Unite sees sharp slump in profits despite record demand

Student accommodation firm Unite saw a slump in profits despite record demand for their flats.

The Bristol based business said profit before tax fell by 66 per cent from £334m to £116m in the first half the year.

The fall in profits came despite a 15 per cent increase in earnings to £110m.

Unite said the fall in profits was largely driven by adjusted earnings and the impact of rising interest rate charges.

Chief executive Richard Smith said: “We have had a strong first half, with growth in earnings driven by a return to full occupancy.

“The need for new student homes is the greatest we have seen for several years. The private rental sector is in retreat and a supply crunch is building amid growing student numbers.”

Smith said Unite is focused on delivering its substantial development and asset management pipeline across the UK, as well as working with university partners to help unlock the potential of their campuses.

He added: “Unite will continue to play a major role in creating new supply of high-quality, affordable accommodation where the need is greatest.

“We continue to invest in our portfolio and customer offer and our rental increases have tracked the rise in our costs. Our all-inclusive, fixed-price offer, which allows students to benefit from our buying power on utilities, compares very favourably to HMOs and, in many cases, we remain cheaper.

“We expect market conditions and our alignment to the UK’s strongest universities to support a positive outlook for our business for a number of years. This creates a range of compelling investment opportunities, which we will balance with ongoing capital discipline. We remain confident in our continued growth.”

Unite has seen  record reservations of 98% for 2023/24 and rental growth of around seven per cent.

There is also growing demand from university partners, accounting for 54 per cent of beds for the coming year.

Housing supply unable to keep pace with student demand with many private landlords leaving the sector.

Unite has a committed pipeline of £623m and 3,659 beds, generating a forecast 6.7 per cent yield on cost.