Unite Group (UTG) H1 2024 earnings summary

Executive summary

• Record H1 2024 earnings with adjusted EPS up 4% to 28.7p and interim dividend up 5% to 12.4p, driven by strong demand, rental growth, and operational execution.

• EPRA NTA per share increased 5% to 969p, with a total accounting return of 7.9% in H1, underpinned by rental growth and portfolio revaluation.

• GBP 450 million equity raise and £700m of new investment commitments in 2024 support a £1.5bn development pipeline and accelerate high single-digit earnings growth.

• Reservations for 2024/25 indicate 98-99% occupancy and rental growth of at least 7%, with robust demand from both domestic and international students.

• Policy environment has become more supportive post-election, with government backing for universities and stabilized funding outlook.

Financial highlights

• Adjusted EPS grew 4% year-over-year to 28.7p, supported by strong rental growth and occupancy for the 2023/2024 academic year.

• Rental income increased 7% to £211.8m; like-for-like rental income up 7% year-over-year.

• Interim dividend increased by 5% to 12.4p; total accounting return reached 7.9% in H1.

• Net operating income rose 4% year-over-year; finance costs fell by GBP 8.6 million due to lower borrowings and reduced average debt cost.

• Net debt reduced to £1,507m, with LTV at 26% (down from 31% in H1 2023); net debt/EBITDA at 5.7x.

Outlook and guidance

• Targeting full occupancy and rental growth of 7%+ for 2024-2025; positive outlook for 2025-26 based on strong market fundamentals.

• Upgraded earnings guidance to the upper end of 45.5p-46.5p per share; dividend payout remains at 80% of adjusted earnings.

• Total accounting return guidance increased to around 12% for 2024, excluding property yield movements.

• EPS growth expected to accelerate into high single digits from 2026 and beyond, supported by a £1.5bn development pipeline.