Unite Students has announced a pre-tax loss of £417m for the six months ending June, a reversal from a £186m profit in the same period last year. This loss follows a £530m revaluation of its property portfolio and what the company described as "extremely challenging" building costs.
The FTSE 250 firm, which is the UK's largest student landlord, saw its earnings decline by two per cent to £142m. In response to lower occupancy levels, Unite has been reducing rents in locations such as Leicester, Nottingham, and Sheffield.
Following a strategic review, Unite plans to sell up to £400m of property to concentrate on student tenants at the UK's "strongest" universities. The group disposed of £130m worth of property in the six months to June and aims to offload an additional 20,000 beds.
Despite recent discounting efforts, Unite anticipates rental growth of one to two per cent for the current academic year and expects occupancy to reach between 94 and 96 per cent. The acquisition of Empiric in August last year contributed to an 11 per cent increase in rents to £262m, though analysts at Quilter Cheviot attributed a seven per cent drop in earnings per share to this deal.
Unite has also warned that the supply of student accommodation is expected to "tighten" in the coming years due to slowing new construction and private landlords leaving the sector, partly influenced by the Renters’ Rights Act and rising mortgage costs. The company stated that new developments outside London would require charging £300 per week, significantly higher than its average £190 rate, to be viable.