Unite Regulatory News (UTG)

THE UNITE GROUP PLC

("Unite Students", "Unite", the "Group", or the "Company")

PRE-CLOSE STATEMENT FOR THE UNITE GROUP PLC AND QUARTERLY VALUATION UPDATE FOR THE UNITE UK STUDENT ACCOMMODATION FUND AND THE LONDON STUDENT ACCOMMODATION JOINT VENTURE

Unite Students, the UK's leading manager and developer of student accommodation, announces a pre-close statement and the quarterly valuation update for the Unite UK Student Accommodation Fund ("USAF") and the London Student Accommodation Joint Venture ("LSAV") as at 31 December 2017.

Highlights

· Occupancy secured at 99% for the 2017/18 academic year, underpinned by 59% nominations agreements - demand for Unite Students high quality and expertly operated, purpose built accommodation has remained consistently high

· The sales cycle for 2018/19 is well underway with 66% of all rooms already sold with 56% being guaranteed by nominations agreements (64% and 54% at the same time last year)

· The level of 2018/19 sales made so far supports the outlook for 3.0-3.5% rental growth on a like-for-like basis

· The strong sales performance has been supported by further efficiency gains and Unite remains on track to deliver its 75% net operating income margin target and overhead efficiency target of 25-30 basis points in 2018

Quarterly valuation uplift driven by rental growth and yield compression

At 31 December 2017, USAF's property portfolio was independently valued at £2,233 million, representing a like-for-like increase of 2.5% in the quarter and 5.6% over the full year. The portfolio comprises 24,887 beds in 70 properties across 23 University towns and cities in the UK.

LSAV's property portfolio was independently valued at £1,159 million, up 5.2% on a like-for like basis in the quarter and 9.2% over the full year. LSAV's portfolio comprises 5,410 beds across 13 properties in London and 3,067 beds at Aston University student village.

The increase in like-for-like valuations is driven by a combination of rental growth and yield compression in the quarter. Across the whole portfolio, rents have increased by 3.3% over the year. The USAF portfolio is valued at an average yield of 5.5% and LSAV's portfolio at 4.5% representing 15 basis points of compression in USAF and 29 basis points of compression in LSAV during the year.

The independent valuation for Unite's wholly owned portfolio, comprising 12,325 beds across 31 properties, will be announced as part of the Group's preliminary statement due to be released on 21 February. Rental growth and yield compression are expected to be in line with the USAF portfolio.

As a result of the strong return in USAF during 2017, Unite expects to earn a net performance fee of c.£3 million. The fee will be paid in new USAF units in the first quarter of 2018.

Leeds development scheme acquisition increases pipeline to 7,500 beds

During the final quarter of 2017, Unite Students acquired a 1,000 bed development scheme in Leeds on a subject to planning basis and secured planning on the 600 bed New Wakefield Street site in Manchester. Unite's development pipeline now amounts to 7,500 beds which will be delivered over the next three years at an average development yield of 8.2%, generating c.10-12p of earnings. The delivery of these new beds, along with anticipated rental growth, underpins the Group's outlook for continued earnings and dividend growth.

Second University Partnership scheme announced

In addition to these core direct-let developments, Unite acquired and secured planning on its second University Partnership scheme in December 2017. The new scheme will provide a home to 885 students studying at Oxford Brookes University through a 25 year nominations agreement. This builds on the acquisition of the Aston Student Village in February 2017 and demonstrates that Unite's brand in the Higher Education sector is opening up a growing number of valuable partnership opportunities.

New S&P and Moody's credit ratings reflect the strength of Unite's capital position

The Group has continued to maintain a disciplined approach to managing leverage, with LTV at 31 December 2017 expected to be at the lower end of our target range around 30-32%. The Unite Group plc was assigned an investment grade corporate rating of BBB from Standard & Poor's and Baa2 from Moody's, reflecting the strength of Unite's capital position, cash flows and track record. The credit rating underpinned the transition to an unsecured capital structure with a new £500 million unsecured debt facility that will reduce the average cost of debt to 3.9% when fully drawn.

Outlook

The sustained business performance and the strength of the Unite Students brand, together with the development pipeline and growing number of University partnership opportunities means that the business is well positioned to maintain momentum over 2018 and beyond.

Richard Smith, Unite Students Chief Executive, commented:

"The business is performing well and remains well placed to capitalise on its market-leading position in a sector that continues to demonstrate structural growth. Our operational platform continues to drive sector leading occupancy and rental growth and our reputation and standing in the sector is under-pinning long-term, meaningful partnerships with leading Universities in the sector, allowing us to support the ongoing growth of these institutions and continue to grow our business."

ENDS

For further information, please contact:

Notes to editors:

About Unite Students

Unite Students is the UK's largest manager and developer of purpose-built student accommodation serving the country's world-leading higher education sector. We currently provide homes for almost 50,000 students in more than 140 properties across 24 leading university towns and cities in England and Scotland. Unite also has a strong development pipeline, which will deliver a further 8,000 beds in the next three years.

Our 1,450 people are driven by a common purpose: to provide the students who live with us a 'Home for Success' and to be the most trusted brand in the sector. We do this through great service, great people and great properties, all designed on the basis of an unrivalled insight into students' needs and preferences.

Unite's accommodation is high quality, safe and secure, and located close to university campuses, transport links and local amenities. Students live predominantly in en-suite study bedrooms with rents covering all bills, insurance, 24-hour security, fortnightly cleaning services and high-speed Wi-Fi. MyUnite, our mobile app, provides practical support such as instant messaging and maintenance requests.

Our commitment to customer service is powered by an innovative, in-house operating platform. It provides a wide range of benefits to our students, such as an optimised online booking process, as well as providing us with a unique ability to drive value from our portfolio through scale efficiencies and revenue management.

Alongside delivering great service, our other strategic priority is delivering growing and sustainable earnings, underpinned by a strong capital structure. A key part of this strategy is growing the number of beds let though partnerships with mid and high tariff universities which are experiencing record levels of student demand. We currently partner with 60 higher education institutions, guaranteeing that approximately 60% of our rooms are let under multi-year, 'nomination agreements' providing high visibility of forward occupancy and rental growth.

Unite is invested in and operates two specialist funds and joint ventures with institutional investment partners: the £2 billion Unite UK Student Accommodation Fund (USAF), and the £1 billion London Student Accommodation Vehicle (LSAV).

Unite is the founder of and major donor to the Unite Foundation, a charitable trust established to support talented students facing challenging financial circumstances through the provision of free accommodation annual scholarships. The Foundation has so far provided scholarships for 250 young people working in close collaboration with 28 universities.

Founded in 1991 in Bristol, Unite Group is an award-winning Real Estate Investment Trust (REIT), listed on the London Stock Exchange and a member of the FTSE 250 Index.

For more information, please visit Unite's corporate website www.unite-group.co.uk, the student site www.unite-students.com or the Unite Foundation www.unitefoundation.co.uk.

LEI: 213800BBUUWVDH9YI827