reserved for 2025/26 (2024/25: 79%), reflecting a normalisation in demand

· Strong demand from university partners with 57% of beds nominated for 2025/26 (2024/25: 57%)

· New PBSA supply 60% below pre-pandemic levels and competing HMO sector in decline

Sustained earnings growth from our best-in-class platform

· On-track to deliver rental growth of 4-5% for 2025/26 and 97-98% occupancy

· Guidance for adjusted EPS of 47.5-48.25p in 2025

· Targeting 8-10% Total Accounting Return (TAR) in 2025, before yield movement

Increasing alignment to the UK's strongest universities

· £281 million of value-add acquisitions in strong markets (Unite share: £210 million)

· £304 million of disposals to enhance portfolio quality (Unite share: £161 million)

· Rental portfolio enhanced through £48 million of investments at a 10% yield on cost

Development pipeline adding scale in the strongest markets

· £1,048 million committed pipeline fully funded, 100% in Russell Group cities at 6.8% yield on cost

· Debut university JV with Newcastle University, with public consultation underway for second JV

· Committed pipeline adding £71 million to NOI (Unite share) in next four years

Strong balance sheet underpinned by growing portfolio valuation

· 4.8% like-for-like portfolio valuation increase to £6.0 billion (Unite share) (2023: 1.2% and £5.5 billion)

· TAR of 9.6%, reflecting 6% growth in EPRA NTA to 972p (2023: 2.9% and 920p)

· Net debt: EBITDA reduced to 5.5x (2023: 6.1x), with LTV of 24% (2023: 28%)

· Cost of debt expected to increase to 4.1% in 2025 (2024: 3.6%)

Leading the living sector in sustainability

· Over 99% of portfolio EPC A-C rated (2023: 99%) with 9% reduction in energy intensity since 2019

· Delivery of our lowest ever embodied carbon development at Bromley Place, Nottingham

1. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). These financial highlights are based on the European Public Real Estate Association (EPRA) best practice recommendations and these performance measures are published as they are intended to help users in the comparability of these results across other listed real estate companies in Europe. The metrics are also used internally to measure and manage the business and to align to the performance related conditions for Directors' remuneration. See glossary for definitions.

2. Excludes IFRS 16 related balances recognised in respect of leased properties. See glossary for definitions.

3. Adjusted earnings and adjusted EPS remove the impact of SaaS implementation costs from EPRA earnings and EPRA EPS. See glossary for definitions and note 7 for calculations and reconciliations.

PRESENTATION

A live webcast of the presentation including Q&A will be held today at 08.30am GMT for investors and analysts, and is available here. Slides and a replay of the event will be available via our website at https://www.unitegroup.com/.

To register for the event or to receive dial-in details, please contact [email protected].

For further information, please contact:

Unite Students

CHIEF EXECUTIVE'S REVIEW

The business has performed strongly in 2024, delivering continued growth in earnings and dividends. This reflects the strength of our best-in-class operating platform, the commitment of our teams and the ongoing appeal of our value-for-money proposition. Our affordable pricing, UK customer focus and strength of relationships with universities are key differentiators, enabling us to significantly outperform the sector in a more competitive environment. We operate in a structurally growing sector, bolstered by demographic growth and the attractiveness of the UK's Higher Education sector to domestic and international students. The shortage of accommodation to meet this demand supports sustainable long-term rental growth and our track record and reputation in the sector create compelling investment opportunities for the business.

Growing earnings and dividend

A strong lettings performance for the 2023/24 and 2024/25 academic years supported growth in adjusted earnings to £213.8 million and adjusted EPS of 46.6p, up 16% and 5% respectively year-on-year. The growth in adjusted EPS also reflects the increased share count following our capital raise in July 2024. IFRS profit attributable to owners of the company of £441.9 million and diluted EPS of 96.1p (2023: £102.5 million and 24.6p) also reflects the valuation increase of our property portfolio, driven primarily by rental growth. We have proposed a final dividend of 24.9p which, if approved, totals 37.3p for the full year, representing a payout ratio of 80% of adjusted EPS and a year-on-year increase of 5%.

Total accounting returns for the year were 9.6%, reflecting dividends paid in the year and 6% growth in EPRA NTA per share to 972p. Following our capital raise in the year, our net debt: EBITDA and LTV ratios reduced to 5.5x and 24% respectively, providing the funding capacity to invest for future growth.

Our key financial performance indicators are set out below:

1. See glossary for definitions and note 7 for alternative performance measure calculations and reconciliations. A reconciliation of profit before tax to EPRA earnings and adjusted earnings is set out in note 7 of the financial statements.

Encouraging outlook for 2025/26

We continue to see strong demand from students and universities for our well located, value-for-money student accommodation. We observed a normalisation in leasing trends over the course of 2024, which we expect to continue for the 2025/26 sales cycle with more bookings made later in the cycle. 

We have seen strong demand from universities for the coming year, as they look to secure accommodation to meet student demand, resulting in nomination agreements for 57% of beds for 2025/26. These agreements deepen our relationships with universities and underpin occupancy each year, providing income security at rental levels comparable with direct-let sales.

International student demand is improving for 2025 after the disruption created by changes to visa policy in early 2024. Visas granted to students were down 14% in 2024 as a result of this policy change and uncertainty created by the review of post-study visa policy ahead of the UK general election. The new government has been vocal in its support of international students coming to the UK, recognising the value they bring to the UK and its universities, and we are not expecting any further visa changes in the near term. Recruitment data is encouraging, with indications of a 14% increase in the intake for January 2025 and a 3% increase in international applicants for the 2025/26 academic year, with 9% growth from China.

Across the Group's entire property portfolio, 70% of rooms are now sold for the 2025/26 academic year (2024/25: 79%), in-line with our expectations for a later sales cycle. We remain on track to deliver 97-98% occupancy and rental growth of 4-5% for the 2025/26 academic year.

Constrained supply of student housing

Many university cities are facing housing shortages, and our investment activity is focused on those markets with the most acute need. Over half of students who need term-time accommodation live in HMOs where many private landlords are choosing to leave the sector due to rising mortgage costs and increasing regulation. In some markets, delivery of Build-to-Rent accommodation is partially mitigating reduced availability of HMO stock, albeit at higher price points.

New supply of PBSA is also down 60% on pre-pandemic levels, reflecting viability challenges created by higher costs of construction and funding as well as planning backlogs and time required to secure Building Safety Act approvals. Weekly rents now need to be at least £200 for new PBSA development outside of London to be viable, meaning there is little prospect of new supply in many markets.

