Student housing specialist Unite Group has said its full-year recurring profit is likely to exceed expectations in a positive trading update released today.
The developer and manager said it has had a very strong sale performance during the period from July to November, with 99% of rooms across its managed portfolio of 41,000 beds sold for 2011 and 2012 – up 2% on the previous period.
Year-on-year growth in net operating income for the full year is expected to be approximately 3.1%, with strong rental growth of 4% partially offset by higher operating costs, principally relating to utilities.
Lettings for the 2012/13 academic year commenced in early November and Unite said it had seen “an early positive response to our rebooking campaign”. Initial discussions with universities regarding demand are also encouraging and the company expects rental growth for 2012/13 to be at a similar level to this year.
The group added that, based on the strong lettings performance for the 2011/12 year and continued effective control of costs, it expects recurring profits for the full year to be ahead of management expectations.
“This also provides a strong foundation for further improvements in profitability in 2012 which we anticipate will be further enhanced by the impact of cost saving initiatives, worth approximately £2.5m per year, recently implemented and announced – with exceptional implementation costs of £1.5m being expensed in 2011.”
The group said it remains confident of achieving its target of £100m to £150m of disposals by the end of 2012 at price levels supportive of current valuations.
Unite’s development pipeline is proceeding in line with plans and includes three projects in London, a project in Camden which has planning and debt finance and an application for a scheme in Stratford.
Chief executive Mark Allan said: “We have continued to make good progress in line with our strategy and have seen excellent performance through the third quarter, in terms of reservation levels, customer service and financial performance.
“We remain well positioned to outperform the wider student accommodation sector as a result of our London focus, the high quality of our portfolio, strong university relationships and our established brand platform. However, we continue to monitor closely the capital markets and the broader economic picture and believe that a cautious approach to investment and managing debt is prudent in the near term.”
bridget.o’connell@estatesgazette.com
