STUDENT housing provider Unite Group said yesterday cuts to university places will mean tenant growth is likely to remain flat over the next five years, forcing the firm to raise rents to drive growth.
Unite, which swung back into profit in 2010 with a pre-tax profit of £24.2m, said it expects rental growth of 3.1 per cent during the next academic year – around the same growth level as the current year.
“We have a portfolio that is well positioned for continued rental growth, a well funded and attractive development pipeline that will add significantly to earnings in future years, financial capacity to add to this pipeline and carefully considered plans to grow the business further,” said Unite chairman Phil White.
Unite has a London pipeline of 2,800 bed spaces due in 2012 and 2014, which is expected to add £69m to the net asset value of the firm’s property portfolio.
Another four projects across the country are set to deliver 1,277 beds this summer.
Unite reduced its debt in 2010 to £335m, down from £390m, mostly funded by a £146m sale of assets to USAF, an investment vehicle that is 20 per cent owned by the firm.
The firm said it plans to reinstate its dividend during this year and continue to sell off non-core properties.
Unite shares closed up 6.8 per cent at 209.4p yesterday.