We expect obsolescence of older university accommodation to further impact supply, with 5,000-10,000 beds being removed from the market each year due to building age and the need to operate buildings more sustainably.

The combination of these factors has significantly increased demand for our accommodation in many cities. Our strong, established relationships with universities position us as a long-term partner to help solve their housing needs. The Government has also set ambitious targets for new housing, and we will play our part in delivering new student accommodation which frees up local housing for families.

Delivering our strategy

Our purpose is to deliver a Home for Success, creating communities where young people thrive. Our strategy is focused on three key objectives to deliver for our key stakeholders:

· Great Place to Live - Creating places that our customers can call home while they stay with us

· Great Place to Work - Creating the platform for our people to do their best work, experience the career journey of a lifetime and achieve extraordinary things together

· Great Place to Invest - Delivering long-term growth for our investors as a sustainable and resilient business

Great Place to Live

We delivered significant enhancements to our buildings and service offering in 2024, delivering value for money for our customers. During the year we refurbished 11 buildings, upgrading the living experience for 5,200 students, driving significant improvements in Net Promoter Scores. Our accommodation is comparable in cost to HMOs once bills are included. This is before allowing for the price certainty we provide on utilities and the additional product and service features we offer, such as on-hand maintenance teams, 24/7 security, high-speed Wi-Fi and contents insurance.

We have a best-in-class 24/7/365 operating platform in the student accommodation sector, underpinned by our PRISM technology platform, passionate customer-facing teams and sector-leading student support in partnership with universities. We are in the process of upgrading our PRISM platform to enhance customer experience and deliver operational efficiencies and during 2024 we delivered new payment options, as well as a new customer website and app. We continue to support student welfare through our Support to Stay programme and are also building on the research of the Living Black Commission in partnership with the HE sector to improve the university accommodation experience for black students.

The impact of our customer initiatives is reflected in a further increase in our Net Promoter Scores to +50 for students at check-in and +37 with university partners (2023: +42 and +32). We have also seen an increase in the proportion of beds under nomination agreements to 57% (2023/24: 53%), reflecting our status as the partner of choice for universities as they increasingly look to trusted partners to meet their accommodation needs.

Great Place to Work

Delivering for our customers and investors requires us to attract and retain the best people and enable them to deliver their best work.

We have maintained our commitment to the Real Living Wage for 2025, with 5% pay awards for our city teams. During the year we introduced a new performance management framework to support our people in having more meaningful performance conversations, helping to align individual goals with the company's objectives. We also maintained our focus on Diversity, Equity, Inclusion and Belonging, by introducing guidance on neurodiversity and the menopause. Our teams delivered a record number of Positive Impact projects in their local communities in 2024, delivering lasting benefits in many of our cities.

Our employee engagement score rose to 74, the highest in two years, and we achieved the Investors in People Gold Award, reflecting the positive impact of these initiatives.

Great Place to Invest

We delivered 5% growth in adjusted EPS and dividends in the year as strong rental growth offset cost increases in our operations. Rental growth also supported increases in our property valuations, which resulted in a total accounting return of 9.6%.

The quality and scale of our portfolio is key to delivering attractive, sustainable returns for our shareholders. We secured planning on three projects in our development pipeline and successfully delivered £48 million of building upgrade projects in the year at a blended yield on cost of 10%. We continue to recycle capital with a focus on increasing alignment to the strongest universities and disposed of £304 million of properties in the year (Unite share: £161 million).

In July 2024, we raised £450 million in equity to accelerate our investment activity into development and acquire value-add investment assets. We have deployed around 50% of the proceeds and expect the transaction to enhance earnings and total returns as projects are delivered.

More supportive government policy

Higher Education contributes over £250 billion to the UK economy, creates new opportunities and life experiences for young people, and provides global influence through the soft power of education. The HE sector also plays a key part in increasing skill levels in support of the Government's mission to kickstart economic growth. Recognising this value, the new UK government is supportive of both the university sector and international students.

Tuition fees for English students increased for the first time since 2017 for the 2025/26 academic year, rising by 3.1% to £9,535 p.a. While this was welcomed by universities, they continue to face cost pressures due to the significant real-term decline in fees over recent years. In 2025, the Government will publish a comprehensive spending review including funding for Higher Education, laying out budgets and capital investment until 2029.

The Government is expected to announce a new Higher Education Policy and International Education Strategy in the spring, which we expect to focus on attracting growing numbers of international students to study in the UK. The Government is actively encouraging international student recruitment and the introduction of student number restrictions by Canada and Australia is expected to increase the relative attractiveness of the UK as a study destination.

Universities are well established, long-term institutions with strong balance sheets and little debt. In recent years, universities have responded to rising costs by growing student numbers, increasing international recruitment and delivering efficiencies within their cost bases. We have deliberately aligned ourselves to the strongest universities which, though not immune, are best positioned to respond to rising costs. A small number of universities face greater challenges where broader cost reduction programmes may be required but our exposure to this part of the market is minimal.

We are confident that our alignment to the strongest universities positions us to navigate future changes in student demand and government policy. Our standing in the sector provides us with unique insight and unlocks opportunities to deepen partnerships. Together with our high-quality portfolio and responsible approach to rent setting, this positions us to deliver sustainable rental growth in the years ahead.

Significant growth opportunities

Universities increasingly see the lack of high-quality and value-for-money accommodation as a barrier to their growth. The challenge of obsolescence in legacy estates and limited funding creates significant opportunities for Unite to support universities to deliver new, improved and sustainable accommodation. During the year, we announced our first university joint venture with Newcastle University to develop 2,000 new beds on university land. We expect to announce our second agreement in the next three months.

In addition, we have a substantial committed pipeline of £1.2 billion of traditional development close to campuses, which is 100% aligned to Russell Group universities. The equity raised over the past two years means our pipeline is fully funded for committed schemes being delivered in the period to 2028. These projects are underpinned by demand from universities for 63% of beds, which supports significant growth in our earnings and NTA over the next four years.

The Building Safety Act introduced three gateways for construction of new high-rise buildings and has added around six months to development programmes. Delays in reviewing applications as the new regulatory process is implemented have unfortunately resulted in the delivery of our Freestone Island development in Bristol being delayed until 2027.

We have increased our target returns for new investment to reflect higher capital costs and increased delivery risks in the current environment. We remain focused on the delivery of our committed pipeline which will add £71 million to net operating income (Unite share) over the medium term as projects are delivered.

Acquisitions, providing immediate income, have become more attractive and we expect to see an increased availability of investment opportunities over the next two years. We acquired eight properties in 2024, all in strong markets with value-add potential, which we expect to deliver attractive risk adjusted returns. We will remain disciplined in our investment activity, ensuring that new commitments enhance the growth and quality of our portfolio, while maintaining a strong balance sheet.

