Unite Group Aktie

Good morning, everybody, and thank you all for joining the call. Since we last spoke, we've taken action across a number of areas and encouraged to see signs of early progress. And today, we will be updating on current trading, taking you through progress with disposals and flagging the appointment of an adviser to accelerate the repositioning of our portfolio and updating on our Q1 valuations for USAF and LSAV. So starting with trading. Overall, we are trading in line with the guidance we shared in February. We're currently 74% reserved for '26, '27 academic year against 76% at the same time last year. And these reservations are supportive of our rental growth guidance of the 2% to 3% range.

Direct-let sales are responding to our productivity. We're currently tracking about 1 to 2 points above the direct-let market at this stage. And the market is competitive, but we are benefiting from our mid-market price points and our productivity on pricing. We're keeping our powder dry on incentives at the moment, but we could see some more promotional activity later in the year, and we are having success at selling beds that have been handed back to us by universities.

Nominations are currently at 54%. We've continued to see lower-tier universities be more cautious in their approach and managing their financial exposure. It is fairly normal that we see ups and downs in nominations agreements at this stage, and we could see norms move further by plus or minus 1 to 2 points by the end of the cycle. On the positive side, high-tariff universities are wanting more beds and locking into longer-term agreements and top up for '26, '27. But as we called out in February, it won't be until July when we firm up numbers with universities with some further demand likely in August once they've also been released.

We are confident that we will win norms when universities are ready to commit. Hello Student, our brand that comprises the Empiric portfolio is trading in line with the update provided at the prelims. Sales are starting to improve following our early interventions, and we are seeing acceleration we need. We're up 11 points since the prelims. We expect to reach mid-80s at the end of the cycle. We also continue to make good progress with the integration and delivery of synergies. We've now secured GBP 3 million of the GBP 9 million savings targeted for this year.

Across Unite and Hello, our teams are fully focused on driving sales. Operational teams are incentivized, web bookings and international and virtual sales teams have all seen good pickup since we last spoke. We've seen good demand from Chinese students in particular. We're selling around 700 to 800 direct-let rooms a week at the moment and the next few weeks are really important to us. We will continue to see the value of our platform and our teams. And I can assure you that we are leaving no stone unturned. On costs, we are fully hedged on energy for this financial year and 70% for '27, and our interest costs are also fully hedged.

So overall, progress is in line with our expectations, and we are reaffirming guidance at the lower end of ranges for occupancy and rental growth and for our adjusted EPS to be at the 41.5p to 43p range. Moving on to disposals. As you know, we've always been active recyclers of assets. We set out a target of GBP 300 million to GBP 400 million in November, double our previous run rate and highlighted that this would be a multiyear program. We're making good progress against this target with GBP 130 million under offer or completed with the St Pancras Way disposal to USAF expected to close in May.

We have a further GBP 500 million of assets being marketed across a portfolio of lower growth assets, development land, nonstudent assets and from the Empiric portfolio. We recognize that selling assets in this market is not straightforward, but we are encouraged by the depth of investor demand and those looking at our portfolios of assets. We have over 70 investors currently in the data room for the larger portfolio. And given the quantum and range of assets being marketed, this means that we are well placed to deliver on this target. Delivering on these disposals would improve current occupancy by 3 points, improve nominations by 3 points and also improve our operating margins, showing the drag that the tail of the portfolio is having on our overall performance. We've also announced this morning that we've appointed advisers to accelerate the portfolio repositioning. As set out in November, this will enable us to create a higher-quality portfolio. We need to address the tail of the portfolio to align to further strongest universities where demand is and will be strongest and most resistant to further market changes.

Our platform and relationships mean that we will be the first choice for both students in all years of studies and universities for the nominations and partnerships, and it will allow us to move faster to our target of 80% high tariff alignment and 60% norms. We believe that higher-quality portfolio offers the best way for us to return to more predictable growing earnings, consistent with our long-term track record, and we will work hard and fast to move through the process and obviously provide updates on our disposal strategy and portfolio shape and size over the coming few months. We will also update on reservations and disposals alongside our AGM in mid-May and further trading update in July.

On the share buyback, we've made good progress with GBP 85 million of the GBP 100 million now deployed, and we expect to extend the share buyback program as we make progress with the disposals with proceeds being split roughly between -- roughly equally between existing capital commitments and share buybacks. On valuations, we have seen some softening of yields in Q1 with USAF at 9 basis points and LSAV at 13 basis points. This is largely being driven by outward movement in interest rates and sentiment in the sector, reflecting a tougher trading environment, and we've seen a widening yield differentiation based on the quality and operating performance of individual assets.

