Unite Share Price (UTG)

Unite has acquired a new 300-bed development site in central Edinburgh 'delivering a development yield in line with the Company's enhanced 8.5% target for provincial markets'. This follows three new sites recently acquired in London.

It appears that Unite are taking further advantage of Covid-19 impact on the wider-Commercial Property Sector to pick-up prime sites at a reduced prices.

Unites' existing development pipeline of 5000+ beds will be delivered on a target initial yield of 6.8%. Whereas they are now targeting enhanced returns on new developments with yields on cost of 7.5% in London and 8.5% in provincial markets and 100 basis points lower for University partnerships. The Covid cloud may thus have a silver lining for Unite.

BBC Radio 4 Today Programme interview with David Spiegelhalter, Statistician and Chair, Winton Centre for the People’s Understanding of Risk, Cambridge.

“If we look at school kids there has been three deaths, fewer than die of flu each year. If we look at fifteen to twenty four year olds, there is about seven million of them, thirty two deaths nearly all of those people with pre-existing medical conditions. So there is about one in a million healthy people that have died from Covid.” “This is that same risk that everyone faces every day from dying from non-natural causes, and we find that quite tolerable.”

“we have to distinguish between the risk to young people, that is extraordinarily low, and the risk to others.

Https://www.bbc.co.uk/sounds/play/m000k8bv 1:54:00 right at the end to the programme.

The focus should be on creating a big campus bubble and then protecting the staff that might be vulnerable and those that might spread the virus outside of the uni bubbles. Let the students have a normal university experience and normal tuition they are at virtually zero additional risk from Covid unless they have pre-conditions.

Jo Johnson Con MP, former UK Universities Minister(and Bojo's bother)interviewed on BBC Radio 4 Today Programme 15 June - he sees a 'hostile environment' for foreign students coming to the UK, listen 2:34:00 in:

https://www.bbc.co.uk/sounds/play/m000k2s0

"there is a lot of red tape and off-putting regulations that reduce our competitiveness in the market for international students, we should remove that because international students are good for our universities, good for our economy and also good for the learning environment of our domestic students - there really isn't anything not to like."

"As a country we should be going all-out to attract them, they are one of the strongest elements of soft power we have as a country, and if we're serious about Global Britain, we should be seeking to maximise the number of Intl students in our system not try and put them off."

He's written a report published by the Policy Institute at the University of London and Harvard Kennedy School:

https://www.kcl.ac.uk/news/how-government-can-help-universities-bounce-back-after-covid-and-brexit

A sensible move last year reversed "the frankly disastrous decision" (made in 2012 by then-Home Secretary Theresa May - also responsible for the Windrush Scandle) that forced overseas students to leave four months after finishing a degree. He argues that the Post-Study Work Visa should be doubled from the current two years to four to make us competitive again against Canada, Australia and others.

"This would be a total game-changer, this would be sensational for the ability of our Universities to go an market UK higher education."

JJ sites his brother as a supporter and he has received his report.

To put the risk that Covid presents to students I'll point to this analysis by David Spiegelhalter, Statistician, communicator about evidence, risk, probability, chance, uncertainty, etc. Chair, Winton Centre for Risk and Evidence Communication, Cambridge.

https://medium.com/wintoncentre/how-much-normal-risk-does-covid-represent-4539118e1196

It shows that the risk of death that Covid presents to 20 - 24 year olds is lower than the normal risk of death that they face. The chance that a young adult of that age will die in that same year is normally low at c. 3 in 10,000. The risk from Covid is even lower at c. 1 in 10,000. Now you are probably thinking Covid is a new risk factor so you should add these risks together. But no, these figures are averaged across the group - whereas the risk is likely to be concentrated in those with underlying health conditions. So there will be overlap in these risks and the threat to healthy individuals will thus be even lower.

Putting the Covid risk further into perspective we have another report:

http://www.youngpeopleshealth.org.uk/wp-content/uploads/2019/09/AYPH_KDYP2019_FullVersion.pdf

This shows that more than half (56%) of the normal risk that students face is from potentially preventable causes - that largest category being suicide, followed by accidents, transport accidents, then drug abuse and lastly assault. It thus appears that Covid-19 presents far less a risk than other risk factors and the extreme social distancing measures that are going to ruin their uni experience are not proportionate. They want to meet new people, socialise, have fun, party, and put the world to right into the early hours of the morning.

If universities don't provide students with the full-fat student experience they will not want to spend the money going away - its not just about the studying or the qualification - it's the whole experience that matters.

Regards Maddox

Thanks Maddox

Universities have until the end of June to clarify their 'offer' for 20/21 and most are understandably holding back from announcing until the last minute to see what changes. UK Visa offices in the main markets have re-opened, so that removes one blockage that could have been an issue and the number of institutions that are accepting online English language testing to prove capability is increasing day by day.

International Students still want to come (in fact interest in the UK is higher than ever - see below), and don't seem to be put off by the prospect of quarantine on arrival, although I can't see that being in place by then. If it is, institutions and PBSA providers are putting in place discounted/ free rents for that period and practical support as necessary.

Also got to remember the geopolitical situation. The main alternative markets - the US and Aus are currently locked in disputes with China and in the case of the US especially, they have significant domestic issues that will drive students elsewhere. If BJ can keep out of the spat that US and Aus are having , the UK should do OK this year, so long as there is some face to face campus provision. Lectures are out, but seminars and tutorials likely to be face to face. Ignore the sensationalist reporting on Cambridge a couple of weeks ago - students will be on the ground there, too.

I've worked in International Education and Student Accommodation for 25 years and whilst no-one in the sector is saying international numbers won't be lower this year, the domestic pipeline is strong due to a rising 18 year old demographic and the higher ranked institutions (around which UTG focused their strategy a few years ago), should still do well.

DYOR of course, but long term, this is a strong hold for me.