Unite confident over rental growth as CMA kicks off acquisition probe

Student accommodation provider Unite said on Wednesday that it remains confident of delivering its rental growth targets for the next couple of years, as the Competition and Markets Authority confirmed the start of a phase 1 probe into its proposed £1.4bn acquisition of rival Liberty Living.

The company said student intake in 2019/20 is expected to be in line with the record levels of the past few years, with growth in the university cities where it operates. Unite said it has continued to see the strongest growth in acceptances at higher tariff universities, which have risen by 1.8% compared to last year.

The group said it has achieved a strong lettings performance across its portfolio, with 98% of bed spaces let. This follows a strong sales performance in summer 2019, with revenue up about 40% on the previous year.

"As such, we remain confident in delivering rental growth of 3.0-3.5% for 2019/20 and 2020/21, including improved utilisation," it said.

Also on Wednesday, the CMA confirmed the start of its phase 1 merger inquiry into Unite's proposed acquisition of Liberty Living, which was announced in July. Completion of the deal, which is conditional upon CMA clearance, is expected in the fourth quarter.

Unite remains confident of delivering the previously-outlined cost synergies of £4m in 2020 and £15m a year from 2021.

Chief executive Richard Smith said: "Demand for UK higher education remains robust, as reflected in the record share of 18-year olds choosing to attend University. Student demand also supports our strategic alignment to mid and higher tariff universities.

"Despite increased political and economic uncertainty, we maintain our positive outlook for the business, reflecting the strength of our operational and letting performance and opportunities to drive further improvements in utilisation and efficiency while investing in further value-added services for our students."