* Unite expects 2-3% rental growth
* Shares up 2% in morning trade
* Pretax loss widens due to pandemic hit
(Adds analyst comments, shares)
By Muvija M and Chris Peters
March 16 (Reuters) - UK student housing provider Unite
forecast on Tuesday a return to full occupancy and
rental growth for the upcoming academic year, saying students
were keen to get back to campus life.
In a sign of its confidence about the outlook, Unite said it
would reinstate a dividend payment for 2020 despite falling
further into the red last year.
Unite, which provides homes to 74,000 students across 177
properties in 27 university towns and cities including Leeds and
Manchester, offered discounts totalling 100 million pounds
($138.17 million) over the past year to students whose courses
were disrupted due to the pandemic.
"Being on campus is absolutely where students want to be...
they want to get on with their lives," CEO Richard Smith said in
a post-earnings call.
Unite reported a pre-tax loss of 120 million pounds ($166
million) for 2020, widening from a 101 million pound loss a year
earlier when it took impairment charges related to its
acquisition of rival Liberty Living.
Investors, however, focused on the group's brightening
outlook, with Unite shares climbing 2% by 0957 GMT to 10.14
pounds. The shares had fallen 27% since Feb. 20 last year when
news of the global spread of the coronavirus began to hit
markets.
"We see the valuation decline as temporary, reflecting a
lost year of rental growth, which will 'bounce back' once normal
trading resumes," JP Morgan analysts, who have a 'neutral'
rating for the stock, said.
Laying out plans to raise its dividend payout ratio to 80%
from the current 50% when conditions stabilise, Unite said it
expected students to return after the Easter break on the back
of strong university applications and reservations.
Unite announced it would pay a dividend of 12.75 pence per
share for 2020, after paying no dividend for 2019.
The company, which tapped investors for 300 million pounds
to deal with the crisis, said 2021/22 reservations currently
stood at 66%, less than usual, due to coronavirus disruptions,
but it expects they will reach occupancy of 95-98% and 2-3%
rental growth for the period.
Unite said its recent survey showed that 86% of students
were keen to get onto campus to "enjoy university life".
It noted some uncertainty over travel restrictions, which
could complicate international students' arrivals for the autumn
term, but said the daily rate of direct-let bookings jumped 150%
since the UK government announced its roadmap to get the country
out of lockdown last month.
($1 = 0.7223 pounds)
(Reporting by Muvija M and Chris Peters in Bengaluru
Editing by Tomasz Janowski and Susan Fenton)
Unite (UTG)