Positive outlook

The outlook for the business is strong. Student accommodation is structurally supported by growing demand for UK Higher Education and constrained supply, which supports sustainable growth in our rents and earnings over the long-term. An environment of higher funding costs will impact our earnings growth, but we also expect this to create significant opportunities for our well-capitalised business to invest and grow in the UK's strongest university cities.

An encouraging outlook for student demand supports rental growth of 4-5% for the 2025/26 academic year and 2-4% growth in adjusted EPS in 2025. We see mid-single digit earnings growth over the medium term, driven by our operating performance and accelerating development completions, which supports attractive total accounting returns of c.10% before yield movements.

We are investing significantly to deliver the new student homes to support the growth of the UK's strongest universities and help free up much-needed family housing in our local communities. The strength of our university relationships, best-in-class operating platform and development expertise has unlocked the opportunity for strategic partnerships and we expect to announce our second university joint venture in the coming months.

OPERATIONS REVIEW

Strong rental growth delivered for 2024/25

Annual rents increased by 8.2% on a like-for-like basis for 2024/25 academic year (2023/24: 7.4%), which was above our initial expectations. We saw strong growth across both our direct-let and nominated beds. This reflected our success in agreeing increased rental levels on renewals of single year and new multi-year nomination agreements where our university partners recognise the value our accommodation provides at a time of increasing costs. Continued enhancements to our service and product offering drove strong demand and supported the increase in our check-in NPS score to +50 (2023: +42).

We achieved occupancy of 97.5% across our total portfolio for the 2024/25 academic year (2023/24: 99.8%) as the market returned to more normal levels of occupancy after two years of exceptional demand resulting from the surge in student numbers during and immediately following the pandemic. The strength of our relationships with universities, the quality and location of our portfolio and focus on UK customers at affordable price points saw lettings outperform the wider PBSA sector, where occupancy averaged around 94%.

Growing demand for student accommodation

The UK's universities attract young people from around the world for the quality of learning and life experience they offer. This demand for university education and our accommodation is structurally supported with the UK population of 18-year-olds forecast to grow 11% (99,000) by 2030 (Source: ONS). We are also seeing a return to growth in international demand for UK Higher Education following disruption in 2024 caused by visa changes.

The latest UCAS data shows 2% growth in applications for the 2025/26 academic year from UK 18-year-olds, our core customer demographic, which is supported by population growth and strong application rates.

Resilient student demand

Overall, the undergraduate intake for 2024/25 increased by 2% to 565,000 (2023/24: 554,000) with a record number of UK 18-year-olds starting courses. We have been deliberate in aligning our portfolio to high- and medium-tariff universities, where the number of accepted applicants grew by 4% for the 2024/25 academic year. In contrast, lower tariff universities saw a 1% reduction in acceptances, continuing the trend of the past decade where higher tariff universities have captured a growing share of student demand. Our portfolio is 93% aligned to Russell Group markets, where the number of accepted students rose by 8% YoY and is now 16% above pre-pandemic levels.

Recruitment of international students was disrupted for 2024/25 by the removal of visas for family members of postgraduate taught students, which became effective in January 2024, and uncertainty created by the Government's review of the Graduate Route in May 2024. This led to a 14% reduction in visas issued to international students in 2024, ranging from a 5% reduction for Russell Group universities to c.25% fewer for other universities. Encouragingly, more recent data indicates a return to growth in international student numbers with January 2025 intake up 14% year-over-year and 3% growth in international applications through UCAS for the 2025/26 academic year.

Strong demand from universities

We have maintained a high proportion of income let to universities, with 38,326 beds (57% of total) provided under nomination agreements for 2024/25 (2023/24: 37,143 and 53%). The increase in the percentage of beds under nomination agreements reflects universities' growing reliance on private providers to meet their accommodation needs and our position as the partner of choice. We saw further improvement in our university NPS score to +37 (2023: +32), recognising the strength of our partnerships, sector-leading student welfare offer, and thought leadership in the sector.

The unexpired term of our nomination agreements is 5.8 years, unchanged on 2023/24. A balance of nomination agreements and direct-let beds provides the benefit of having income secured by universities, as well as the ability to offer rooms to re-bookers and postgraduates and determine market pricing on an annual basis. We expect to maintain nomination agreements between 50-60% of beds going forward, providing significant income visibility.

67% of our nomination agreements, by income, are multi-year and therefore benefit from annual fixed or inflation-linked uplifts based on RPI or CPI. The remaining agreements are single year, and we achieved a renewal rate of 81% with universities for 2024/25 where we offered to renew (2023/24: 89%). As inflation moderates, we expect annual rental uplifts will return closer to historical levels of 0.5-1.0% above CPI inflation.

UK students account for 72% of our customers for 2024/25 (2023/24: 72%), making up a large proportion of the beds under nomination agreements with universities. This represents a significant increase in our weighting to UK students over recent years, compared to 60% immediately prior to the pandemic, and reflects our success in retaining second- and third-year students who might have historically moved into the HMO sector. The proportion of our customers from outside the UK is unchanged at 28% (2023/24: 28), highlighting the resilience of our strategy in a year when international demand was disrupted.

Postgraduates make up 17% of our customer base and non-first year undergraduates accounted for a further 27% of our bookings for the 2024/25 academic year (2023/24: 17% and 28%), reflecting the success of proactive marketing to these groups. The growing appeal of our offering to postgraduate and non-first year undergraduate students, who typically seek greater independence, supports our strategy of increasing the segmentation of our customer offer to capture market share from the traditional HMO sector.

Occupancy by type and domicile by academic year

Leasing trends normalising for 2025/26

Applications data for the 2025/26 academic year is encouraging, with applications up 2% on 2024/25 from UK 18-year-olds who are our core customer group. We continue to see strongest demand for the high-tariff universities to which we have aligned our portfolio, where applications increased by 4%. Applications from international students are 3% higher for 2025/26, with particularly strong growth from China.

Across the Group's entire property portfolio, 70% of rooms are now reserved for the 2025/26 academic year, which is in-line with our long-term leasing pace. We have seen strong early demand from universities who see quality accommodation as a key part of their offer to prospective students, including new and extended multi-year nomination agreements for 7,000 beds.

We expect the normalisation of booking trends seen over the course of 2024 to continue for the 2025/26 sales cycle with more bookings made later in the cycle. Recent data releases on international student demand are encouraging and we anticipate an acceleration in reservations over the coming months. Our nominations and direct-let sales performance to date is supportive of our guidance for 97-98% occupancy and rental growth of 4-5% for the 2025/26 academic year.

