investegate.co.uk - Reservations update

My take: it's OK.

Good: FY2026 results remain in line with forecast.

Good: Occupancy 95%, very slightly higher end of 95% than last year. "As a result, occupancy is slightly ahead of last year and we have secured income growth in line with our expectations"

Bad: rental growth non-existent, LFL income growth 0.5-1% (forecast 0-2%).

Good: the problem Empiric had with filling rooms has been fixed on Unite's platform, huge improvement there from 84% occupancy to 91%, maybe 92% soon. This is ahead of forecasts (88-90%).

Good: The new 719-bed hall recently finished achieved 100% occupancy. Looks good for their other new projects underway.

OK: mix was more shorter tenancies to undergrads vs postgrads, but they note there may be opportunity to let for hotel rooms/summer schools. "Income growth reflects a sales shift towards undergraduate students over postgraduates"

The last point is kind of a reflection on what happened with student intake. UCAS (undergraduate intake) is well up. Undergrads are usually a 40-44 week let. Applications for study by foreign postgrads are down (-16%) due to rule changes / deliberately discouraging certain groups of applicants. Those are 51 week lets.

Overall these results are fine. This is important because it's like the harvest time for a farmer; what you have now with PBSA is what you have for the year ahead, though maybe you'll get a little more if you're lucky.

The 'bad result' for current FY2026 was 2/3 locked in last year e.g. by Empiric's own sales team before the acquisition.

Today's 'OK result' locks in a 1/3 impact on FY2026 and 2/3 impact on FY2027. So 2/3 of the FY2027 result is now locked in as 'OK' as a baseline, with some room to finesse it higher.

If you run a simulation of FY2027 using these occupancy and LFL numbers, then allow for the full effects of the previous 2026 £165m buyback and synergy/closing of Empiric HQ etc, you can see FY2027 will be a decent result.

On top of that, any new asset sales / buy backs / cancellation of most expensive debt leave further room to nudge FY2027 performance upwards.

My personal feeling is that maybe they wanted to lock in high occupancy to demonstrate what halls are capable of currently for the asset sales this year. And so occupancy maybe took priority over pushing LFL growth.

Next update 8th October and I think likely to be about asset valuations and hopefully asset sales.

As always please double check anything that matters to you, read the announcement yourself, and remember this post is just my own opinions/interpretation.

TRS