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https://www.investegate.co.uk/announcement/rns/uni...

Wow!

Unite bought back 1M shares yesterday, at a great price.

They only have 540M shares in issue for the whole company.

At this rate, they would buy back the whole company in 2 years if the price didn't move.

That is quite unusual, I think.

It's great to see management doing what I'd be doing in their place.

And they still have plenty of capital pre-allocated to buybacks.

They could keep this rate of purchase up for the next few weeks using the initial £100m buyback allocation.

And behind that £100m, there's plenty more new cash becoming available from the new asset sales on Tuesday.

This was a real delight to see in the news this morning.

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Buybacks at REITs, when the share price is far below NAV/share, have two interesting effects.

1. They push NAV/share up alongside any effect they have on pushing up the share price in the short term.

So in principle you can start with a company with price 500p, NAV 1000p, and end up with one price 550p, NAV 1050p... which has just as much reason to keep buying back despite the price being up.

2. You can use it to manage the debt profile if interest rates have gone up.

It's worth doing the maths on an example REIT, e.g. 4 buildings of £3m each, with £1m debt on each building and £2m net asset value in each building, and a market cap 50% of the NAV of the company. What happens if you sell one of the 4 buildings and retire lots and lots of the shares? If the price stays low during the buyback, it gets interesting very quickly.

And what happens if one of the buildings had a loan at a 6% interest rate, and the others had been bought with long term loans at 2% rates?

If you were able to retire the 6% debt early, (for example, by not renewing it as it comes due), how does that change the profit at the REIT?

TRS

I want to present some weak reasoning relating to buybacks that produces an interesting number.

In 2023 Unite placed shares at 905p for expansion.

In 2024 Unite placed shares at 900p for expansion.

In 2026 they bought back shares modestly around 600p and enthusiastically at 500p.

One might speculate that 'fair value' might be somewhere around the middle of the two extremes of buybacks and placings.

(900+500)/2 = 700p.

(900+600)/2 = 750p.

Does anyone know other companies that have flipped from 'capital raise for expansion' to 'buying back'?

TRS

P.S. Selling something for 900p and buying it back for 500p is an amazing business model if you ever get the chance to do it.

Does anyone know other companies that have flipped from 'capital raise for expansion' to 'buying back'?

Not yet, but keep an eye on Gamestop : )

Jim

"Does anyone know other companies that have flipped from 'capital raise for expansion' to 'buying back'?"

Would that apply to Greencoat UK Wind, I think they frequently issued shares to buy assets and over the last year or two have been buying back shares?

> Would that apply to Greencoat UK Wind, I think they frequently issued shares to buy assets and over the last year or two have been buying back shares?

Thanks for your post.

I looked into Greencoat UK Wind (UKW) a couple of months ago over the course of a few evenings, and was put off by:

- the question about decommissioning end-of-life costs for old windfarm sites, further down the line.

- a certain UK political party wants to cause damage to the wind energy sector, if they get power.

- still not 100% sure about what is actually going on in the UKW reports

I came to the conclusion, the yield is appealing, but understanding where it will be in 5 years time is 'too hard'.

This blog post may interest you:

https://davidturver.substack.com/p/offshore-wind-d...

TRS

Another 550k shares bought back on Friday. NICE.

I think the total for the week was: 150k, 350k, 1M, 700k, 550k averaging around £5, for a total of 2.75 million shares, or roughly £14 million of the £100 buyback.

That's a pretty solid week of buybacks by UK standards!

An update was issued confirming the shares are being cancelled immediately, rather than held in treasury from where they might be easily reissued/sold later.

https://www.investegate.co.uk/announcement/rns/uni...

I ran the maths again last night to double check the impact of this phase of buybacks.

Basically a 100m buyback at these prices, will add about 15p to NAV/share, assuming a penny or two lost in friction.

That might not sound like much, but when you have an 8% dividend yield and a 2% buyback yield boosting NAV (with more to follow - it's 'initial' buyback) plus a bit of inflation, even if the share price goes nowhere, you're in a good place.