Cost pressures are easing

Cost growth slowed in 2024 as utility costs stabilised in the second half and inflation moderated. Property operating costs increased by 8% in 2024 (2023: 14%), principally driven by staff costs due to wage increases linked to the Real Living Wage and utility costs as a result of higher commodity prices following the expiry of cheaper historical hedges.

Summer cleaning costs decreased by £0.4 million through in-sourcing activity, which supported the improvement in our NPS score. Marketing costs reduced by £0.3 million, reflecting fewer direct-let beds for sale and more targeted investment in our commercial proposition. Central and other costs together increased by £1.7 million driven by maintenance activity, growth in central teams and council tax/HMO licences.

We expect further normalisation of cost growth in 2025 as utility growth slows further and inflationary pressures subside. Increased National Insurance contributions from April 2025 will cost the business around £2 million p.a. and we have adopted the 5% increase in the Real Living Wage for relevant roles. Our utility costs are fully hedged through 2025 and 35% for 2026, and we expect a low single-digit percentage increase in the cost of utilities in 2025.

The combination of slowing cost growth and strong rental growth secured for the 2024/25 academic year supports an improvement in our EBIT margin of around 50bps in 2025.

Technology enhancing customer experience and margins

Our technology upgrade programme to enhance customer experience and drive efficiencies delivered significant milestones in 2024 as we launched a new student app and website, opened up new payment methods and launched a new reward and benefit platform for our people. We will deliver new booking, customer service, maintenance and finance platforms over the next two years, which will support our strategic objectives of delivering a Great Place to Live and Work. We expect to incur a further £15 million of costs in 2025 as the programme continues to deliver change. We expect to achieve a payback on our investment through enhanced utilisation of our portfolio and cost efficiencies, which will increase our EBIT margin by around 1% over the medium term.

PROPERTY REVIEW

Our property portfolio saw a 4.9% increase in valuations on a like-for-like basis during the year (Unite share: 4.8%), as strong rental growth more than offset the loss of Multiple Dwellings Relief (MDR) and increases in property yields. The see-through net initial yield of the portfolio was 5.1% at 31 December 2024 (December 2023: 5.0%), which reflects like-for-like yield expansion of 10 basis points in the year. We are encouraged by the stabilisation of property yields in the year and an increase in transaction volumes for PBSA.

Rental growth was particularly strong in our wholly owned portfolio following accretive asset management projects and recognition of rental upside in two buildings approaching the end of long-term nomination agreements. This was partially offset by an increase in property yields for larger assets in prime regional markets. The stronger valuation performance for LSAV reflects its higher London weighting, where the loss of MDR was less impactful.

Like-for-like capital growth1,2,3

1. Excludes leased properties and gains/losses on disposals

2. Other includes changes to operating cost assumptions and income adjustments on reversionary assets

3. Excludes fire safety expenditure costs

The proportion of the property portfolio that is income generating is 93% by value (31 December 2023: 97%) with properties under development increasing to 7% of the property portfolio by value (31 December 2023: 3%) due to the acquisition of several development sites and capital expenditure for on-site projects during the year. We expect the proportion of properties under development to grow in 2025 as we build out the committed pipeline.

The PBSA investment portfolio is 38% weighted to London by value on a Unite share basis, which is expected to rise above 40% on a built-out basis following completion of our secured development pipeline.

Limited new supply

There is widespread acknowledgement from universities and local authorities of the need for new student accommodation to support the growth of universities and relieve pressure on housing supply in local communities. However, supply conditions remain tight due to depressed levels of new development and a declining supply of private housing (HMOs).

New supply of PBSA is down 60% on pre-pandemic levels, with around 11,000 beds delivered in 2024 (Source: StuRents), reflecting viability challenges created by higher build, regulation and funding costs. Weekly rents of around £200 are now required to make development viable outside London, significantly above market rents in many cities and 80% of our regional portfolio. In response to increasing costs, new supply is increasingly focused on higher price studio accommodation and is targeting a different market segment to our 85% cluster-flat portfolio. Positively, we saw build cost inflation moderate during the year, although the availability of skilled labour remains tight, and costs remain around 50% higher than five years ago.

Planning timescales remain protracted due to limited planning resource for local authorities, resulting in longer delivery programmes which challenge viability. We expect the combination of complex planning, increasing regulation, and higher build and funding costs to restrict the delivery of new supply for several years.

Delivering new, high-quality student homes

Developing new high-quality accommodation in the most supply constrained markets increases our alignment to the strongest universities and is a significant driver of both earnings growth and total returns.

Our development pipeline includes 7,676 beds with a total development cost of £1.5 billion, of which 100% is located in Russell Group cities, 60% by cost will be delivered in London and 63% of beds are underpinned by a university agreement.

The Building Safety Act addresses the safety of new residential accommodation, by adding three gateways to the design, build and occupation of new buildings. We expect these gateways will add around six months to PBSA development programmes once embedded, putting pressure on returns and further slowing new supply. Our appraisals and delivery targets reflect the expected impact of the Act.

We have increased our return requirements for new investment to reflect higher funding costs and increased delivery risks in the current environment. We now are seeking development yields on new direct-let schemes at around 8% in regional markets and 6.75-7.0% in London, approximately 25-50 basis points higher than previous targets. We have lower hurdle rates for developments that are supported by universities or where another developer is undertaking the higher-risk activities of planning and construction.

Our focus is now on successfully delivering our secured pipeline and seeking opportunities for further university joint ventures, including on-campus projects and stock transfer, building on our successes over the past year. Land prices will have to adjust further for traditional development projects to meet our increased return requirements.

Completed schemes

During the year, we completed our 271-bed Bromley Place scheme in Nottingham at a cost of £36 million. The programme was accelerated to achieve delivery for the 2024/25 academic year and occupancy is expected to stabilise in 2025/26 with the benefit of a full leasing cycle. The project is tailored to postgraduate students, with smaller cluster sizes, a higher share of studios and an enhanced room specification. Through reusing the pre-existing façade, the project's embodied carbon of c.670kg/m2 is 45% below the RIBA baseline of 1,200kg/m2, making it our lowest carbon building to date.

Committed schemes - Off campus

We are committed to seven off-campus development schemes and our Newcastle joint venture, totalling 6,570 beds and £1,048 million in total development costs (Unite share). Once complete, the projects will add a combined £71 million to net operating income (Unite share).

