Student accommodation owner and developer Unite has seen a reduction in H1 valuations for its portfolios, since it expects rental income to shrink by up to 20% for 2020/21.
The landlord posted a 2.2% like-for-like reduction in the value of its UK Student Accommodation Fund portfolio, which comprises 30,209 beds, to £2.8bn during H1.
It also recorded a 1.5% reduction in its 8,354-bed London Student Accommodation Joint Venture portfolio, to £1.3bn over the first half of the year.
The group said that the H1 valuations have been reported on the basis of “material valuation uncertainty” caused by the Covid-19 crisis, in line with recent RICS guidance.
However, Unite highlighted that both valuations have remained broadly unchanged when compared with the previous quarter.
The company is targeting 90% occupancy for 2020/21, down from 98% in the previous year, underpinned by income security provided by multi-year nomination agreements.
An overall 10-20% reduction in rental income is expected for 2020/21, compared with the previous year.
Reservations for the 2020/21 academic year are at 81%, which Unite said reflected delays by some students and universities in making accommodation choices.
Unite expected “a higher than usual volume of sales activity later in the booking cycle”.
Joe Lister, chief financial officer at Unite Students, said: “UCAS applications data and our own research underlines that students are keen to start or get back to university as soon as it’s safe to do so.
“We have growing visibility and confidence over our income for the 2020/21 academic year, reflective of the strength of our university relationships and underlying student demand for our offering. This is demonstrated by the stability in our valuations for USAF and LSAV in the second quarter.”
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