Set against these numbers is the ongoing yield compression effect on NAV as their cheap debt ages out which reduces NAV (as we saw this year, e.g. the yucky IFRS numbers).

However, by cancelling new projects and selling properties, they don't need to take on new debt at currently higher interest rates, which means the yield compression effect will moderate out at the end of 2026 (you can see some numbers in the 2025 presentations pointing to this). In fact if rates drop well down, yield compression will go into reverse and we'll get some very, VERY nice IFRS and NAV numbers for a few years.

Also, I noticed that about half the 'trouble' in their occupancy figures, in the presentations, is from build projects that are completing, which obviously sit empty during construction and for a little while after. By cancelling most of their upcoming new builds, this impact on occupancy will reduce. I think that effect by itself could improve the occupancy figure by maybe 0.5% in late 2026 and 2027, by my estimation. Basically they're reducing drag factors.

Similarly by going fast with the buybacks, they're reducing cash drag by getting money to work right away. Cash drag is a real pain for REITs.

Hope this info is useful to someone.

TRS

One of the interesting questions about buybacks is, 'where does the money come from?'

It can come from e.g. spare cash, operational income, asset sales, debt. Maybe from other places I can't think of right now.

Regarding asset sales. UTG has a lot of purpose-built student accomodation.

Some here have raised concerns that PBSA assets may not achieve NAV, even though that NAV has been recently appraised by an independent assessor.

OK. Well, let's set that aside for now. What else is in the kitty to be flipped for cash for buybacks without altering the core business?

During times of cheap interest rates, companies often pursue speculative projects in nearby niches, to see how they go.

In the case of Unite Group, they started to enter the 'build to rent' BTR sector a little, the same sector that Land Securities is pivoting into just now.

BTR is often 'modern apartments', purposefully designed to suit local renting demand/needs rather than ownership demand/needs.

I believe Unite have two build-to-rent related properties. 180 Stratford, in London, and part of Burnet Point, in Edinburgh.

Both London & Edinburgh are extremely hot, high demand rental markets. The buildings are good condition, recently upgraded.

There is a lot of institutional money looking for that kind of asset currently.

Rumour has it, Unite are considering selling:

1) 2022 - https://www.unitegroup.com/articles/unite-students...

2) 2026 - https://www.propertyweek.com/news/unite-mulls-walk...

"Unite mulls exit from BTR sector through Stratford scheme disposal"

It will be interesting to see if they do sell it, and if so, how much they get.

TRS

It will be interesting to see if they do sell it, and if so, how much they get.

Indeed.
Funny market in central London at the moment. Rents and occupancy are high, rents still rising, but the price of flats is falling like a stone. e.g., down 15-16% in the last year in Westminster and in Kensington & Chelsea. Of course that observation might have zero or even negative applicability to 180 Stratford which is a few miles and cultural changes from "central London".

I doubt they'd sell for a bad price. They aren't in desperate need of the cash, and it is bad PR. So I'd expect a sale near book, or no sale.

Jim

That's an interesting point... though pension funds usually aren't looking to swoop in and pick up regular apartments.

They want a whole block and low hassle. e.g. different market for institution grade property.

https://www.property118.com/student-accommodation-...

This article suggests BTR yields were unchanged from 2024 to mid 2025.

Also, there's a lack of new development starting in the last 12 months, also fell off a cliff.

Either way, externally appraised recent book value in the accounts should be pretty accurate.

TRS

"Either way, externally appraised recent book value in the accounts should be pretty accurate."

I know you will know this already, I guess this is more for myself and others relatively new to the company, and I appreciate it is very much them taking their book, but watching the online investor webinar/Analyst Q&A from a few weeks ago, they did field questions from analysts on the appraisals to which they confirmed that the latest values did take into account the lower take up of places.

They also from what I remember specifically mentioned the Stratford property as one they would consider selling in light of the new profitability floor they were reviewing their portfolio and future properties against (again also confirming that they are not being forced to sell, it would only be if the price was right).

