41061 Unite AR22 HI-RES WEB-READY - Flipbook - Page 35
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
We started the 2022/23 sales cycle cautiously in late 2021,
with the Omicron variant and ‘Plan B’ Covid-19 restrictions in
place, and initially prioritised securing occupancy over rental
growth. During the second half of the sales cycle, we saw the
pace and pricing of lettings strengthen as concerns around
the Omicron variant eased and associated restrictions were
gradually lifted.
2022/23 rental growth and occupancy
Nomination agreements
Rental growth1
Occupancy 2
4.0%
Direct-let
3.1%
Total
3.5%
99%
1. Like-for-like properties based on annual value of core student tenancies.
2. Beds sold.
We have maintained a high proportion of income let to
universities, with 36,611 beds sold (52% of total) for 2022/23
under nomination agreements (2021/22: 37,359 and
51%). The slight increase in the percentage of beds under
nomination agreements reflects greater confidence from
universities, as demand for accommodation has normalised
following the pandemic and the disposal of a number of
primarily direct-let properties during 2022.
The unexpired term of our nomination agreements is 6.3
years, slightly down from 6.7 years in 2021/22. A balance of
nomination agreements and direct-let beds provides the
benefit of having income secured by universities, as well as
the ability to offer rooms to rebookers and postgraduates
and determine market pricing on an annual basis. We expect
to maintain nomination agreements at around 50–55% of
beds going forward.
63% of our nomination agreements, by income, are multiyear and therefore benefit from annual fixed or inflationlinked uplifts based on RPI or CPI. The remaining agreements
are single year, and we achieved a renewal rate of 75% on
these agreements for 2022/23 (2021/22: 74%). Together,
nomination agreements delivered rental uplifts of 4.0% for
2022/23 and are expected to support overall rental growth
of 6–7% for 2023/24.
Agreement length
Beds
2022/23
% Income
2022/23
Single year
14,210
39%
2–5 years
9,107
27%
6–10 years
5,491
14%
11–20 years
6,003
15%
20+ years
Total
1,800
5%
36,611
100%
OTHER INFORMATION
UK students account for 72% of our customers for 2022/23
(2021/22: 70%), making up a large proportion of the beds
under nomination agreements with universities. This
represents a significant increase in our weighting to UK
students, which stood at only 60% immediately prior to the
pandemic, and reflects our success in attracting students
from the HMO sector. In addition, 25% and 3% of our
customers come from non-EU and EU countries respectively
(2021/22: 25% and 5%), reflecting the relative appeal of
our all-inclusive, hassle-free product when compared with
alternatives in the private-rented sector.
Postgraduates continue to make up around 25% of our
direct-let customer base and rebookers accounted for 23%
of our direct-let bookings for the 2022/23 academic year
(2021/22: 20%), reflecting the proactive retention campaign
in our properties. The growing share of postgraduate and
non-first year undergraduate students in our properties
supports our strategy of increasing segmentation of our
customer offer.
Positive outlook for 2023/24
Applications data for the 2023/24 academic year is
encouraging, with total applications down 2% on 2022/23
but still 5% ahead of pre-pandemic levels. We continue to see
strongest demand for the high- and mid-tariff universities
to which we align our portfolio. Application rates remain
strong for UK 18-year-olds at 41.5% and there continues
to be significant unmet demand for university places, as
demonstrated by the nearly 200,000 unplaced students in
2022/23. Applications from international students are 3%
higher for 2023/24, with 4% growth from non-EU markets
more than offsetting a 2% reduction in EU applicants.
Demand for the Group’s accommodation has continued
to be strong through the sales cycle to date. Across the
Group’s entire property portfolio 83% of rooms are now
sold for the 2023/24 academic year, significantly ahead of
the prior year and pre-pandemic levels (2022/23: 67%). We
have seen increased early demand from universities who
see quality accommodation as a key part of their proposition
to prospective students. Current reservations under
nomination agreements account for 54% of available beds
for 2023/24, up 6 percentage points versus the same stage in
the 2022/23 sales cycle.
In our strongest markets, we have also seen an increasing
number of students looking to secure accommodation
earlier in the sales cycle than previous years and a significant
increase in the level of rebookers who now make up 28% of
direct-let reservations (2022/23: 23%). This is supportive of
our guidance for full occupancy and rental growth of 6–7%
for the 2023/24 academic year.
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