Unite Group will sell £300-400 million of student housing assets in 2026 to offset declining university nomination agreements. The UK's largest student accommodation REIT expects nominations to fall by 1,000-2,000 beds next year as universities reduce guaranteed occupancy commitments.
The company set adjusted EPS guidance at 41.5-43 pence for 2026 with dividends held flat. Rental growth on a Revenue Per Occupied Room basis reached 2.4%, landing at the bottom of the firm's 2-3% target range. Current bookings stand at 68% for the upcoming academic year, below historical pace due to universities cutting nomination allocations earlier in the sales cycle.
Unite is repositioning toward direct-let beds with higher margins. High-tariff properties now represent 67% of the portfolio, up from previous periods, with management targeting 80% over the medium term. The shift addresses margin pressure from nomination bed economics as universities negotiate harder on guaranteed occupancy deals.
Disposal yields are expected around 5.5-6% on average, creating a capital recycling opportunity. Unite plans to redeploy proceeds into higher-yielding direct-let properties and premium student housing in core university markets. The strategy aims to maintain earnings targets while reducing exposure to institutional nomination agreements that lock in lower returns.
The nomination model historically provided occupancy certainty but capped rental upside. Universities now face budget pressures and enrollment uncertainty, making multi-year bed guarantees less attractive. REITs with heavy nomination exposure must either accept compressed margins or pivot to direct student lettings that carry operational risk but higher profit potential.
Unite's disposal program tests whether capital redeployment can offset nomination headwinds fast enough to hit 2026 earnings guidance. The 12-15 month lag between asset sales and redeployment into stabilized properties creates execution risk. Success depends on finding acquisition targets yielding above the 5.5-6% disposal rate while maintaining occupancy levels in a competitive student housing market where universities now compete directly with private operators.