Trading Statement
Unite Group PLC
13 July 2006
13 July 2006
The UNITE Group plc ('UNITE' / 'Group')
The UNITE Group plc - Trading Update
The UNITE Group plc, the UK's largest provider of student hospitality, today
provides a trading update prior to entering its close period.
The update reports good progress in the year to date, in line with the Board's
expectations.
• The Group will operate 35,272 bedrooms in 2006/07 academic year (2005/06:
30,996)
• Reservations already at 78% for 2006/07
• Growing interest in student accommodation as an investment class
• Encouraging advances with the Group's joint ventures and asset management
activities
• The Group is evaluating moving to a co-investing fund management model for
the majority of its completed direct let properties.
The market
Student accommodation is becoming increasingly recognised as an investment class
offering substantial potential for income and capital growth. The role of
purpose-built, high-quality student accommodation in the physical and economic
regeneration of the UK's university towns and cities is also being widely
acknowledged.
UNITE, with its in-depth knowledge and experience of this growing sector, is
uniquely placed to benefit from these trends, both on its own behalf and on
behalf of its third party management clients and joint venture partners.
Reservations performance
The Group will be operating 35,272 bedrooms in the forthcoming academic year and
marketing of the portfolio is continuing to attract customers at an encouraging
rate.
As at 30 June, approximately 78% of available rooms in the Group's portfolio had
already been reserved for 2006/07. That represents the same proportion of
reservations received at the same point last year, when there were over 4,000
fewer beds in the portfolio.
Sales mix continues to be an important driver of revenue growth. The Group has
again been successful in letting an increasing proportion of its portfolio on
tenancies of between 50 and 52 weeks, rather than the shorter academic year.
5,156 rooms have been let on 50 to 52 week tenancies for the forthcoming
academic year, compared to 4,095 in 2005/06.
Development activity
Construction in respect of the Group's 2006 deliveries remains on track and in
total, the Group will deliver 4,276 new bed spaces into its portfolio for the
2006/07 academic year. Acquisition and development activity continues in line
with plan in respect of the Group's 2007 and 2008 pipeline.
Third party management and Joint Ventures
Further strong performance is reported for UNITE's 'Capital Cities' joint
venture with GIC Real Estate Pte Ltd. 846 beds in five properties will be
completed for the 2006/07 academic year, taking the total number of operational
beds in the joint venture to 1,960.
UNITE's 'Student Village' joint venture with Lehman Brothers will deliver its
second village scheme comprising 964 beds in Leeds city centre for occupation in
Summer 2006.
Student numbers outlook
The Group continues to benefit from positive market fundamentals. Although UCAS
figures for 2006/07 applications reflect a marginal decline of -3.2% year on
year, that follows the exceptional increase in applications in 2005/06, with
average annual growth over the past two years of 2.6%.
Prospects
UNITE continues to make strong progress across its business. Student
accommodation is increasingly recognised as an attractive commercial property
sector and the experience of the Group and its market leading presence should
ensure that UNITE's shareholders benefit from these positive trends.
We have given detailed consideration to the proposed UK REIT structure to be
introduced in 2007. We have concluded that UNITE is unlikely to convert to REIT
status in the short term, given our continuing levels of development activity.
Following the successful implementation of our joint ventures and asset sale
initiatives, we believe that there are more appropriate options available to the
Group.
In that respect, the Group is evaluating the potential formation of a student
accommodation fund which would acquire substantially all of the Group's
completed and stabilised direct let properties (other than those in the UNITE
Finance One securitised portfolio). It is also anticipated that the fund would
acquire additional stabilised direct let properties developed by the Group in
the future. The Group would retain a significant minority stake in any such fund
and would act as manager of the properties as well as of the fund itself. Such
a transaction would release capital to repay debt and for reinvestment in
ongoing development to support future growth. A further update will be provided
with the Group's interim statement in September.
Commenting, Mark Allan, Chief Financial Officer of The UNITE Group plc, said:
'We have made solid progress across all areas of our business in line with
expectations. With recent transactional evidence in the sector, including our
joint venture and asset disposals, and the non-cyclical demand and rental growth
characteristics of our market, the Group is well placed to continue to drive
investment into the sector.
'Development progress is on track and acquisition activity for 2007 and 2008 bed
deliveries continues in line with plan.
'The Board is confident that UNITE will continue to make good progress against
its strategy to deliver shareholder value through sustainable growth in its
portfolio and build upon its position as the UK's number one student hospitality
company.'
- ends -
Enquiries:
The UNITE Group plc
Mark Allan, Chief Financial Officer
Tel: 0117 302 7004
Financial Dynamics
Stephanie Highett / Dido Laurimore
Tel: 020 7831 3113
Further information on UNITE is available at www.unite-group.co.uk
Notes to Editors
• UNITE is the UK's number one student hospitality company. UNITE
delivers the real student experience, whilst at the same time helping to
regenerate cities as part of the community and contributing to the
improvement of the country's housing.
• The Group focuses on the provision and management of high quality,
well-located student accommodation and hospitality services in strong higher
education markets. UNITE undertakes the planning, development and management
of sites, often working closely with the universities and colleges, to
deliver accommodation for students across all ages and nationalities. UNITE
developments typically show high occupancy levels and robust rental growth
as demand continues to rise for places in UK Higher Education and for high
quality and safe accommodation for students.
This information is provided by RNS
The company news service from the London Stock Exchange
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