The UK’s largest provider of student accommodation has warned a reduction in occupancy and rental income over the next academic year is expected to impact its future financial performance.
Unite Students, which was founded and is headquartered in Bristol, provides homes for 73,000 students across 173 properties in 25 University towns and cities in the UK.
In a trading update for Q3, the company said that for the full-year 2021, earnings per share is expected in the range of 27 pence to 30p, at the lower end of guidance.
It said that latest UCAS data showed a total of 508,000 students are placed at UK universities for the 2021/22 academic year – 1.6% below the same stage in 2020/21.
The firm estimated the impact of lower rental income in terms two and three of 2021/22 would reduce rental income for the 2022 financial year by £8-10m, compared to its previous expectations.
The company said that it had let 94% of bed spaces across its total portfolio for the current academic year, slightly below its previous expectations for 95-98% occupancy.
Richard Smith, the chief executive of Unite Students, said the group had seen “record demand” among UK school leavers and non-EU students.
UCAS data showed the number of placed students from the UK increased by 1.4%, driven by a record entry rate for UK-based 18-year-olds (37.9%), while non-EU student numbers had increased by 5%.
Unite Students said this had been more than offset by a 56% reduction in EU students impacted by Brexit and Covid-19 travel restrictions.
The company said a record number of university applications hadn’t translated into higher student intake as expected.
The firm added that a sharp increase in grade attainment had distorted the distribution of students across universities. It said that while it had sold out in the majority of its markets, acceptances were more concentrated in leading institutions.
The company said that international travel restrictions had an effect on demand from China, where record numbers of new undergraduate students had not yet translated into bookings.
Read More Related Articles Dyson and Rolls-Royce to join companies at Bristol jobs fair Read More Related Articles West of England media and tech sector boosted by new £7m learning facilityRent collection for 2020/21 was at 96%, excluding the impact of the 10-week rental discount offered to customers for the second semester, with 1% of rent for the period still to be billed.
Unite Students said that as of September 30 its portfolio was independently valued at £2.8bn – a 1.1% increase on a like-for-like basis during the quarter.
Similarly, the group’s London Student Accommodation Joint Venture was up 3.7% at a value of £1.7bn.
Mr Smith said: “There remains a strong outlook for student demand driven by demographic growth, rising participation rates and increasing demand from non-EU markets.
“This underpins our confidence in a rapid recovery in earnings and total returns, driven by sustainable rental growth, our substantial development pipeline and further opportunities to deploy capital.”
Unite said it would mitigate impact on 2022 earnings through ongoing sales activity by targeting international students who may delay their arrival to the UK until the new year and the reintroduction of summer business in 2022.
In addition, it said it would target cost savings from operational efficiencies resulting from lower occupancy.
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