Unite Group (LON:UTG) outlined a slower start to its current sales cycle and reiterated its push to reposition the business toward higher-tariff universities, while also detailing cost actions, capital recycling plans, and early integration steps following the Empiric acquisition.
Market shifts pressure occupancy, nominations lag
Management said 2025 brought “considerable change” across the purpose-built student accommodation sector, with more students opting to live at home and a continued decline in international postgraduate demand since a 2022 peak. While Unite reported strong performance across most of its portfolio, weaker occupancy in three cities weighed on group results.
On the direct-let side, Unite said bookings are slightly ahead year-on-year after adjusting prices and tenancy lengths to attract more undergraduates and compensate for softer postgraduate demand. The company also highlighted progress in stabilizing recently opened and refurbished properties, where bookings are up 25% year-on-year.
2025 results: income growth offset by cost inflation and lower occupancy
Chief Financial Officer Mike explained that Unite delivered like-for-like income growth of 4.9% in 2025, driven by strong rate growth that more than offset lower occupancy. Like-for-like operating costs rose 9%, primarily due to higher property-level staffing costs from the real living wage and higher employers’ national insurance, as well as higher council tax liabilities from vacant rooms and building insurance.
The EBIT margin declined to 65.9% due to lower occupancy and inflationary cost increases. Adjusted earnings rose 9% in the year, while adjusted EPS increased 2% to 47.5p, which management said was at the lower end of guidance because overall occupancy was 95%.
Net tangible assets per share fell 2% to 955p, reflecting a 0.5% like-for-like revaluation deficit in the rental portfolio. Mike said rental growth “substantially offset” yield expansion, with the portfolio yield increasing 11 basis points to 5.2%. The development portfolio also recorded a deficit tied to decisions to defer or exit projects, including a 2p write-down for the TP Paddington scheme after Unite decided not to proceed on viability grounds. Fire safety CapEx, net of recoveries, reduced NTA by 3p, with a similar impact expected in 2026.
Total accounting return for the year was 2.1%, reflecting the change in NTA and dividends paid.
2026 outlook: lower-end occupancy and rent guidance; cost efficiencies targeted
Management said the slower start to the sales cycle has been most impactful for nominations, with expectations for a reduction of around 1,000 to 2,000 nominated beds. Unite said it will continue discussions to secure additional nominations and, where needed, pivot those beds into the direct-let channel.
Rental growth for bookings to date is 2.4% on a RevPOR basis, at the lower end of Unite’s 2% to 3% guidance. Based on current trends, Unite said it expects performance to be at the lower end of its previously communicated ranges: 93% to 96% occupancy and 2% to 3% rental growth. That implies 0% to 2% like-for-like income growth for the academic year, at the lower end of an initial 0% to 4% range.
Unite emphasized it is early in the cycle, with 6–7 months remaining. Management described a later demand cycle, with undergraduates expected to book more heavily from April and nominations typically firming in June after student acceptances. Unite said it aims to be 87% to 90% sold by Clearing in August and noted that last year nearly 6% of sales were made during Clearing. The company also said it is monitoring market discipline on incentives, described as typically 2% to 4% of annual contract value, while acknowledging these could rise late in the cycle.
On costs, Unite said overhead rationalization was completed in December, delivering a 20% reduction in central staff costs. The company said it has identified £30 million of annual cost efficiencies across Unite and Empiric to be executed by the end of 2026. Unite expects to hold its cost base flat in 2026 as efficiencies offset inflation. Unite also said it is close to completing its technology platform upgrade, expected to generate nearly £7 million of annual operating cost savings, with £2 million expected to be realized in 2026. Management said about £10 million of software implementation cost remains.
Empiric integration: higher synergy target, but near-term earnings drag
Management said integration of Empiric is “well underway,” but acknowledged that Empiric’s sales position for 2025/2026 was below expectations. Unite attributed the underperformance to market challenges, distraction from the acquisition process, and Empiric’s failure to pivot away from its core market of Chinese postgraduates.
Unite said the weaker Empiric income for 2025/2026 will reduce 2026 earnings by about 1p to 1.5p, with a first-half weighting. However, Unite increased its annual synergy target to £17 million from a prior £13.7 million risk-adjusted figure, saying it has now confirmed those cost savings. Unite expects to recognize £9 million of savings in 2026 and reach the full run rate from 2027.
On brand strategy, Unite said it will keep “Hello Students” as a separate brand to serve returners seeking a more independent living experience, while leveraging Unite’s international sales network, data and revenue management, and cross-selling to improve performance. The company said full benefits should build into the next sales cycle as Hello Students moves onto Unite’s technology stack.
Unite’s 2026 adjusted EPS guidance was given as 41.5p to 43p, including Empiric for 11 months. Management said the Unite business is expected to be at the lower end of prior guidance, partly offset by a £100 million share buyback launched in January, which should provide “modest” earnings upside. Unite said it intends to hold the dividend flat in 2026, implying a payout ratio just under 90%, with an expectation to normalize toward 80% over time.
Portfolio repositioning and capital allocation: disposals, JVs, and development discipline
Management said it is accelerating portfolio repositioning toward high-tariff and strong teaching universities. Unite said its high-tariff alignment has already increased to 67% and reiterated a medium-term target of 80%, to be achieved via pipeline delivery, joint ventures, and disposals.
Unite announced the sale of St Pancras Way to USAF for £186 million. Management described the transaction as arm’s length and said the disposal helps USAF increase London exposure while allowing Unite to remain invested and earn additional management fees, as well as recycle capital for partnerships and developments. Unite said its stake in USAF could increase to a maximum of 32% and is expected to reduce over time.
The company is targeting £300 million to £400 million of disposals in 2026 and said it expects disposal yields to be around 5.5% to 6% on average. Management also identified around £100 million of future disposals from the Empiric portfolio and said it is seeing interest from value-add investors for affordable-rent portfolios valued below replacement cost.
On university partnerships, Unite said it is on site in Newcastle and Manchester, with 4,300 new beds under construction. Management said there is strong appetite to finance these partnerships, citing Rothesay and PIMCO providing debt at borrowing costs below initial underwriting. Unite said it has about half a dozen live opportunities with high-tariff universities and is targeting one deal per year, with low- to mid-teens unlevered IRRs.
On developments, Unite delivered two new schemes in 2025 in Bristol and Edinburgh totaling 1,000 beds, which were 65% let in their year of opening, and said they are leasing up well for the 2026/2027 cycle. The company has two further schemes under construction in London and Glasgow, with around £100 million of cost to complete. Unite also discussed Hawthorne House in Stratford (719 beds), where 51% is already nominated with a London university, and said it is engaged with the Building Safety Regulator to de-risk opening in time for the 2026/2027 academic year.
Management reiterated a more cautious stance on uncommitted pipeline starts, noting decisions to exit TP Paddington and defer Freestone Island in Bristol, while exploring options to realize value through sales or joint ventures.
About Unite Group (LON:UTG)
Unite Students is the UK’s largest owner, manager and developer of purpose-built student accommodation, serving the country’s world-leading Higher Education sector. We provide homes to 70,000 students across 157 properties in 23 leading university towns and cities. We currently partner with over 60 universities across the UK.
Our people are driven by a common purpose: to provide a ‘Home for Success’ for the students who live with us. Unite’s accommodation is safe and secure, high quality and affordable.
