(Alliance News) - Unite Group PLC on Monday lifted full-year guidance and unveiled plans to raise GBP300 million to fund two new development schemes and accelerate initiatives to enhance future returns.
The Bristol-based owner, manager and developer of purpose-built student accommodation reported a 0.6% increase in net asset value in the six months to June 30 to 954 pence from 948p the year prior, although pretax profit slumped to GBP116.9 million from GBP334.1 million.
Earnings per share fell to 28.8p from 82.9p but the firm raised guidance for the full-year to the upper end of the 43-44p range and said it was targeting rental growth of at least 5% for the 2024/25 academic year.
Record reservations of 98% for the 2023/24 academic year and rental growth of around 7% were reported, up from 92% and 3.5% respectively the year before.
On an adjusted basis, pretax profit increased by 15% to GBP110.2 million from GBP96.0 million driven by higher occupancy and rental growth which helped to offset the impact of inflationary pressures in staff and property costs as well as higher interest costs. Adjusted EPS increased 15% to 27.5p from 24.0p.
Chief Executive Richard Smith said: "We have had a strong first half, with growth in earnings driven by a return to full occupancy."
"We expect market conditions and our alignment to the UK's strongest universities to support a positive outlook for our business for a number of years."
The upbeat outlook was reflected in a 7.3% increase to the total dividend to 11.8p from 11.0p.
Unite also launched a GBP300 million fundraise via a placing, subscription and retail offer at a price to be determined.
"The board believes the current market environment offers a compelling multi-year opportunity to accelerate the company's growth."
Proceeds will be used to commit to two additional development schemes in Bristol and London, with a total development cost of GBP277 million and accelerate asset management initiatives through a further GBP50 million of projects for delivery in 2024 and 2025 at yields on cost of over 8%.
Smith said: "These investments will allow Unite to continue to play a major role in creating new supply of high quality, affordable accommodation where the need is greatest as well as supporting the growth of our university partners."
Unite said it expected the fundraise and use of proceeds to be earnings accretive from 2024 as new developments and asset management investments are delivered.
The retail offer will be via PrimaryBid and is open to both existing shareholders and new investors with a minimum subscription of GBP250 per investor.
JP Morgan Cazenove and Numis will commence the bookbuild with respect to the placing.
Shares in Unite fell 1.1% to 945.06p each in London on Monday.
By Jeremy Cutler, Alliance News reporter
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Unite (UTG)