We are on track to deliver two schemes for the 2025/26 academic year. At Burnet Point in Edinburgh, we will deliver 298 beds in cluster-flats as well as 103 beds in two- and three-bed clusters in a separate block. These smaller flats will be available for postgraduate students, university staff and other young professionals and form part of our BTR pilot. At Avon Point in Bristol, 50% of the 623-bed scheme will be nominated by the University of Bristol on a long-term nominations agreement. The site is adjacent to the University of Bristol's new Temple Quarter campus and will grow our portfolio in Bristol to 4,700 beds.

In Stratford, work is also underway at our Hawthorne House and Meridian Square projects which will be delivered for the 2026/27 and 2028/29 academic years respectively. The developments will be delivered as university partnerships, with over half of the beds let under nomination agreements to our university partners.

Early works are underway at our Central Quay project in Glasgow and we expect to commit to the full build contract in the coming weeks, which supports delivery in time for the 2027/28 academic year. During the year, we acquired the 444-bed Kings Place project in London with the benefit of a full planning consent. Demolition is now underway, and we expect to deliver the scheme for the 2027/28 academic year.

University joint ventures

Co-investment in accommodation alongside a university has been an objective for the business for several years. In February 2024, we announced an agreement with Newcastle University to enter into a joint venture to develop c.2,000 beds at the University's Castle Leazes site. The joint venture deepens our 20-year relationship with Newcastle University through a long-term strategic partnership. The existing halls are being demolished in anticipation of the new development. We are providing 1,600 beds being provided to house first-year students during the redevelopment. We submitted a joint planning application with Newcastle University for the new scheme in the autumn and, following delays in reaching agreement with a third party, now expect to open the first phase of Castle Leazes for the 2028/29 academic year.

We are in the advanced stages of agreeing our second university joint venture with Manchester Metropolitan University, which we expect to finalise in the second quarter of 2025. The partnership will redevelop the University's existing 770-bed Cambridge Halls accommodation adjacent to its campus in Manchester city centre, which is now thirty years old and no longer meets student needs. Subject to finalising the agreement and securing planning approval, around 2,300 beds will be built on the site for delivery in 2029 and 2030. The proposed scheme offers a range of room types and price points for students, including a new more affordable design concept.

We are in active discussions with a range of high-quality universities for further partnerships, which we are looking to progress over the next 12-18 months. These include discussions around stock transfer and refurbishment of existing university accommodation as well as new development both on- and off-campus.

Future pipeline

Our secured pipeline includes an additional 1,106 beds for as yet uncommitted schemes with total development costs of £305 million. We have optionality over these schemes and will make decisions on whether to proceed based on their risk-adjusted returns relative to other investment opportunities. In January, planning was rejected for our TP Paddington development in London despite being recommended for approval by planning officers, again highlighting the challenges of delivering new supply in our strongest markets. We are reviewing our options to secure planning and deliver a scheme in-line with our return requirements.

Secured development and partnerships pipeline

1. Direct-let (DL), Nominated (Noms) and Joint Venture (JV)

2. Subject to obtaining planning consent

3. Yield on cost assumes the sale of academic space for c.£45 million

4. Unite share 51%. Yield on cost includes management fees in NOI and deducts development management fee from costs

Investment activity aligned to the strongest universities

Acquisitions

Higher interest rates have increased our cost of capital. This increases the attractiveness of income today compared to income in the future, to which we now apply a higher discount rate. As a result, acquisition opportunities which are immediately income-generating have increased in attractiveness compared to developments, which deliver income in future years.

We expect increasing volumes of PBSA assets to come to market in 2025 and are focused on opportunities in our strongest markets aligned to high-quality universities, where we see the ability to deliver attractive rental growth over the long term.

Following our capital raise in July, we acquired seven assets for £244 million from USAF as part of a property swap. The acquired assets are located in strong markets (Bristol, Cardiff and Liverpool) and offer value-add opportunities through refurbishment as existing nominations expire over the next two to three years.

During the year, we also acquired the freehold interest of a 260-bed property in London for £37 million, which the Group had previously sold and leased back, from the freeholder. The property was acquired at below replacement cost, off affordable rents and we are planning a refurbishment upon expiry of a nomination agreement in 2026.

Disposals

We continue to manage the quality of the portfolio and our balance sheet leverage by recycling capital through disposals. During the year we completed the sale of six properties to PGIM Real Estate for £184 million (Unite share: £76 million). The disposals were priced at a blended 6.2% yield and in line with book value after deductions for fire safety works.

Following our capital raise in July, we sold two assets to USAF for £120 million as part of a property swap. The assets, located in Bristol and Liverpool, offer modern, high-quality accommodation with 58% of beds let under university nomination agreements.

We will continue to recycle capital from disposals to maintain LTV around our c.30% target and net debt: EBITDA in the 6-7x range. The level of planned disposals will adjust to reflect capital requirements for our development and asset management activity as well as market pricing. We will target future disposals of around £100-150 million p.a. (Unite share).

Asset management

We see significant opportunities to create value through asset management projects in our existing estate. Refurbishment ranges from smaller projects focused on upgrading communal areas and energy efficiency, through to full building refurbishment or more significant works such as extension or redevelopment. These projects have shorter lead times than new developments, often carried out over the summer period, and deliver both attractive risk-adjusted returns and significant enhancements to the student experience.

In the year, we delivered 11 refurbishment projects in strong markets alongside other building upgrades. Investment across the projects totalled £48 million (Unite share: £39 million) and delivered a 10% yield on cost through rental uplifts and operating cost savings. The projects delivered additional beds, upgraded existing rooms and enhanced the environmental performance of the properties.

We have a significant pipeline of attractive asset management and building improvement opportunities and will accelerate investment to c.£65 million (Unite share: £45 million) during 2025, improving the experience of around 3,000 students for the 2025/26 academic year.

Build-to-rent (BTR)

We believe there is an opportunity to grow our platform in the wider living sector by catering to the growing number of young professional renters living in major UK cities. Our pilot BTR asset in Stratford has performed well and is integrated into our operating platform of 1,700 PBSA beds in the area.

During the period, we committed to the planned refurbishment of our 180 Stratford pilot asset. The project will deliver new amenity space as well as a rolling refurbishment of the apartments over the next 24 months as units are vacated. Total costs are expected to be c.£15 million, delivering a yield on cost in line with PBSA returns.

We continue to review BTR opportunities though do not expect to increase our capital commitment in the short term.

Fire safety

Fire safety is a critical part of our health and safety strategy, and we have a track record of leading the sector on fire safety standards through our proactive approach. During the period we completed fire safety improvements on 7 properties across our estate and spent £76 million (Unite share: £31 million) on fire safety capex during the year.

