UK student housing provider Unite sees campus life appeal bringing back full occupancy

By Muvija M and Chris Peters

(Reuters) - UK student housing provider Unite forecast on Tuesday a return to full occupancy and rental growth for the upcoming academic year, saying students were keen to get back to campus life.

In a sign of its confidence about the outlook, Unite said it would reinstate a dividend payment for 2020 despite falling further into the red last year.

Unite, which provides homes to 74,000 students across 177 properties in 27 university towns and cities including Leeds and Manchester, offered discounts totalling 100 million pounds ($138.17 million) over the past year to students whose courses were disrupted due to the pandemic.

"Being on campus is absolutely where students want to be... they want to get on with their lives," CEO Richard Smith said in a post-earnings call.

Unite reported a pre-tax loss of 120 million pounds ($166 million) for 2020, widening from a 101 million pound loss a year earlier when it took impairment charges related to its acquisition of rival Liberty Living.

Investors, however, focused on the group's brightening outlook, with Unite shares climbing 2% by 0957 GMT to 10.14 pounds. The shares had fallen 27% since Feb. 20 last year when news of the global spread of the coronavirus began to hit markets.

"We see the valuation decline as temporary, reflecting a lost year of rental growth, which will 'bounce back' once normal trading resumes," JP Morgan analysts, who have a 'neutral' rating for the stock, said.

Laying out plans to raise its dividend payout ratio to 80% from the current 50% when conditions stabilise, Unite said it expected students to return after the Easter break on the back of strong university applications and reservations.

Unite announced it would pay a dividend of 12.75 pence per share for 2020, after paying no dividend for 2019.

The company, which tapped investors for 300 million pounds to deal with the crisis, said 2021/22 reservations currently stood at 66%, less than usual, due to coronavirus disruptions, but it expects they will reach occupancy of 95-98% and 2-3% rental growth for the period.

Unite said its recent survey showed that 86% of students were keen to get onto campus to "enjoy university life".

It noted some uncertainty over travel restrictions, which could complicate international students' arrivals for the autumn term, but said the daily rate of direct-let bookings jumped 150% since the UK government announced its roadmap to get the country out of lockdown last month.

($1 = 0.7223 pounds)

(Reporting by Muvija M and Chris Peters in Bengaluru; Editing by Tomasz Janowski and Susan Fenton)