(Alliance News) - Unite Group PLC on Wednesday said reservations for student accommodation has declined year-on-year, but highlighted stability in the valuation of its portfolio over the quarter.
The FTSE 250-listed student accommodation provider said that reservations for the 2020/21 academic year are currently at 81%, down from 90% the year prior as result of students and universities delaying making decisions on their accommodation choices. It added that prior to cancellations due to Covid-19, it expects a 10% to 20% reduction in rental income for 2020/21 compared to the previous year.
Unite said as at the end of June, the Unite UK Student Accommodation Fund's property portfolio - comprising 30,209 beds in 79 properties across 22 towns and cities - was valued at GBP2.79 billion, unchanged over the quarter. The London Student Accommodation Joint Venture investment portfolio - comprising 8,354 beds across 12 properties in London and Birmingham - was also unchanged at GBP1.32 billion.
This represents a 2.2% value reduction in the USAF portfolio and a 1.5% reduction in the LSAV portfolio over the first half of the year on a like-for like basis. Overall, the USAF portfolio is valued at an average yield of 5.3% and the LSAV portfolio at an average yield of 4.4%, both of which are broadly unchanged over the quarter.
"UCAS applications data and our own research underlines that students are keen to start or get back to University as soon as it's safe to do so. We have growing visibility and confidence over our income for the 2020/21 academic year, reflective of the strength of our university relationships and underlying student demand for our offering. This is demonstrated by the stability in our valuations for USAF and LSAV in the second quarter," said Joe Lister, Unite Students chief financial officer.
Shares in Unite were trading 0.5% higher at 929.00 pence each on Wednesday morning in London.
By Ife Taiwo; ifetaiwo@alliancenews.com.
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Unite (UTG)