Hello Indefensible,

I don't think they're talking their book, it's just normal practice in the UK REIT industry, to the best of my knowledge.

REITs generally get their assets externally appraised, using a) recent sales of similar properties b) fair estimate of income being made c) any other relevant market factors.

The appraisals are pretty regular.

The smallest REITs (like 1/30 the size of UTG) might make their own appraisals, and less often, I suppose? I'm not sure.

This is actually done in a pretty standard way across Europe. Google / AI search for "EPRA".

TRS.

REITs generally get their assets externally appraised, using a) recent sales of similar properties b) fair estimate of income being made c) any other relevant market factors.
The appraisals are pretty regular.

To brutalize a metaphor: As usual in the real estate field, it's not a matter of where the puck is now, but where the puck is going.

It's not so much that one has any cause to doubt the current appraisals (though that certainly happens), but that one often has cause to doubt that current appraisals have any relevance for what's about to happen. Especially as "current" appraisals are always a bit backward looking, based as they are on recently completed transactions even when done honourably and skilfully. Think of them as "if by chance you had been fortunate to have contracted to sell this a few months ago, you probably would have realized XXX", but not much more than that.

The UK RE price trend is not good these days in a broad sense, so perhaps a "prudent man of business" should not assume that asset values a year or two from now, which is what you're really interested in, will be the same or higher than the current appraisals. There are very serious cracks showing here and there, for the moment in obscure or irrelevant corners. But one should probably conservatively assume that the cracks are spreading. Assume there are more cockroaches, or that the liquidity situation might suddenly deteriorate a lot.

None of that affects long term valuations past the current cycle, but it can be tough to wait out a down cycle. Some firms have probably not sufficiently battened the hatches.

Jim

> The UK RE price trend is not good these days in a broad sense

Hello Jim,

I'm not sure what you have in mind when you say the words 'UK RE price trend', for several reasons.

I'm also not sure what you mean by 'not good in a broad sense'. That claim contradicts basically every piece of data I have read on the topic in 2026. What was the source for this claim?

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Firstly, to talk about trend is to talk about "a matter of where the puck is now" (and has been). Which you suggest yourself is not the issue. It would be wonderful to know the property trends of the future before they happen, but I am not sure that anyone actually does know this more than 1 year out. (My instinct says that if anyone *does* know the trend of the next 6-12 months, it's more likely to be the REITs themselves - who have been furiously buying up other REITs).

Secondly, re: 'UK RE'. As you probably know, commercial and residential property in the UK have different cycles that are only partially synchronised by interest rates. Within regional/London, you see different cycles (property bubbles and crashes usually ripple out from London). Within different subsectors of commercial lending you sometimes see different outlooks and trends (oddly enough, not so much at the moment - see below). Offices vs datacenters vs healthcare, regional high street retail vs London high street retail, etc.

So I would suggest there is not really a 'UK RE' concept except when you get big or sudden moves in interest rates, or national recessions, that synchronise things a bit across these diverse classes of property, with various time delays.

For example, if someone spoke of the Canadian, Mexican and US economy as one thing, when they behave quite differently and are only partly synchronised by global rates and global recessions, that would not make it 'a thing'. IMHO.

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Regarding 'where the puck is going', I would point to three factors that are shaping the medium-term future.

Firstly, the collapse of new construction in the UK (and particularly in London) is broadly acknowledged and is very supportive of pricing and yields.

Secondly, the trend of UK rates down (until this Iran war came along!) seemed well established and is supportive of future prices. (e.g. investing.com, view the 2Y/5Y UK gilt up till 'Operation: Epic Fail' began).

Thirdly, across almost *all* the different sectors and subsectors of UK commercial property, yields are basically steady for the last year and this has continued into March.

I accept the points you are making as 'general musings about the world, property and investing', but I am unsure that they actually relate to the situation in the UK right now, or particularly to Unite Group.

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> "one should probably conservatively assume that the cracks are spreading"

> "Assume there are more cockroaches, or that the liquidity situation might suddenly deteriorate a lot."

What cracks? What cockroaches? (I'll come back to this).

