RBC Capital starts coverage of Unite Group at 'outperform'
RBC Capital Markets started coverage of Unite Group on Thursday with an ‘outperform’ rating and 1,025p price target.
Real Estate Investment Trusts
The bank said student accommodation should prove resilient in a downturn, while hedged utilities and an attractive product offering improve Unite's value proposition relative to houses in multiple occupation (HMOs).
RBC said it forecasts an 8% earnings per share compound annual growth rate for 2022-25, supported by like-for-like rent growth and developments, as supply continues to lag demand growth.
"Unite's 5.8% 2023e earnings yield and circa 8% net asset value/share discount look undemanding at a spread to the UK REIT sector that is comparable with historical levels, despite a more positive outlook than most subsectors," it said.