Unite Group: after the re-rating
Student housing developer Unite Group (UTG) has turned itself around in recent years, cutting costs to boost cash flow and selling properties to reduce gearing. The hard work – and the big share price rerating – is now in the past, yet a bullish half-year report suggests scope for further profit growth against a favourable market backdrop.
Net operating income, a measure of turnover for property companies, grew 4 per cent year-on-year, supported by the completion of various developments. Management also kept a tight lid on costs, so adjusted profit rose 6 per cent to £15.2m, even though 2012’s figure was boosted by the recovery of £2.5m in cash deposits from a bust Icelandic bank.
Like-for-like rental growth reached a pedestrian 1.2 per cent over the six months (from 1.8 per cent in 2012) but, judging by advance room bookings, that could quicken. Reservations for October currently cover 90 per cent of the portfolio, up from 87 per cent a year ago …