In an earlier post, I noted (for Unite at least), the combination of buybacks, 0.5 price/book, and low LTV mean that you can write off 10, 20, 30% from the entire portfolio and still get an outstanding result.

Now personally, I can't imagine why the market would write down all Unite's properties by 30%, given 99-100% occupancy in most of them and ongoing widespread inflation & rent inflation.

Sure, if a liquidity crunch like 2008 shows up suddenly, banks go pop, credit window goes 'bye' suddenly, that could definitely do it.

But I don't think it's a good idea to price that in at high probability.

Also, I acknowledge, everyone could decide tomorrow that they don't want to go to Oxford, Cambridge, etc any more, but that's the opposite of the current data about 2026 applications, reported by Unite, UCAS etc.

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Returning to "UK commercial RE". Take a quick look at this. (Link on the right side of the page, URL below). I think you may find it surprising and interesting.

Prime Yield Guide – March 2026: (https://www.knightfrank.com/research/report-librar...)

This gets updated every month. You can go back in their archives and review older ones to see how accurate they were.

It breaks down all the commercial property subsectors of the UK and the trend in property yields that are being measured. They also poll for sentiment.

The overwhelming picture is that across the different subsectors of UK commercial property, life is more boringly predictable than it has been in a long time.

It's not growing, it's not shrinking, there's some positivity. Mediocrity can be a wonderful thing if it pays a good dividend and grows predictably with inflation.

If there are cracks, or cockroaches, I think you will find them in places like the table I've linked - yields will suddenly dip a little, then later, a lot.

Or, there will be stories in the news. e.g. if the FT starts reporting that UK banks are going bust (as we saw in 2008), slowly then suddenly.

So, browsing the data - where are the cockroaches? Where are the spreading cracks?

The actual data, versus the narratives I see put forward on this forum, could hardly be further apart.

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Regarding residential (non-commercial) property in London and the UK.

I would note that the UK press and estate agents do a very poor job of communicating that UK prices vary seasonally, sometimes dramatically, and this time of year is often the 'low' before spring (it's a bit warm this year, so who knows). Here's a paper that suggests the effect averages around 6.5%. (https://personal.lse.ac.uk/tenreyro/housing1.pdf). Elsewhere though this effect is claimed at +/- 1%. The point is, the time of year you observe the UK market has a big impact.

As of Q1 2026:

Halifax notes +1% residential year on year across the UK, but -1% yoy in London. (https://www.halifax.co.uk/assets/pdf/february-2026...)

Rightmove reported that largest January rise in house prices in 25 years, +2.8% Dec->Jan, and 0.5% yoy. (https://www.rightmove.co.uk/press-centre/house-pri...)

Savills of London suggests London at +0.4% yoy, as of March 2026. (https://pdf.savills.com/Housing+Market+Update-+Mar...)

Savills also reports rental growth basically everywhere in the UK except Glasgow. Take a look at the map in the report.

Again - where are the cockroaches? Where are the spreading cracks?

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Regarding your previous post talking about central London flat prices being affected by price drops. -16% etc.

It's a microclimate there of leasehold rather than freehold. A lot of flats with service charges that start 'cheap' but very rapidly escalate as part of the ownership lease. e.g. article below suggests leashold service fees are up +41% in 5 years.

It reminds me of a story about Norway, during one economic crisis, flats were selling for 1 kroner each (10 US cents), because no one was willing to take on the outrageous service charge contract (& annual escalation) associated with the flat.

So I would be wary about calling the situation in Chelsea / Kensington, 'cockroaches' or 'spreading cracks', rather than a strange microclimate and odd conjunction of service charges, higher interest rates, the end of government Help to Buy etc. See:(https://hoa.org.uk/news/house-price-crash/)

Hope you find something interesting among all the data above (particularly the Knight Frank link), and best wishes.

TRS

> yields will suddenly dip a little, then later, a lot.

brain slip while writing: when a sector is in trouble, yields expand (e.g. price goes down relative to constant rent, people demand better rates of income to stay in the sector)

prices go down, yields go up

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