Unite Group (UTG) Investor Update summary

Sector outlook and structural drivers

• UK higher education remains globally competitive, with strong demand from domestic and international students, underpinned by demographic growth and a shortage of student housing.

• High-tariff universities are outperforming, with increased student demand, higher occupancy rates, and greater earnings premium for graduates.

• International student demand remains stable, with a shift from postgraduates to undergraduates and increased competition from other countries.

• Students are increasingly seeking value and employability, with government policy supporting quality and value for money.

• New supply is slowing due to development viability challenges and regulatory changes, constraining future growth.

Recent performance and challenges

• Occupancy for 2025-2026 ended at 95.2%, below the 97% target, mainly due to underperformance in certain cities and weaker demand at low and mid-tariff universities.

• Rental growth was 4%, with high-tariff universities and key cities outperforming; 59% of beds are under nomination agreements.

• New supply, delayed or overpriced refurbishments, and vacancies in cities like Nottingham, Sheffield, and Edinburgh impacted occupancy.

• International sales remained stable at 28% of bookings, with strong undergraduate demand offsetting fewer late-cycle Chinese postgraduate sales.

• Leeds case study shows successful recovery in occupancy and rental growth through asset sales, pricing, and service improvements.

Strategic response and operational changes

• Portfolio repositioned to focus on 18-20 cities, with 80% aligned to high-tariff and top teaching universities post-Empiric acquisition.

• Increased emphasis on nominations agreements, targeting 60% of the portfolio, and growing share of second and third-year students.

• Cost reduction initiatives include a 20% cut in head office staff costs, technology-driven savings, and flat cost guidance for 2026.

• Accelerated disposals of £300-400m per year will fund reinvestment in university partnerships and potential share buybacks.

• University partnerships are prioritized, aiming for one new joint venture per year and delivery of 4,300 beds for existing ventures.