At this stage in the sales cycle, there is limited rental growth being baked into the valuations, and this will become clearer in Q2 and Q3 valuations as normal. We expect a similar approach to be reflected in the group's wholly owned valuations at H1. Before opening up for Q&A, hopefully, you will see that it's clear that we're not standing still, and we are working hard to deliver on a clear set of priorities, which are: one, to drive operation and sales performance across Unite Students and Hello; secondly, to accelerate the repositioning of the portfolio so that we're the first choice for students across all years of study, nominations and partnerships in the best university cities. And thirdly, to maintain a strong balance sheet, allocating surplus capital to further share buybacks.

Together, this will give us the greatest visibility of income and growth, consistent with our track record and enable us to deliver value to shareholders. On that note, we'll open up to Q&A. As stated, questions can be submitted online. Thank you to those already submitted. I think Mike will read out the questions, and then we'll allocate accordingly between us. So Mike, over to you.

Thanks, Joe. I'll start with Ana Escalante at Morgan Stanley, who's got a couple of questions. So the first one is on nomination agreements. Nomination agreements have fallen by 1 percentage point versus the end of February. What has changed since the full year results? Can you explain the flexibility that universities have in the reservations?

Yes. Thanks, Mike. Yes, it's interesting what we're seeing in the market at the moment. I was having really positive conversations with the high-quality university partners. So as I said -- as I mentioned, extending existing arrangements. We've been winning tenders versus other operators and seeing more beds from those operators. Where they're multiyear agreements, we've seen rental growth uplifts typical with what we've had historically. And I'd say a strong performance with those universities. On the flip side, those universities who are less confident on numbers are taking a more cautious approach.

A number of those universities have been more active in the single year deals, and that's where we've seen those universities choosing not to renew those agreements or where they have the provision to have some flexibility in numbers, hand back some additional beds as well. It is fairly normal that we would see this movement in nominations rooms at this stage, particularly amongst those 1-year agreements. Where we have multiyear agreements at fixed numbers of beds, they don't have the ability to hand back. So this is really about the fluctuation in the 12% of our portfolio, which has single year agreements. And that is where we're seeing the movement in numbers of beds. And we will continue to see that through the next couple of months as universities get clear on what their final numbers will be.

Great. Thanks, Joe. Second question then from Ana at Morgan Stanley. Can you provide any comments on your previous EPS guidance for 2026? And any views on 2027 based on available information today? Do you see grounds for earnings to decline further in 2027?

Thanks, Ana. If I start with EPS guidance for '26, as Joe said, we're reiterating the guidance for 41.5p to 43p of adjusted EPS for this year. So maybe dig into the component parts of that, we've obviously reiterated our income guidance for this academic year, and we continue to sell through. That's a key part of that 2026 earnings guidance. We're also delivering against our cost plan, so delivering the cost savings that we'd anticipated in the Unite business, and we're also making good progress in delivering those GBP 17 million of Empiric cost synergies, GBP 9 million of which will fall into this year and the full run rate will fall into '27.

And then in terms of capital investment activity, property activity, that's progressing in line with plan and the '26 earnings guidance assumes GBP 100 million of share buyback. In terms of the 2027 earnings guidance, I think it's fair to say it's a little bit too early. Clearly, the outturn on this academic year sales cycle will be a key influence. As Joe said in his script, our focus is on getting back to growing earnings. Where we come out on income will dictate some of the choices we have to make in 2027, and we'll be thinking very hard about how we manage the cost base and how we allocate our capital so that we can look to get back to that earnings growth as soon as possible. But as I said, we'll be able to provide a further steer on 2027 as we get through the year, but it's a little bit premature at this stage.

If I then turn to Tom Musson at Berenberg. Two questions from Tom. The first one here is on the direct-let bed reservations, can you give a sense of how the tenancy lengths are changing versus last year?

Yes. Thanks, Mike. I'll pick that one up. As I stated, we've been proactive on our rent setting. We are looking to drive occupancy and really holding optimizing price and tenancy length is one of the factors that plays into price, and we think about price more on an annual contract value rather than on price and the split of price and tenancy length. It really is determining where you're playing, which customer group that you're targeting. And U.K. undergraduate students typically want a shorter-dated tenancy, whereas internationals are more focused on longer-dated tenancies.

So we have seen a slight shortening of tenancies. This has acted as about a 1% headwind to our overall rental growth rates and is factored into our guidance of the 2% to 3% rental growth over the full year. So we will continue to manage to the overall annual contract values of rents and tenancy length is one of the factors that we play with to ensure that we are optimizing the overall income for the business.

