Unite Students Q3 2025: Rental Growth Holds Up, Guidance Reaffirmed
Unite Students has delivered a steady Q3 trading update, with 95.2% of beds sold for the 2025/26 academic year and rental growth of 4.0%. That’s a notch below last year’s exceptional 8.2%, but still solid in the context of new supply and a normalising international market. Crucially, the company has reiterated its FY2025 adjusted EPS guidance of 47.5-48.25p.
The big picture: demand from high-tariff universities remains strong, nomination agreements have increased to 59% of beds, and rental growth is nudging fund valuations higher, particularly in London. There are some soft spots in a few regional cities as they digest new supply, but the overall tone is resilient.
Key numbers from the trading update
| Metric | Q3 2025 update | Prior/Context |
|---|---|---|
| Beds sold for 2025/26 | 95.2% | 97.5% for 2024/25 |
| Rental growth (2025/26) | 4.0% | 8.2% for 2024/25 |
| Nomination agreements | 59% of beds | 57% in 2024/25 |
| FY2025 adjusted EPS guidance | 47.5-48.25p | Reiterated |
| USAF valuation | £2,853 million | Q3 capital growth 0.0%; YTD 1.4%; yield 5.2% |
| LSAV valuation | £2,108 million | Q3 capital growth 0.4%; YTD 1.9%; yield 4.5% |
Demand backdrop: high-tariff universities driving growth
UCAS data shows 512,000 undergraduates accepted places for 2025/26, up 3% year-on-year. High-tariff universities – the selective institutions with higher entry requirements – saw acceptances jump 8%, outpacing medium-tier (+2%) and well ahead of low-tariff (-2%). That suits Unite’s strategy, as its portfolio is increasingly aligned to high-tariff institutions.
International trends are stabilising. Study visa applications grew 7% in the year to August, with summer activity in line with 2024. Overall applications remain 11% below 2023 after the dependant restrictions for postgraduate taught students, but management calls the outlook “encouraging” as global student mobility grows and competitor markets tighten policy.
Lettings performance: strong university demand, regional digestion
With 95.2% of rooms reserved, Unite remains largely full, though not quite at last year’s level as some regional cities adjust to new supply. Demand from universities is robust: nomination agreements now cover 59% of beds, up from 57% last year.
What matters about nomination agreements? They are block bookings by universities, often on multi-year terms, providing visibility and reducing leasing risk. Management says these beds outperformed on rental growth versus direct-let rooms. Direct-let sales to international students are in line with last year; fewer rooms were sold to UK students, which chimes with the softer regional picture.
Rental growth and earnings: holding the line
Sales to date are delivering 4.0% rental growth for 2025/26. That’s below the internal target and last year’s 8.2%, but it is still respectable and has supported modest valuation progress in the London JV. Unite also states it is outperforming the wider purpose-built student accommodation (PBSA) sector, helped by its university partnerships.
Guidance for adjusted EPS remains 47.5-48.25p for FY2025, backed by trading through the first nine months. Adjusted EPS is an earnings measure that strips out certain non-cash or non-recurring items to reflect underlying performance. The company outlines assumptions and caveats for this profit forecast, including steady macro conditions and no material disruption or changes to demand.
Valuations: flat to up, with London edging ahead
Unite’s funds saw small like-for-like gains in the quarter, driven by rental growth and broadly stable yields (the yield is the property’s net income divided by value). In valuation-speak, “basis points” (bps) are hundredths of a percent: 100 bps = 1.0%.
- USAF: valued at £2,853 million; Q3 capital growth 0.0%; YTD up 1.4%. Quarterly rental growth 1.8%; yield 5.2%.
- LSAV: valued at £2,108 million; Q3 capital growth 0.4%; YTD up 1.9%. Quarterly rental growth 0.8%; yield 4.5%.
The shift in yields was minimal in Q3 (USAF +7 bps, LSAV +1 bp). The Royal Institution of Chartered Surveyors (RICS) has introduced new independence rules, so USAF rotated valuers this quarter and LSAV will rotate at year end – a procedural change rather than a directional signal on values.
Empiric Student Property acquisition: on track, CMA process underway
Empiric shareholders have approved Unite’s recommended cash and share offer. The Competition and Markets Authority has started its pre-notification ahead of a formal Phase 1 investigation. Unite expects the scheme to complete by the second quarter of 2026, subject to conditions and regulatory timelines.
What this means: stakeholder approval is a tick in the box, but UK merger control is the key gating item. Phase 1 will test competition concerns in specific cities; the timeline and any remedies are not disclosed.
Why this update matters for investors
Positives I see
- High occupancy maintained: 95.2% reserved is solid given new supply pressures in some regions.
- Income visibility: nomination agreements cover 59% of beds and are outperforming on rent growth.
- Rental growth still doing the heavy lifting: 4.0% is enough to hold valuations, especially in London.
- Guidance intact: reiterating 47.5-48.25p adjusted EPS anchors expectations into year-end.
- Favourable demand mix: high-tariff universities continue to gain share of student demand.
Watch-outs and sensitivities
- Lower sales vs last year: 95.2% compares to 97.5%, with pockets of higher vacancy in some regional cities.
- Slower rent growth: 4.0% is below last year’s 8.2% and slightly below target, limiting valuation upside.
- International still below 2023: study visa applications are 11% lower than pre-restriction levels.
- CMA risk on Empiric: regulatory review introduces timing and potential remedy uncertainty.
Jargon buster
- PBSA: purpose-built student accommodation.
- Nomination agreement: a contract where a university takes a block of rooms, often multi-year, improving income certainty.
- Yield: net property income as a percentage of valuation; rising yields can pressure values, falling yields support values.
- Basis point (bp): 0.01%. For example, 25 bps = 0.25%.
- Adjusted EPS: an earnings measure excluding certain items to reflect underlying performance.
My take: resilient fundamentals with selective softness
Unite is doing what it says on the tin: leaning into high-tariff demand, building university partnerships, and using rental growth to support values. The 4.0% rent uplift and 59% nomination coverage are the headline strengths. London continues to look firm through LSAV.
The softer spots in a few regional cities and the slower rent growth temper the excitement, but they do not upend the thesis. If the Empiric deal clears the CMA cleanly, Unite strengthens its position further. Near term, keep an eye on final occupancy at year-end, the 2026/27 sales outlook in November, and any signals on international intake stabilising into 2026.
