Unite Group (LON:UTG) said reservations are running ahead of last year as the student accommodation provider reiterated its earnings guidance and outlined progress on disposals, buybacks and the integration of Empiric.
On the call, the company said overall reservations currently stand at 86%, one percentage point ahead of the same point last year. That marks an improvement from its prior update, when reservations were one point behind the comparable period.
Reservations improve, but pricing growth moderates
The company said the leasing market remains competitive, but that its relationships with universities and its operating platform are supporting performance. It cited stronger inquiry levels from its sales and marketing activity, including its “Live. Your. Now.” campaign, as well as improved conversion rates through web and direct channels.
Unite said it has made targeted pricing adjustments to secure bookings earlier in the cycle and reduce reliance on late sales in August and September. The company said it expects slightly stronger occupancy to be offset by lower pricing growth, leaving income broadly in line with expectations.
“We are outperforming the market and winning share from both HMO and PBSA,” the company said on the call, referring to houses in multiple occupation and purpose-built student accommodation.
The company said nominations, or beds reserved through university agreements, are down one point from its previous update, mainly at weaker universities. Unite said it has been able to sell those beds through direct letting and does not assume an increase in nominated beds within its occupancy guidance.
The company said universities remain cautious about making financial commitments until they have more certainty over student numbers. It said U.K. and international undergraduate intake is still expected to be up 1% to 3% from last year, while international postgraduate demand is expected to remain soft, though stabilizing.
Empiric integration showing progress
Unite said it is beginning to see benefits from applying its platform to the Empiric portfolio. Reservations for the Hello Student brand are now at 71%, which the company described as meaningfully ahead of last year after taking over the business when it was significantly behind the prior-year pace.
The company said it has broadened sales channels, introduced a dedicated international team, repriced in certain markets and reduced reliance on postgraduate students. It also pointed to demand from rebookers and both U.K. and international students.
Unite said it has increased expectations for Empiric’s 2026-2027 academic year performance by a couple of percentage points and expects rental growth broadly in line with the main Unite portfolio. The company said it will trade price for occupancy where it sees opportunities to secure rooms later in the sales cycle.
On integration, Unite said Empiric’s head office has been closed and operational staff have transferred to Unite’s platform. The company said it is on track to deliver £17 million of synergies, £3 million above its original target.
In response to a question from Tom Lousson of Berenberg about whether Hello Student occupancy could recover to at least last year’s 89% level, the company said it was pleased with recent progress but remained cautious because this is its first sales cycle with the portfolio and the customer demographic differs from Unite’s traditional base.
Earnings guidance reiterated as disposals advance
Unite said first-half trading performance is in line with expectations and reaffirmed its full-year earnings per share guidance of £0.415 to £0.430. The company said the guidance reflects the one-off impact of students giving notice under the Renters’ Rights Act, which it had previously outlined.
The company also said its new development, Hawthorne House in Stratford, has reached completion. The building is fully let for September, and Unite said it is working with the Building Safety Regulator through one of the first Gateway Three processes for the sector.
Portfolio repositioning remains a major focus. Unite said it has completed £130 million of disposals so far this year and has a further £500 million of assets on the market across more than a dozen live processes. These include lower-growth assets, development land, non-PBSA assets and Empiric assets.
The company said several disposal processes are at more advanced stages, though generally in smaller lot sizes, and it expects to make progress in the second half. Unite said it is not dependent on any single transaction to meet its £300 million to £400 million disposal target for the year.
Mike Burt, chief financial officer of Unite Group, said in response to a question from Ana Escalante of Morgan Stanley that the company’s ability to commit more capital to buybacks or other uses will depend on disposal progress. He said around half of the proceeds from expected disposals would be available for reinvestment, with a portion going toward remaining capital expenditure in the development pipeline.
Valuations decline and buybacks continue
Unite said transaction volumes were lower in the first half, and valuers have reflected higher capital costs and a more uncertain operating backdrop. The company said yields have moved out and rental growth has been broadly flat over the first half.
The company expects valuations at Unite’s share to be down between 6% and 6.5% at the half year. It also said there will be an impact on the carrying value of development assets, which will be reflected in net tangible assets.
Unite said valuation movements were most pronounced in London, where starting yields are lowest, and in more provincial markets where operating dynamics are less certain. At the same time, the company said valuers are beginning to recognize the income visibility provided by nomination agreements.
The company said it has completed £165 million of share buybacks in the first half at an average price of £5.05. It said buybacks will partially offset dilution to net tangible assets from valuation declines.
Burt said the first £100 million of buybacks was funded by capital redirected from development no longer progressing, while a second £65 million tranche was funded by disposal proceeds generated year to date.
Unite said share buybacks remain the most attractive use of surplus capital and described them as a way to invest in high-quality accommodation below book value. The company said decisions on extending the buyback program will depend on further disposal progress.
University agreements remain a medium-term focus
Asked about nomination agreements and whether Unite remains confident in its medium-term target of 60% of reservations coming through nominations, the company said nominations remain an important sales channel.
The company said it was not expecting the recent drop in nominations and attributed the change to more cautious universities, particularly lower-ranked institutions. It said universities are less certain about student demand and are also being careful because of their financial positions.
However, Unite said it is not losing meaningful share to competitors and continues to discuss both near-term opportunities and renewals of longer-term agreements maturing over the next 12 to 24 months. The company said it still views the 60% target as achievable, supported by university joint ventures, the development pipeline and portfolio repositioning.
In response to a question from Véronique Meertens of Van Lanschot Kempen about incentives such as cashback or vouchers, Burt said Unite does use targeted incentives, but that pricing adjustments have been more significant. He said the company’s rent growth outlook of 1% to 2% reflects factors including a slight shortening in tenancy lengths.
Unite concluded that reservations are progressing well, Empiric is beginning to perform, earnings and income guidance have been confirmed, and the company remains on track with its disposal target while managing valuation adjustments through its balance sheet.
About Unite Group (LON:UTG)
Unite Students is the UK’s largest owner, manager and developer of purpose-built student accommodation, serving the country’s world-leading Higher Education sector. We provide homes to 70,000 students across 157 properties in 23 leading university towns and cities. We currently partner with over 60 universities across the UK.
Our people are driven by a common purpose: to provide a ‘Home for Success’ for the students who live with us. Unite’s accommodation is safe and secure, high quality and affordable.