Our year-end balance sheet includes committed fire safety spend of £118 million (£62 million Unite share), the costs for which will be incurred over the next two years. Of this, £6 million (£5 million Unite share) is included in provisions and £112 million (£57 million Unite share) is deducted from the fair value of our investment properties.

During the year, we reached agreement with contractors for recovery of £32 million of remediation costs (Unite share: £23 million) in relation to three properties. In total, we have now agreed settlements totalling £72 million (Unite share: £51 million). We expect to recover 50-75% of total cladding remediation costs through claims from contractors, although the settlement and recognition of these claims is likely to lag costs incurred to remediate properties. We anticipate the remediation programme to complete in 2028 with net spend higher in the earlier years of the programme and reducing substantially from 2026.

FINANCIAL PERFORMANCE

The Group uses alternative performance measures (APMs), which are not defined or specified under IFRS. These APMs, which are not considered to be a substitute for IFRS measures, provide additional helpful information and include, among others, measures based on the European Public Real Estate Association (EPRA) best practice recommendations. The metrics are used internally to measure and manage the business.

Earnings and adjusted earnings

We delivered a strong operating performance in 2024, with adjusted earnings increasing by 16% to £213.8 million (2023: £184.3 million), reflecting an increase in net operating income and a reduction in finance costs, when compared to the prior year. Adjusted EPS increased by 5% to 46.6p (2023: 44.3p), reflecting the increased share count following the capital raise in July.

A reconciliation of profit after tax to EPRA earnings and adjusted earnings is set out in note 2.2b to the financial statements.

IFRS profit before attributable to owners of the parent company increased to £441.9 million in the year (2023: £102.5 million), reflecting the increase in adjusted earnings of £29.5 million, a revaluation gain of £239.6 million (2023: £61.2 million loss) and a £3.5 million loss for interest rate swaps and cancellation costs (2023: £17.2 million loss).

A reconciliation of profit before tax to adjusted earnings and EPRA earnings is expanded in section 7 of the financial statements.

Rental growth and profitability

Rental income increased by £28.5 million to £398.0 million, up 8% compared to 2023. Like-for-like rental income, excluding the impact of major refurbishments, acquisitions, disposals and development completions, increased by 8% during the year reflecting strong rental growth but modestly lower occupancy for the 2024/25 academic year. Non-like-for-like income grew by £4.3 million with additional rental income from acquisitions and development completions exceeding the impact of income forgone through disposals.

Operating expenses increased by 6% for like-for-like properties, primarily driven by increased utility and staff costs due to the expiry of cheaper utility hedges and increases in the Real Living Wage.

This resulted in an 8% increase in net operating income to £276.1 million (2023: £256.5 million) or 8% on a like-for-like basis.

Overheads increased by £5.3 million, primarily reflecting investment into our technology platform. Excluding the impact of Software as a Service implementation costs, as underlying overheads decreased by £0.3 million. During the year SaaS implementation costs relating to our technology upgrade programme of £15.9 million were incurred and a deferred tax credit of £4.0 million (2023: £11.0 million and £2.8 million). Recurring management fee income from joint ventures increased to £17.3 million (2023: £16.9 million), driven by increased property valuations and NOI in USAF and LSAV.

Our EBIT margin increased slightly to 68.1% (2023: 68.0%), reflecting the offsetting impact of increases in rental income and operating costs. We are targeting up to 50bps improvement in our EBIT margin in 2025, driven by rental growth, completions of development and asset management projects and efficiencies delivered through procurement and the enhanced use of technology. We expect these factors to more than offset the impact of increases in staff costs linked to higher National Insurance contributions and increases in the Real Living Wage.

Finance costs reduced to £44.0 million in 2024 (2023: £55.1 million) with the impact of lower borrowings following our capital raise more than offsetting the impact of an increase in our average cost of debt to 3.6% (2023: 3.3%) due to refinancing activity and higher rates on new debt. Capitalised interest linked to our development pipeline increased to £15.5 million (2023: £8.4 million) due to increasing levels of development activity.

EPRA NTA growth

EPRA net tangible assets (NTA) per share, our key measure of NAV, increased by 6% to 972p at 31 December 2024 (31 December 2023: 920p). EPRA net tangible assets were £4,758 million at 31 December 2024, a £743 million increase from £4,015 million in the prior year.

The main drivers of the £743 million increase in EPRA NTA and 52p increase in EPRA NTA per share were our capital raise and retained profits and valuation gains on our investment and development portfolio, which were partially offset by further deductions for fire safety capex.

IFRS net assets increased by 18% in the year to £4,812 million (31 December 2023: £4,067 million), principally driven by net proceeds from the capital raise, valuation gains and retained profits. On a per share basis, IFRS NAV increased by 5% to 982p.

Property portfolio

The valuation of our property portfolio at 31 December 2024, including our share of property assets held in USAF and LSAV, was £6,375 million (31 December 2023: £5,770 million). The £605 million increase in portfolio value reflects the valuation movements outlined above, capital expenditure and interest capitalised on developments.

Summary balance sheet

1. Rental properties (owned) includes assets classified as held for sale in the IFRS balance sheet

Return on equity (total accounting return)

Dividends paid of 36.0p (2023: 33.5p), together with growth in EPRA NTA, resulted in a total accounting return of 9.6% in the year (2023: 2.9%). Our adjusted EPS yield (measured against opening EPRA NTA) increased to 5.1% in the year (2023: 4.8%), reflecting the growth in our recurring earnings.

We expect to deliver a total accounting return of 8-10% in 2025 before the impact of any property yield movements. This reflects our expectation of growing recurring earnings, rental growth for the 2025/26 academic year and valuation uplifts from our development and asset management pipeline.

Cash flow and net debt

The business generated £61 million of net cash in 2024 (2023: £176 million) and net debt reduced to £1,510 million (2023: £1,571 million). The key components of the movement in net debt were:

· Capital raise gross proceeds of £450 million

· Operational cash flow of £216 million on a see-through basis

· Acquisitions net of disposals of £63 million on a see-through basis

· Total capital expenditure of £360 million on a see-through basis

· Dividends paid of £137 million

· A £46 million net outflow for other items

In 2025, we expect see-through net debt to increase as planned capital expenditure on investment and development activity will exceed anticipated property disposals.

Debt financing and liquidity

During the year, borrowing rates for new debt remained high, as markets adjusted to a 'higher for longer' interest rate environment. We are well protected from significant increases in borrowing costs for our existing debt through our well-laddered debt maturity profile and forward hedging of interest rates. However, we still expect to see our borrowing costs increase over time as we refinance in-place debt and draw new borrowings at higher prevailing rates.