Great. Thanks, Joe. And then second question from Tom. How much of the Q1 yield expansion do you think reflects factors specific to the U.K. student market? And how much is driven by macroeconomic events? Can you give any sense of further yield expansion to come?

Happy to take that one. So Tom, I think when we look at market data, it does appear that sort of U.K. real estate, we've seen a little bit of an increase in property yields in the first quarter, probably less than we've seen in our portfolio though. So it does feel that the student accommodation market has seen a slight widening in yields versus wider real estate. That's not really transaction driven. We haven't seen a huge amount of trade in the first quarter of the year. We think it's more valuers just being a little bit more cautious in sentiment, and some of that is due to the slightly slower occupational trends.

I think in terms of the forward look on yields, very hard to say. We've got assets in the market. We'll be making disposals over the course of this year, so will others. And I think that will dictate where we see yields moving over the course of the next 6 to 12 months.

So thanks, Tom. Now moving on to Marc Mozzi at Bank of America. We've got 3 questions from Marc. So the first one is, what is the current net initial yield of the GBP 300 million to GBP 400 million of noncore assets yet to be sold?

I'm happy to take that one, Joe. Thanks, Marc. So as we set out at the time of the prelims, we guided that we thought the yield on the GBP 300 million to GBP 400 million disposals will be about 5.5% to 6.5% as a blend. What that includes is a mix of assets. So you've got lower growth assets in there, which are those sort of strategic disposals to help position the portfolio more towards higher tariff universities. We think they will be slightly higher yielding, more like 6% to 7.5%.

However, we also have then within that GBP 300 million to GBP 400 million, the disposal of St Pancras Way, and we're also looking to sell some nonstrategic assets, including our build-to-rent assets in London and some of our development sites. So that brings the overall yield down slightly.

Second question from Marc. To what extent is the later booking pattern we're seeing a return to normal versus a sign of softer underlying demand, particularly in international and post-graduate segments?

Yes. I think the later booking cycle we've seen over the last couple of cycles, we do feel is more around customers being aware of the fact that some operators have been offering incentives and lowering prices towards the tail end of the cycle and therefore, have been holding out for lower rents at a later stage in the cycle, as I mentioned. I think we are also seeing this shift around fewer international postgraduates in the market who have typically booked at the back end of September, and we didn't see that same level of intensity or pace in last year's sales cycle. So I think it is a combination of more beds being available, students seeing that they can wait.

They don't need to rush into make those bookings, which ultimately, if we think about it, isn't actually the most healthy when students are having to book their beds so early in the next academic cycle. So rebookers are taking longer to do that. So I think it probably is a normalization of the cycle having had a couple of years when the student number growth was so significant that it was leading to real shortages of the beds, and there was an element of panic buying. So I think we've got a little bit of returning to normality to where we have been historically.

Thanks, Joe. We then got a final one from Marc on Hello Student. Hello Student reservations stand at 33% versus 48% last year at Q1. How confident are you that this gap closes? And what evidence should investors expect to see of progress over the summer?

Yes. So on Empiric, I think they did have the benefit of a large nominations agreement last year, a 1-year agreement, which has fallen away. That made up about 5 points of occupancy. They also had a systems implementation that went live in Q3 last year, and that led to a delay in their sales cycle. So they missed the first 4 weeks. So they were slightly on the back foot. At 33%, the direct-let sales, and that's effectively all direct-lets across their portfolio, it's pretty much in line with the market. It's only a few points behind where the market is.

And so given the pace of sale, the fact that we have seen 11 points of improvement versus 6 points in our own portfolio, I think, goes to show that there is real pace that is coming and that we would expect to see those reservations trending back towards that 85% as we move through the summer. Empiric have typically booked later and their cycle has run later than ours. And again, that is because of a higher post-graduate component to their portfolio. So we will provide updates, and we will be tracking towards that level. And if we feel that we're not getting to it, then we will flag that as we move through the sales cycle.

Thanks, Joe. Next question is from Max Nimmo at Deutsche Bank. On norms, it sounds like there could be a bit of a quality upgrade to income if you can sign more multiyear deals with higher-quality universities. Do you think that's fair? And then the second part of the question, how much of the 54% of norms today is under option from lower tariff universities who may not take up this space?

Yes. Thanks, Max. That's exactly right. We are seeing that move up the quality spectrum. And I think that's been most pleasing about where we are in nominations for this sales cycle. So it is the high-quality universities who are coming back to us. They are more confident about their numbers. And where they're doing that, they are comfortable to be taking longer-term agreements in place. So the movement of that quality register for those nominations is something that we are definitely seeing. So we've set out a target of 60% nominations agreements and the repositioning of the portfolio is a fundamental part of allowing us to do that.

