Student flats provider will ‘lose around £125m’

THE country’s largest student flat provider The Unite Group Plc is expecting to lose up to £125 million because of the coronavirus pandemic.

The company, which has three blocks in Exeter, made a statement to the stock exchange in which it said it is predicting a cashflow reduction for 2020 of between £90 million and £125 million.

Unite Students has refunded rent money to students who have returned home during the lockdown and senior board members have taken pay cuts of up to 30% during the crisis.

The firm said it has also stopped work on new flats developments at Middlesex Street, in London, and the former Bristol Royal Infirmary site.

The company said it may now end up with a four-week delay to the start of the 2020/21 academic year, which would result in reductions of up to 30% to group cashflow for the autumn term.

Unite is the UK’s largest owner, manager and developer of student accommodation, with a presence in 27 UK cities including London, Manchester, Liverpool, Newcastle, Birmingham, Nottingham, Sheffield, Leeds, Cardiff, Bristol and Exeter.

It has already contacted students to see if they want to leave their flats for the summer term and, based on cancellation requests received so far, expects to forgo rent on about 43,000 to 46,000 beds representing about 62% to 65% of all its owned and managed beds.

Overall, Unite expects a reduction in income from the 2019/20 academic year of 16% to 20%.

Meanwhile, reservations across the group for the 2020/21 academic year are currently at 80%, compared with 81% at the same time in 2019.

“Positively, we have seen healthy levels of demand from UK students, reflecting our decision to switch the focus of our sales and marketing efforts to the domestic market,” the report said. “We are still seeing inquiries from international students but, as expected, demand has slowed. A number of universities have already begun to allocate students to us for the new academic year, reflecting confidence around their accommodation requirements.”

So in a bid to save cash, Unite’s board has agreed to a 30% reduction to salaries and pension contributions for executive directors, 10% to 20% for senior management and a 30% reduction in fees payable to non-executive directors, effective for a four-month period from 1 April. Bonus payments for executive directors will also be suspended for 2020.

Richard Smith, Unite Students chief executive officer, said: “We are committed to doing the right thing for our customers, colleagues and other stakeholders, despite unprecedented times. We will emerge stronger from this challenging time, building on our enhanced reputation with students and universities.”