41061 Unite AR22 HI-RES WEB-READY - Flipbook - Page 18
16
THE UNITE GROUP PLC | Annual Report and Financial Statements 2022
CHIEF EXECUTIVE’S REVIEW continued
HOME FOR SUCCESS
OUR STRATEGIC
OBJECTIVES
DELIVERING FOR
OUR CUSTOMERS
AND UNIVERSITIES
ATTRACTIVE RETURNS
FOR SHAREHOLDERS
Strategic overview
Our best-in-class operating platform provides us with strong
foundations to adapt to evolving student needs and deliver
an enhanced customer experience. There are also significant
opportunities to invest in our well-located and affordable
estate to drive rental growth and improve the environmental
performance of our buildings.
Our strategy is focused on three key objectives, which will
deliver value for our range of stakeholders:
•
•
•
A RESPONSIBLE AND
RESILIENT BUSINESS
We continue to evolve the customer offer in our properties
to better appeal to the different customer segments who
live with us. There is a significant opportunity to attract
more non-first year students who have historically chosen
to stay in the HMO sector given their desire for greater
independence. We successfully extended our postgraduate
trials in six buildings for the 2022/23 academic year and
also deliberately tailored our three major refurbishments
in Manchester to different segments: UK undergraduates,
postgraduates and international students.
Delivering for our customers and universities
Attractive returns for shareholders
Attractive returns for shareholders
We achieved a return to full occupancy for the 2022/23
academic year, as market conditions normalised following
the disruption of the previous two years during the
Covid-19 pandemic. This supported rental growth of 3.5%
for the 2022/23 academic year and an improvement in
our EBIT margin to 67.9% (2021: 62.3%). We also delivered
total accounting returns of 8.1% for the year, driven by
our recurring earnings and the positive impact of rental
growth on our property valuations (2021: 10.2%).
Being a responsible and resilient business
Delivering for our customers and universities
We have a best-in-class operating platform in the student
accommodation sector, underpinned by our PRISM operating
platform, passionate frontline teams and sector-leading
student support. We introduced a new operating model
during the year, meaning all our properties are now staffed
24/7, 365 days a year, so that students can access in-person
support when they need it. We have also made various
service enhancements, including further improvements to
student support in collaboration with our Higher Education
partners as well as digital upgrades to better enable our
customers to self-serve the services they need. In addition,
we are investing to upgrade PRISM over the next 12–18
months, which will deliver an improved customer experience
alongside cost savings through greater efficiency.
The success of our customer initiatives is reflected in an
increase in our Net Promoter Score to +38 for the class of
2022 (2021: +35). For those buildings where we delivered
major refurbishments during the year, NPS scores improved
by an average of more than 50 points. We have also seen a
significant increase in our retention of direct-let customers
for 2023/24 and have secured demand from universities
for an additional 5,000 beds under nomination agreements
compared to the same stage in the prior year.
Our long-term university relationships remain a key
differentiator for Unite and a source of potential growth
opportunities. This is reflected in over 60% of our
development pipeline by cost being underpinned by university
partnerships. For developments completing in 2022, 78%
were let under nomination agreements for an average of nine
years with the University of Bristol and King’s College London.
The quality, location and scale of our portfolio is key
to delivering attractive, sustainable returns for our
shareholders. During the year, we made disposals totalling
£339 million (Unite share: £256 million) at a blended yield
of 5.7% to enhance our overall portfolio quality and fund
reinvestment into the improvement of our estate. These
proactive sales have reduced our footprint from 25 to 23
markets and completes the disposals of non-strategic assets
identified following our acquisition of Liberty Living in 2019.
The proceeds were partially redeployed to increase our
investment in USAF, which increased our share of the fund’s
portfolio by £177 million at an effective acquisition yield of
5.1% and takes our ownership share to 28%. The Group also
successfully delivered £275 million in developments and
major asset management projects in the year at a blended
yield of 6.2%. The schemes were delivered in line with budget
and all are fully let for the 2022/23 academic year.
We are committed to four development projects, requiring
£200 million in future capex and expected to deliver a yield
on cost of 6.7%. We are also reviewing future development
starts to ensure projects deliver earnings accretion in an
environment of higher funding costs. However, given the
strength of demand from students and universities, we
expect to commit to further developments during 2023.