We are focused on maintaining a strong and flexible balance sheet and will continue to use leverage to support our growth and enhance risk-adjusted returns. In response to the higher interest rate environment, we reduced our medium-term target LTV to c.30% on a built-out basis (previously 30-35%). LTV reduced to 24% at 31 December 2024 (31 December 2023: 28%), reflecting lower net debt and increases in our property valuations.

We also continue to monitor our interest cover and net debt to EBITDA ratios. In 2024, interest cover improved to 6.2x (2023: 4.6x) and net debt to EBITDA reduced to 5.5x (2023: 6.1x), reflecting both the improved operational performance of the business and the impact of lower leverage. We aim to maintain an ICR ratio of 3.5-4.0x and a net debt to EBITDA ratio of 6-7x.

We remain committed to active portfolio management through capital recycling and will continue to target disposals of around £100-150 million p.a. (Unite share).

Following our capital raise, The Unite Group credit rating was upgraded to BBB+ by Standard & Poor's reflecting our lower leverage targets, robust capital position, growing cash flow and track record.

Funding activity

As at 31 December 2024, the wholly-owned Group had £1,024 million of cash and debt headroom (31 December 2023: £579 million), comprising £274 million of drawn cash balances and £750 million of undrawn debt (2023: £29 million and £550 million respectively).

In February 2024, we increased our revolving debt capacity by £150 million to £750 million and added a further £150 million term loan. Both new facilities are on similar terms to our existing RCF and mature in 2027. The new loans increase investment capacity and provide flexibility to capitalise on growth opportunities.

The Group established a £2 billion Euro Medium Term Note (EMTN) Programme during the year. Following establishment of the programme, the Group issued a £400 million eight-year bond in June bearing a 5.625% coupon. In November, the proceeds of the bond were partially used to repay the maturing £300 million Liberty Living bond with the balance held for general corporate purposes.

During the year, USAF completed a new £150 million secured loan, refinancing its maturing £150 million RCF. The five-year loan has a fixed rate of 5.6%. We have agreed terms with a lender for the refinancing of the USAF £395 million bond due to mature in June 2025, which we expect to complete in the coming months.

Interest rate hedging arrangements and cost of debt

Our average cost of debt increased to 3.6% in the year (2023: 3.3%) as new debt was issued at higher prevailing rates. At the year-end, 100% of the Group's debt was subject to fixed or capped interest rates (31 December 2023: 100%), providing protection against future changes in interest rates. Based on our hedging position, forecast drawings, planned refinancing and market interest rates, we expect an average cost of debt of 4.1% for 2025 and 4.5% for 2026. Reflecting an increased level of development activity, we expect a corresponding increase in capitalised interest in 2025 to around £25-30 million (2024: £15.5 million).

Our average debt maturity is unchanged at 3.8 years (31 December 2023: 3.8 years) and we continue to proactively manage our debt maturity profile and diversify our lending base.

Dividend

We are proposing a final dividend payment of 24.9p per share (2023: 23.6p), totalling 37.3p for the full year (2023: 35.4p) and representing a 5% increase compared to 2023. This represents a payout ratio of 80% of adjusted EPS. The final dividend will be fully paid as a Property Income Distribution (PID) of 24.9p, which we expect to fully satisfy our PID requirement for the 2024 financial year.

Subject to approval at Unite's Annual General Meeting on 15 May 2025, the dividend will be paid in either cash or new ordinary shares (a 'scrip dividend alternative') on 30 May 2025 to shareholders on the register at close of business on 22 April 2025. The last date for receipt of scrip elections will be 8 May 2025.

During 2024, scrip elections were received for 26% and 1% of shares in issue for the 2023 final dividend and 2024 interim dividend respectively. Further details of the scrip scheme, the terms and conditions and the process for election are available on the Company's website.

We plan to distribute 80% of adjusted EPS as dividends for the 2025 financial year.

Tax and REIT status

The Group holds REIT status and is exempt from tax on its property business. During the year, we recognised a corporation tax charge of £5.0 million (2023: £1.2 million charge) with the increase primarily due to higher taxable profits from interest income.

Funds and joint ventures

The table below summarises the key financials at 31 December 2024 for our co-investment vehicles USAF and LSAV.

Property valuations increased by 4.5% for USAF and 6.0% in LSAV over the year, on a like-for-like basis, with rental growth more than offsetting the loss of Multiple Dwellings Relief. Property yields remained broadly stable across both portfolios.

USAF is a high-quality, large-scale portfolio of 24,326 beds in leading university cities. The fund has positive future prospects through rental growth and investment opportunities in asset management initiatives in its existing portfolio. USAF, in-line with other non-listed property funds, has received redemption requests which are expected to be fulfilled by mid-2025 from the proceeds of the recently completed asset swap and planned disposals.

Fees

During the year, the Group recognised net fees of £17.3 million from its fund and asset management activities (2023: £16.9 million). The increase in fee income is due to growing income and property valuations, partially offset by lower third-party assets under management following redemptions in USAF during the year.

Responsibility statement of the directors in respect of the annual financial report

We confirm that to the best of our knowledge:

· The financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole

· The strategic report includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face

· The annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group's position and performance, business model and strategy.

Joe Lister Michael Burt

Chief Executive Chief Financial Officer

25 February 2025

Forward-looking statements

The preceding preliminary statement has been prepared for the shareholders of the Company, as a body, and for no other persons. Its purpose is to assist shareholders of the Company to assess the strategies adopted by the Company and the potential for those strategies to succeed and for no other purpose. The preliminary statement contains forward-looking statements that are subject to risk factors associated with, among other things, the economic, regulatory and business circumstances occurring from time to time in the sectors and markets in which the Group operates. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a wide range of variables that could cause actual results to differ materially from those currently anticipated. No assurances can be given that the forward-looking statements will be realised. The forward-looking statements reflect the knowledge and information available at the date of preparation. Nothing in the preliminary statement should be considered or construed as a profit forecast for the Group. Except as required by law, the Group has no obligation to update forward-looking statements or to correct any inaccuracies therein.

Primary statements

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated balance sheet

Consolidated statement of changes in shareholders' equity

Statement of cash flows

Section 1: Basis of preparation

Section 2: Results for the year

2.1 Segmental information

2.2 Earnings

2.3 Net assets

2.4 Revenue and costs

2.5 Tax

Section 3: Asset management

3.1 Wholly owned property assets

3.2 Inventories

3.3 Investments in joint ventures

Section 4: Funding

4.1 Borrowings

4.2 Interest rate swaps

4.3 Net financing costs

4.4 Gearing

4.5 Covenant compliance

4.6 Equity

4.7 Dividends

Section 5: Working capital

5.1 Cash and cash equivalents

5.2 Credit risk

5.3 Provisions

Section 6: Post balance sheet events

Section 7: Alternative performance measures

Glossary

Company information

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2024

All results are derived from continuing activities.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2024

All other comprehensive income may be classified as profit and loss in the future.