And we believe in doing that, that we'll sort of continue to see a greater level of quality and income certainty that underpins those agreements. So we will provide further detail on that as it transpires at the end of this sales cycle. We're flagging that there is a risk of plus or minus 1 to 2 points on nominations at this stage and sort of that minus would be if the remaining flexibility and nominations are all taken up and the plus 2 would be if they're not taken up and we win further beds from additional universities across the spectrum as we go through the cycle. So that is the sort of the range of outcomes that we can see from the current level of 54%.

Thanks, Joe. The next one we've got there is from Rebecca Parker at Goldman Sachs. You've commented about planning to accelerate disposals, to what quantum could the disposal plan be raised to?

So when we're thinking about the quantum and timing of disposals, as I say, we've currently got a target of GBP 300 million to GBP 400 million of disposals, and we set that out in November as a multiyear program. I guess with that, announcing today an acceleration, it's a recognition that we can't take sort of 3 to 4 years to deliver against that disposal program. And we want to make meaningful progress more quickly and certainly by the end of 2027. So we are working up a strategy now, which will give us greater confidence on the quantum and timing and how we will take those assets to market, which we will share with you over the summer.

And ultimately, we want to create a portfolio that is aligned to the best, most resilient universities. And we believe that those universities will be the ones that are most resilient to the changes in demand that we are seeing and will have the most enduring demand. We are seeing those universities act with confidence now, and we expect that to continue. And that's why the targets we set out of 80% high tariff and 60% norms and really narrowing the focus of the portfolio to 18 to 20 cities is fundamental to that repositioning and enabling us to get back to that more consistent predictable earnings growth that we really need to get back to.

Thanks, Joe. Next question then is from Neil Green at JPMorgan, still on the theme of disposals. Can you provide any more details of the type of investors that are interested in the on-market portfolio? That's it from Neil.

Yes. Neil, it's -- as you'd expect, the 70%, it's quite a wide range of investors who are looking at it. But probably the bulk of those investors are what we would see is value investors. They're buying assets in that 6% to 7.5% range, which Mike talked about. I think they see an opportunity to drive income, potentially reposition the assets and probably seeing that as a period of time when they can drive value from an asset which isn't at full value at this stage. So -- but as I say, we are really encouraged by that depth and breadth of buyers who are looking at the portfolio, and we'll start to get a sense of where initial views on value will be over the coming few weeks and months.

Thanks, Joe. Next, we've got 2 questions from Aakanksha at Citigroup. The first, just to continue the theme of disposals. Against the backdrop of declining valuations and the GBP 500 million of disposals being marketed, what's the range of discount you might be willing to absorb to get the disposals to your target levels?

I'm happy to take that one, Joe. Thanks, Aakanksha. Yes, so we're in the market at the moment. We'll get feedback on pricing on those assets in the coming weeks and months. As I think we said previously, ultimately, we look at the returns we think we can generate from the assets at the prices at which they're likely to transact and then we compare that against our alternative use of capital. So that will inform our thinking on price. As we've said today, we think those lower growth assets will probably trade at yields of between 6% to 7.5%.

But ultimately, the North Star is how do we get to a portfolio that is more highly aligned to those strongest universities and where we see prospects for predictable long-term earnings growth, which is in line with our history. So that will inform our decision-making around pricing and how quickly we move through our disposal plan.

Second question then from Aakanksha is around promotional activity. So could you give some examples of promotional discounts for direct-let sales? Are there any differences between the United Empiric portfolio in terms of pricing?

Yes. So as I mentioned, we've been more focused on getting the underlying pricing appropriate. And where we've tested incentives has typically been at sort of the GBP 200 to GBP 400 cash back type offer or reduction in price, but we've seen that's had less of an impact in sales velocity and the overall take-up against those relative to where we sort of adjust the underlying pricing. So as we go through the sales cycle and we see competitors act differently, then we may need to adjust and we may need to respond to what we are seeing from our competition.

But overall, as I say, we are feeling that we are winning through the approach that we're taking both from a -- to bring customers into our customer funnel, the conversion rates that we're having are performing well, and that is driving the improvement in performance around direct-lets. We are effectively going through the process of bringing the Empiric sales processes more in line with ours. And in terms of an incentives program, we are following the same approach. And where we've seen some of that benefit of the acceleration is, I think, us using our platform, our teams and processes to really drive and ensure that we are optimizing and maximizing those conversion rates across their portfolio. And I think that's encouraging us to see that we can continue to drive that through the remainder of the sales cycle as well.

Thanks, Joe. We've got a next one from Sam King at Covalis. What level of occupancy of the valuers assumed in the Q1 valuations? And has this changed? Is there potential for assumptions to be revised down?

I'm happy to take that one, Joe. So Sam, no change in the occupancy assumptions that the valuers have made in their assumptions in Q1. I think it's fair to say, as Joe said, they are being slightly more cautious in reflecting rental growth, and we expect that to continue. So I think when they're thinking about income overall, they're probably being more cautious in passing through rate growth possibly because of that view of caution on where occupancy will be and the fact that it might be slightly below historical averages.

I think we would also suggest that some of the softness we've seen in yield this quarter is slightly driven by sentiment on the occupational side. And it's not really down to specific trades that we've seen in the market. And arguably, we think the valuers are using a little bit of yield to adjust for slightly softer occupancy in the near term.

And then we have a final question from Matt Saperia at Peel Hunt. Do you have any thoughts on how the impending Renters' Rights Act will change behavior among HMO landlords or pricing move in addition to a reduction in stock?

Yes. Thanks, Matt. It's certainly early days on that one. The Renters' Rights comes into play on the beginning of May of this year. So we don't think it will have a significant impact on this year's academic cycle as students were generally moving out by that stage. New tenancies that are signed for the '26, '27 academic year will start to be impacted. And those new tenancies, if you're a registered PBSA operator, you will be exempt from the Renters' Rights Act, whereas private landlords won't have that benefit.

The 2 key impacts that means is that landlords won't be able to sign tenancies or students won't be able to sign tenancies more than 6 months before the start of the sales cycle. So that does mean that what is often a very busy period of time for those landlords where second and third years are signing up through November, December, January, they will either have to go down a route of signing some sort of commitment to enter an agreement or they will have to wait.

So again, that will add a further barrier or headache for those landlords and potentially for students being able to lock into those agreements. And then the second impact will be that the students will be able to grant notice or give 2 months' notice to end their tenancy at any time. So that will give the landlords less certainty over the full year's cycle of when they will be able to generate income.

So we know what the kind of the changes will be, how that drives and how that impacts student and landlord behavior will flow out. I feel that this is a continuation of the pressure that's been on those landlords over the last few years with some of the changes to tax rates and licensing arrangements, and we will continue to see a steady reduction rather than a significant fall at one moment. So I think it will put further pressure on those -- on that sector, and we'll see that unfold over the next couple of years.

Thanks, Joe. That's all we can see by way of questions on the Q&A. We are aware that we may have had a bit of a challenge in some questions feeding through to the list. So what I would say is if you have any further questions that we haven't taken on the call, please contact Joe, myself and Saxon, and we'd be very happy to speak to you or answer them offline. And with that, I'll hand back to you, Joe.

Thanks, Mike, and thank you all for joining us this morning. We know that there is a lot for us to do, but we are encouraged by the early signs of progress. And hopefully, you recognize that we're focused on driving the performance of the business and getting the portfolio to a place where we can return to that more consistent, predictable and growing earnings. So thank you again all for your time, and look forward to catching up soon. Thank you.

Great. Good morning, everybody. Thank you all for coming along, and those of us joining today, I see you fighting over the snacks on the chairs. So please enjoy that. And for those joining us online, sadly, we won't be posting them to you today, but hopefully, you can come next time and enjoy them.

So, this morning, I'm going to just run through what we're seeing in the market and progress with our strategic priorities. Karan will then take you through the '26, '27 sales position before Mike talks through the financials and property. And then I'll wrap up and open up for Q&A as usual.

So, 2025 was a year of considerable change for us in our sector. And whilst our performance was strong across the majority of the portfolio, we have seen that pace of change accelerate, which has impacted our occupancy. More students are opting to live at home and international postgraduates have declined again since their peak in 2022, which meant that occupancy was weak in three of our cities, which impacted the overall performance. And whilst it's still early, we are currently tracking 3 percentage points behind last year, which is all in the nomination space, which Karan will come on to talk about. We have seen the demand shifts like this before, and we know that we can respond positively.

So we set out a plan in November to reposition the business, and I'm proud of the start that we've made across the three areas. First, we've been accelerating the repositioning of the portfolio. We've got a high-quality, well-located portfolio at the right price points, and we've already started selling assets as seen by the USAF disposal announced today, and we've launched a portfolio of GBP 300 million just last week as well.

Secondly, we will play to our strengths. We have unparalleled relationships with universities, and we have NPS scores at record levels. And we have an opportunity to deepen these relationships at a time when universities themselves are facing into challenges, and we're excited about further joint venture opportunities. And thirdly, we will leverage our platform. Our integrated platform gives us that ability to react, to take share from our competitors, including HMO and Empiric gives us the opportunity to do this. And we've already taken costs out and reduced CapEx spend at pace. And encouragingly, young people still see the value in a university experience, particularly at high-tariff universities and supply constraints are having a real and having a real and lasting impact.

The fundamentals of the HE sector remain strong and where there are near-term headwinds, we are addressing them and facing into them. Demand remains robust. We've seen a record number of applications from U.K. 18-year-olds and international graduates are also increasing, particularly from China, and growth is focused at high-tariff universities. We have seen a fall in postgraduates over the last three years, as I mentioned, but the U.S. and Canada still have restrictive visa policies and the U.K.'s international education strategy provides greater policy certainty and the prospect of growth in student numbers at top universities. And we are positioning our portfolio where this demand-supply imbalance is most favorable. And universities are still targeting growth and the growth ambitions remain core to their strategies. When I'm speaking to the vice chancellors at the likes of UCL, King's, Leeds, Liverpool and the rest, growing U.K. and international undergraduates is a priority for them, and we're seeing that come through in their numbers. They're committing to long-term campus investment. And you can see that at universities like Bristol and Glasgow and also through their investment into joint ventures with our partners at Newcastle and Manchester Met.

Universities recognize that they, like all industries, do need to adapt to AI, but educating young minds will be more important than ever. And over the next 20 years, it is estimated that there will be a 10% increase in jobs needing a degree. And so we do see that there will still be more opportunities to grow nominations in joint ventures with high-tariff universities. And we are positioning the business to face into the near-term challenges as young people are being more rational in their choices, and they're prioritizing on value for money and the investment they're making, particularly given the cost of living pressures and the graduate outcomes, meaning that more students are opting to live at home and students are again booking later to try and secure the best deal. And this is driving the continued focus on to high-tariff universities where student sees the value of a residential degree. And this continues to see us concentrate into more cities and the opportunities to capture share from HMO and grow our overall addressable market.

On the supply side, the viability challenge is real across PBSA, build-to-rent and new housing and new starts have largely ground to a halt. The Renters' Rights bill becomes effective in May '26, and we've already seen around a 10% reduction in HMO over the last few years, and we'd expect the renters rights to continue to play into this.

And so what does this all mean for us? High tariff is growing at the expense of low tariff, so we are growing our exposure there. Universities will commit to high-quality PBSA, either through nominations or joint ventures, and we are well placed to play into this. And whilst we outperformed the market in '25, '26, it's clear that, again, we will need to take share from both HMO and PBSA. And where we need to reposition the portfolio, we will be proactive and pragmatic. And we believe that this will drive a return to growth over the medium term.

In November, we set out our revised strategy to respond to these shifts in the market. And as I say, we are making good progress three months into this plan. We are 68% sold for the next academic year, as I mentioned, 3 points behind last year. Universities are being more cautious on renewing nominations, especially at low tariff universities. And whilst the applications data is stronger than we anticipated, and we're having good conversations with universities since that data was released at the end of January, as we saw last year, this does not always flow through to bookings. So we've been more cautious on our outlook and guiding to the lower end of our occupancy and rental growth range.

Taking action on costs, our overhead rationalization completed in December, delivering a 20% reduction in our central staff costs, and we're close to completing our technology platform, which will unlock GBP 7 million of savings by the end of the year. And the integration of the Empiric acquisition is well underway. It is really exciting to the opportunity for us to take share from HMO across both Unite and the Empiric portfolios. And we're also increasing our synergy target today to GBP 17 million. We're also increasing -- making progress increasing our alignment to high tariff and the best teaching universities, already reaching 67%, and we will achieve our 80% target through the pipeline, joint ventures and disposals. We are on site with both of our joint ventures and the financial constraints on universities are increasing partnership opportunities at sensible returns and we're making good progress with our capital allocation, the USAF disposal showing our proactivity, and we've been decisive in our approach to developments and using the proceeds from those developments to launch our GBP 100 million share buyback program earlier this year. And we do recognize it will take some time to reposition the portfolio, but delivering these priorities will underpin our return to growth.

As we've got into the Empiric business, we really are excited by the extent of the opportunity, giving us a brand and a platform to compete with HMO, which is home to over 1 million students, and this will increase the size of our addressable market. I've been out visiting the properties. I've been to Cardiff, Birmingham and Bristol, and I've been impressed with the quality of the portfolio and the fit with the Unite portfolio as well as the quality of the people in those cities. There are loads of opportunities for us to use our sales platform to drive performance. And yes, the sales position is disappointing, and that reflects some distraction from the acquisition as well as the market challenge and the fact they didn't pivot away from their core market of Chinese post graduates. So the '25-'26 income will impact our '26 earnings by 1p to 1.5p, which Mike will cover. And there is more work to do on our '26-'27 sales, and we are on it. We will partially offset some of the shortfall by the increased synergies and driving our sales performance through both '26 and '27 to deliver earnings accretion from Empiric.

In summary, this slide highlights our 2025 performance. We've delivered EPS of 47.5p underpinned by the good performance in the majority of our cities. but at the lower end of our guidance due to the 95% occupancy overall. And the TAR of 2.1% is below our usual standards, driven primarily by yield expansion and also a slowdown in development activity.

So I'll now hand you over to Karan, who will take you through the '26 sales in some more detail.

Thanks, Joe. As Joe highlighted earlier, on occupancy, we are currently at 68% versus 71% same time last year. Nominations are back 4% year-on-year, and I'll share a bit more detail on nominations on the next slide. On direct let, bookings are actually slightly ahead of last year, having adjusted prices and tenancy length to attract more undergraduates to compensate for the softness in the international postgraduate market. We're also making good progress in stabilizing our recently opened and refurbished properties, where bookings are up 25% year-on-year. This has been achieved on the back of strong student feedback, improved marketing, demand for nominations as well as adjustments to tenancy length.

Rental growth, which is on a RevPAR basis, is currently at the lower end of our 2% to 3% guidance at 2.4%. Our inflation-linked multiyear nominations continue to underpin this rental growth with some of it being offset by adjustments made to secure single year nominations as well as more undergraduate direct-led customers. Like last year, we are seeing a later demand cycle as students wait to get the best scale possible. So we are preparing for a big push in the latter half of the cycle again.

A bit more on nominations. As you know, with nearly 60% of our beds on nominations, of which 85% are on multiyear linked inflation-linked contracts with an average tenure of six years, they're a big part of what makes Unite successful. For the current sales cycle, which is still quite early, we are behind what we achieved last year.

To add a bit of color on that, when we started discussions with our university partners towards the end of last year, we found that they were a bit more cautious in resigning to the same volumes that they took from us previously. Quite simply, to manage their financial risk, they needed clarity on their own student numbers before they could make firm commitments to us. The majority of these handbacks, as you can see, were from lower and medium tariff universities, which have been losing share to the higher tariff.

Encouragingly, though, since the release of the UCAS application data, we have seen an uptick in the request from universities to take more rooms now that they know their application rates. The headline UCAS data shows continued positive trend in student number growth. Overall applications from 18-year-olds were -- was up nearly 5% as application rates held steady at 41%. Like last year, higher tariff universities continue to win share, growing applications at 6%. They now account for nearly 50% of all student applications.

Additionally, higher tariffs have seen an increase in applications from students who intend to live away from home, so effectively seeking accommodation. This highlights that students and parents continue to see value in the full residential experience at these universities, and it validates our portfolio strategy to align ourselves to these institutions. So our focus right now is very much to leverage our relationships to convert as many of these discussions into firm bed commitments and secure an additional 1 to 2 points of occupancy on our current position. That said, the low visibility we have on nominations at this stage and the continued late nature of the direct let cycle is leading us to guide to the lower end of our 93% to 96% occupancy target.

Stepping back, we are seeing three major themes come through our discussions with universities. Firstly, there is still strong demand from all universities, whether you are high tariff or low tariff for well-located, high-quality accommodation at the right price points. The cost of living pressure on parents and students and the growing number of stay-at-home students means that universities are very keen to secure more affordable options. And this plays to our portfolio, which is 90% cluster flats. And in most cities, we already have the price points and the tenancy lengths that these universities are looking for compared to so much of what's been built recently, which is at much higher price points and full year occupancies.

Secondly, it is essential for universities that the partners that they work with share the same values they do on student experience with a strong welfare component that complements their own. Here again, the investments that we made in our 24/7 operating model in resident ambassadors who build great local communities in our student support framework, all of that has meant that we are at the front of the queue when the universities are looking for accommodation partners, not just another supplier of beds.

Finally, there is strong belief within the more selective universities that they will continue to be the net winners. And for them, to continue to grow students, student numbers sustainably, they need a pipeline of high-quality accommodation for the long term. So we are actively working on renewing several of our longer-term deals with universities. The alignment of our strategy with these trends is what gives us the confidence that we will remain the partner of choice for the best universities in the U.K.

So, what happens next? I thought it might be worth revisiting the structure of a typical sales cycle. Firstly, we're just four months into the current cycle. So there's a fair bit of runway ahead of us. So far, our focus has been very much on securing rebookers and undergrad returners. We will start our new customer acquisition campaign from end March going into April and May. This is really when undergrads start to act on their offer letter from universities. On nominations, universities tend to firm up their commitments with us in June once the acceptances come back from students. Our goal is, therefore, to have 87% to 90% of our inventory sold by the time we get to clearing in August. Now clearing is always massive for the undergraduate segment, between 65,000 to 70,000 students use clearing, either to find a new course or to switch their universities or both. Last year, we did nearly 6% of our sales during clearing. We expect this trend of a larger clearing to continue as we know, students are first waiting to secure the university place and then book their accommodation on the best possible offer out there.

