The UNITE Group plc, the UK's leading developer and manager of student accommodation, announces its interim results for the six months to June 30, 2009.
Highlights
- Recurring profits before tax increased to £3.5 million (30 June 2008: loss of £2.9 million). Adjusted loss of £13.3 million (30 June 2008: £12.2 million) and IFRS loss of £29.7 million principally due to writedowns in the value of the Group's investment and development portfolio and restructuring costs.
- Strong sales and rental growth performance continues with 89% of the Group's beds reserved at the reporting date (2008: 90%); like-for-like rental growth is anticipated to be between 10% and 11% for the next academic year.
- Property investment portfolio outperformance, with a valuation fall of only -1.9%, compared to the industry average decline as measured by IPD of -13.2%, as a result of the Group's robust reservations performance and strong rental growth. Adjusted fully diluted net asset value per share fell by 12% to 286 pence (31 December 2008: 325 pence).
- Group is on track to exceed its 2009 asset disposal target of £150 million. As at 24 August, asset sales of £136 million completed or exchanged at an average discount to December 2008 valuations of 1.5%. A further £55 million of asset sales are in solicitors' hands.
- £194 million five year joint venture created with Oasis Capital Bank ("OCB") in August 2009 to develop the Group's entire 2010 development pipeline.
- Adjusted net debt £584 million (31 December 2008: £531 million), reducing to £504 million after adjusting for the development joint venture and asset sales completed since the period end. Net debt has reduced by over £360 million since its peak in November 2006 and the Group has no significant debt maturities before September 2012.
- Delivery of the final phases of the Group's operational change programme, with resulting annualised savings of £12 million from academic year 2009/10.
- Attractive development opportunities emerging, particularly in London.
Phil White, Chairman of The UNITE Group, commented: "The student accommodation sector has remained resilient throughout the wider deterioration in UK commercial property values over the past two years and the Group's strong relative performance demonstrates the ongoing attractions of the asset class. Demand for our units has remained high and the rental growth secured by UNITE in each of the two most recent academic years has been exceptional.
"Investment markets are now showing tentative signs of recovery and, with its balance sheet strengthened, UNITE is increasingly focused on the attractive development opportunities that are beginning to emerge, particularly in London. Management's focus in the months ahead is to ensure that the Group is well positioned to benefit from this shift to create and enhance value for shareholders."
Mark Allan, Chief Executive of The UNITE Group, commented: "Ongoing rental growth, coupled with the strengthening of our balance sheet through planned disposals, the reduction and renegotiation of our debt and the delivery of significant cost savings through our 'Blueprint' program, have been significant drivers of our positive performance in 2009. As a result of these activities, UNITE now stands in a strong position, with enhanced cash balances and covenant headroom.
"Looking to the future, clear opportunities are beginning to emerge to acquire development sites at attractive prices, particularly in our major market, London. We have continued to track potential sites closely over the past year and believe that, owing to the pronounced ongoing supply-demand imbalance, there is a clear opportunity to deliver accommodation in the Capital at or above 2009 volumes at very attractive returns from 2012 onwards.
"Having bolstered our balance sheet through a number of proactive steps, the Group is now positioning itself to take advantage of these opportunities and intends to secure sites for 2012 delivery over the next six to nine months. The scale of opportunity