There are no tax effects on items of other comprehensive income.

CONSOLIDATED BALANCE SHEET

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the year ended 31 December 2024

For the year ended 31 December 2023

STATEMENT OF CASH FLOWS

For the year ended 31 December 2024

NOTES TO THE FINANCIAL STATEMENTS

Section 1: Basis of preparation

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2024 or 2023 but is derived from those accounts. Statutory accounts for 2023 have been delivered to the Registrar of Companies, and those for 2024 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 2024 or 2023.

Going concern

In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether the Group can continue in operational existence for at least 12 months from the date of this report.

The Directors have considered a range of scenarios for future performance through the 2024/5 and 2025/26 academic years. This included a base case assuming cash collection and performance for the 2024/25 academic year remains in line with current expectations and sales performance for the 2025/26 academic year consistent with published guidance; and a reasonable worst-case scenario where income for the 2025/26 academic year is impacted by reduced sales, equivalent to occupancy of around 90%.

The impact of our ESG asset transition plans are included within the cashflows, which have been modelled to align with the Group's 2030 net zero carbon targets. Under each of these scenarios, the Directors are satisfied that the Group has sufficient liquidity and will maintain covenant compliance over the next 12 months. To further support the Directors' going concern assessment, a 'Reverse Stress Test' was performed to determine the level of performance at which adopting the going concern basis of preparation may not be appropriate. This involved assessing the minimum amount of income required to ensure financial covenants would not be breached. Within the tightest covenant, occupancy could fall to approximately 50% in the Group and 70% in the funds before there would be a breach. The Group has capacity for property valuations to fall by around 70% in the Group and 40% in the funds before there would be a breach of LTV and gearing covenants in facilities where such covenants exist. Were income or asset values to fall beyond these levels, the Group has certain cure rights, such that an immediate default could be avoided.

The Directors are satisfied that the possibility of such an outcome is sufficiently remote that adopting the going concern basis of preparation is appropriate.

Apart from the undrawn RCF, £150m of which matures in March 2026, there is no borrowing maturity in the wholly-owned group until 2027. Refinancing for the USAF £395m secured bond is well progressed in advance of its maturity in June 2025. The LSAV Bank of America loan has two extension options at the borrower's discretion. The Group are currently in the process of extending which will take the maturity out to May 2026

The Directors have considered the impact of climate change in the context of our strategic report and the Group's target of net zero carbon emissions by 2030. These considerations did not have a material impact on our financial reporting. There is limited exposure and vulnerability of climate change on the Group's investment property portfolio, carrying value of non-current assets, and the estimates of future profitability used in our assessment of the recoverability of deferred tax assets.

Accordingly, after making enquiries and having considered forecasts and appropriate sensitivities, the Directors have formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, being at least 12 months from the date of these financial statements.

Section 2: Results for the year

IFRS performance measures

EPRA performance measures

* See glossary for definition and note 2.2b for reconciliation to IFRS measure.

2.1 Segmental information

The Board of Directors monitors the business along two activity lines:

· The Operations segment manages rental properties, owned directly by the Group or by joint ventures. Its revenues are derived from rental income and asset management fees earned from joint ventures. The way in which the Operations segment adds value to the business is set out in the Operations review. The Operations segment is the main contributor to adjusted earnings and adjusted EPS and these are therefore the key indicators which are used by the Board to monitor the Group's financial performance. The Board does not manage or monitor the Operations segment through the balance sheet and therefore no segmental information for assets and liabilities is provided.

· The Group's Property business undertakes the acquisition and development of properties. The way in which the Property segment adds value to the business is set out in the Property review.

The reportable segments for the years ended 31 December 2024 and 31 December 2023 are Operations and Property.

The Group undertakes its Operations and Property activities directly and through joint ventures with third parties. The joint ventures are an integral part of each segment and are included in the information used by the Board to monitor the business.

Detailed analysis of the performance of each of these reportable segments is provided in the following sections 2.2 to 2.3. The Group's properties are located exclusively in the United Kingdom. The Group therefore has one geographical segment.

2.2 Earnings

EPRA earnings and adjusted earnings amend IFRS measures by removing principally the unrealised investment property valuation gains and losses such that users of the financial statements are able to see the extent to which dividend payments (dividend per share) are underpinned by earnings arising from operational activity. In 2024 and 2023, software as a service cost, which were previously capitalised under the existing intangibles policy have been excluded from adjusted earnings (net of deferred tax), to align with the International Financial Reporting Interpretations Committee ('IFRIC') agenda decision in 2021. The reconciliation between profit attributable to owners of the Company and EPRA earnings is available in note 2.2b.

2.2a) EPRA earnings

2024

Included in the above is rental income of £20.3 million and property operating expenses of £11.5 million relating to sale and leaseback properties. Included in the above is also rental income of £4.0 million and property operating expenses of £1.2 million, relating to a build-to-rent property. Unallocated to segments includes the fair value of share-based payments of (£2.3 million), contributions to the Unite Foundation and social causes of (£0.6 million), a deferred tax credit of £2.6 million and a current tax charge of (£5.1 million). Depreciation and amortisation totalling (£5.7 million) is included within overheads. The software as a service costs are presented net of deferred tax of £4.0 million.

2023

Included in the above is rental income of £19.0 million and property operating expenses of £10.2 million relating to sale and leaseback properties. Included in the above is also rental income of £3.8 million and property operating expenses of £1.2 million, relating to a build-to-rent property. Unallocated to segments includes the fair value of share-based payments of (£3.4 million), costs due to leadership changes of (£2.9 million), contributions to the Unite Foundation and social causes of (£1.6 million), a deferred tax credit of £2.5 million and current tax charge of (£1.0 million). Depreciation and amortisation totalling (£6.3 million) is included within overheads. The software as a service costs are presented net of deferred tax of £2.8 million.

2.2b) IFRS reconciliation to EPRA earnings and adjusted earnings

EPRA earnings excludes movements relating to changes in values of investment properties (owned, leased and under development),profits/losses from the disposal of properties and swap/debt break costs which are included in the profit reported under IFRS. EPRA earnings and adjusted earnings reconcile to the profit attributable to owners of the Company as follows: