Unite Students Posts Robust 2025 Results Amid Strategic Shift, Guides for Lower 2026 Earnings

Strategic pivot: more of the best universities, fewer tail cities

Unite is leaning harder into the most resilient demand pools. The portfolio is now 67% aligned to high-tariff universities, targeting 80% through disposals and committed development. That should lift occupancy and pricing power over time.

Two new on-campus joint ventures with Newcastle University and Manchester Metropolitan University will deliver 4,300 beds between 2028-2030, with a blended 7.4% yield-on-cost and Unite’s share of NOI at £29 million when stabilised. These long-dated, affordable beds deepen university relationships and underpin income quality.

Empiric acquisition: short-term drag, clear upside case

Unite completed the acquisition of Empiric’s 7,700-bed portfolio in January 2026. The assets are 81% aligned to high-tariff universities and expand Unite’s offer to “returners” – students beyond first year who want more independent living.

Near term, Empiric is under-earning: occupancy was 89% for 2025/26 with 4.5% rental growth, and management expects a 1.0-1.5p EPS drag in 2026 net of early synergies. The plan is to plug Empiric into Unite’s sales engine and university networks ahead of the 2027/28 cycle, with cost synergies now increased to £17 million per annum from 2027. If executed well, this looks earnings-accretive over the medium term.

Capital allocation: recycle, refocus, return

Unite is moving from net investor to net seller, targeting £300-400 million of disposals per year (Unite share), with £214 million completed in 2025 and the agreed sale of St Pancras Way, London for £186 million to USAF post year end (Unite share: £126 million). Proceeds are earmarked for university partnerships and share buybacks.

A £100 million buyback launched in January 2026. Development capex is being dialled back and reprioritised – the Freestone Island project in Bristol is deferred and the TP Paddington scheme has been exited, with a c.£10 million planning cost write-off excluded from adjusted earnings. Balance sheet metrics remain solid: LTV at 27% and net debt: EBITDA at 6.0x, with 100% of debt fixed or capped.

Developments in delivery: selective, university-backed

Two off-campus schemes are committed: Hawthorne House, Stratford – 719 beds for 2026 with 51% nominated to University of the Arts London – and Central Quay, Glasgow – 934 beds targeting 2027/28 near University of Glasgow. Together, they add £21 million to NOI from 2027/28, with £109 million of capex remaining.

Build cost inflation has moderated, but viability still demands higher yields – Unite is now seeking >8% in regional markets and >7% in London for direct-let schemes, typically underpinned by nominations. That discipline should protect returns in a trickier leasing environment.

Costs, margins and valuations

Property operating expenses rose 10% in 2025, driven by Real Living Wage uplift, higher marketing, insurance and council tax where occupancy was lower. Management has cut central costs by around 20% and targets flat property and central costs in 2026 for the Unite business (excluding Empiric). EBIT margin reduced to 65.9% as costs outpaced rents.

Like-for-like valuations fell 0.5% on a Unite share basis, with yields up 11bps across the portfolio to a see-through net initial yield of 5.2% at year end. EPRA NTA per share declined 2% to 955p, and total accounting return was 2.1%.

2026 guidance: lower, but realistic

Management guides to the lower end of 2-3% rental growth and 93-96% occupancy for 2026/27, implying like-for-like income growth of 0-2%. Adjusted EPS is guided to 41.5-43.0p, reflecting Empiric’s initial underperformance and a step up in cost of debt to 4.3%.

The dividend is set to be held at 37.7p for 2026. For income-oriented investors, that signals confidence in medium-term cash generation despite a temporarily lower EPS base.

What I like, what I’m watching

Positives

• Sharpened focus on high-tariff universities – historically stronger occupancy and pricing.
• University partnerships – 4,300 on-campus beds with attractive economics and deeply defensive demand.
• Capital discipline – accelerated disposals, buyback underway, higher return hurdles for new projects.
• Sector tailwinds – constrained PBSA supply, HMOs in retreat, supportive HE policy stance.

Watch items

• Leasing in a handful of cities – vacancies in Leicester, Nottingham and Sheffield need to normalise.
• Empiric integration – timing and scale of occupancy recovery and the delivery of £17 million p.a. synergies from 2027.
• Debt costs – average cost of debt rising to 4.3% in 2026 and 4.5% in 2027.
• Booking cadence and nomination renewals – later student decisions and competitor incentives can compress pricing.

Jargon buster

• PBSA – purpose-built student accommodation.
• EPRA NTA – a net asset value metric that strips out intangibles and swap mark-to-market to show tangible NAV on a going concern basis.
• Nomination agreement – a contract where a university underwrites a block of beds, improving occupancy visibility.
• LTV – loan to value, debt as a percentage of property value.

Bottom line

Unite delivered resilient 2025 earnings, but 2026 will be a reset year as bookings normalise, Empiric is integrated, and debt costs rise. The strategy to skew harder to the UK’s strongest universities and deepen university partnerships makes sense – it addresses the parts of the market with the most durable demand and the tightest supply.

If management lands its disposals, integrates Empiric as planned, and refills the few soft cities, the platform looks well set for 2027 and beyond. For long-term investors, this is a classic case of a quality operator using a wobble in the cycle to upgrade its portfolio and protect returns.