Student housing group Unite has delivered a bumper set of half-year results, revealing a 5.3% hike in net asset value and doubling of recurring profits.
Unite said the increase to 335p a share was driven by rental growth of 1.8% delivering capital growth of £20m, and development profits of £3m, but was partially offset by interest rate swap breakage costs linked to £290m of debt which was refinanced during the period to the end of June.
For the half year, rental growth added 12p to NAV, retained profit 7p, development 1p and swap close-outs took off 3p
JP Morgan said the group is well on track to beat analysts’ full-year estimate of 347p, with the expectation that £8m of development profit will be booked in the second half.
The group’s 2012 development programme includes 1,825 beds in four new developments – three in London and one in Glasgow. No projects are planned for 2013, but in 2014 the group has committed to two London schemes, in Camden and Stratford City.
The developer and manager of student housing also doubled its recurring profit from operations from £7.2m this time last year to £14.4m.
A statement from chief executive Mark Allen and chief financial officer Joe Lister said the group has maintained the positive operational momentum created in 2011.
They added that “high occupancy across the entire portfolio, coupled with a variety of efficiency initiatives, underpinned a further significant improvement in the group’s core profitability”.
Although the group’s results are expected to be stronger in the first half because of vacancies over the students’ summer break, progress was made on costs, with the group’s net operating income margin improving to 74.8% from 71.3% this time last year.
Earnings per share increased 190% to 9p from 3.1p in June last year.
At the end of the period the company’s net debt was £501m, with adjusted gearing at 92%, while see-through LTV was stable at 54% and will fall to 52% with the inclusion of post-reporting date sales.
An interim dividend increased to 1p a share, while the full-year dividend is expected to represent 25% of net portfolio contribution.
Looking ahead, Allen said current reservations for 2012/13 are “robust” at 87%, compared with 89% in 2011 when there was a surge of applications ahead of increased tuition fees, and 87% in 2010.
bridget.o’connell@estatesgazette.com