So far, we are seeing the market stay disciplined on incentives. They tend to be usually between 2% and 4% of the value of the annual contract, but this could increase towards the end. So we are keeping a close eye on it, and we will react accordingly.

The post-graduate cycle actually does work a little bit differently. Currently, students are in the research phase, and they tend to book later in the cycle with peaks really coming through July onwards, especially for international postgraduates who also need to secure their visas. While the Unite Students portfolio was historically mostly undergraduate, now with Hello Student, we do have a new offer to take to postgraduates, and they will be a big part of our focus later in the cycle.

Talking about Hello Student, I wanted to share a little bit more on how we are integrating Hello into the Unite operating platform. As Joe said, Hello Student provides students with a very different proposition to what we do at Unite. They have a high-quality portfolio aligned to high tariff universities where they deliver an excellent experience. And we will be keeping them as a separate brand to address the returners need for a more independent living experience. That said, their sales performance was below our expectations, but we are confident that as part of our platform, we can drive significant commercial improvements.

One of the big areas where we will add value is through the scale of our international sales network. We work with 3x as many agents as they do across multiple markets. We have a dedicated sales team, many of whom are native Chinese speakers and also have a dedicated local office in China, all tools that the Hello team didn't have access to before. Additionally, we are already using our data and insights capabilities to help them make the right revenue management decisions, so where to adjust prices and tenancy lens and where to price recent refurbs so they can rebuild the base.

We're also putting in place a cross-selling program, both to retain existing returning students across both portfolios, but also try and secure some norms for some of our Hello Student properties. Some of these will have a near-term impact, but the full benefit really comes from the next sales cycle when we will also have fellow students on our technology stack.

And talking about our best-in-class operating platform, a final bit for me. I know a lot of focus right now is on our sales performance, but we can only deliver that if we deliver a great experience to our students and HE partners. And here, we've had another stellar year. Our student NPS is at a record high, and we are now rated gold by GSLI. Our higher engagement NPS is also at a record high, a reflection of how aligned we are with our university partners. And we're in the final stages of our technology upgrade program. We've already upgraded our finance, service and people platforms and the last piece of the jigsaw, which is our new booking engine and our new property management system is due to go live in the second half of this year. Once the transformation is complete, we will deliver nearly GBP 7 million of operating cost savings per annum. This, together with how students and universities feel about us, gives me the confidence that we will remain the best operating platform in the sector. And on that note, I'm going to hand over to Mike.

Thanks, Karan. I'll now take us through a review of financial performance in 2025 as well as the outlook for income and earnings in the year ahead.

We delivered like-for-like income growth of 4.9% in 2025, thanks to strong rate growth, which more than offset the reduction in occupancy. Operating costs increased by 9% on a like-for-like basis, primarily driven by higher staffing costs at property level, resulting from increases in the rural living wage and higher employers' national insurance. We also saw cost increases linked to higher council tax liabilities from vacant rooms as well as building insurance.

Property activity over the past two years added a net GBP 15 million net operating income as the impact of development completions and acquisitions more than offset income loss through disposals. The EBIT margin reduced to 65.9% as a result of lower occupancy and inflationary cost increases.

Adjusted earnings increased by 9% in the year, reflecting like-for-like growth in net operating income and investment activity. Overheads net of recurring management fees were broadly flat in the year. Adjusted earnings also included a nonrecurring fee of 0.9p on formation of our Newcastle University joint venture. Finance costs increased as a result of higher borrowings and a 30 basis point increase in the average cost of debt to 3.9%. Capitalized interest was also higher, consistent with the pickup in development activity over the period. On a per share basis, adjusted EPS increased by 2% to 47.5p, reflecting the increase in share count from the equity issue in mid-2024.

Net tangible assets per share reduced by 2% in the year to 955p. This reflected a 0.5% like-for-like revaluation deficit in the rental portfolio, where rental growth substantially offset the impact of an 11 basis point increase in the portfolio yield, which now sits at 5.2%. Our development portfolio also recorded a revaluation deficit linked to our decision to defer or exit projects. This included our TP Paddington scheme, for which we incurred a 2p write-down, having taken the decision to not proceed with the scheme on viability grounds. Fire safety CapEx, net of recoveries through our claims, saw a 3p reduction in NTA. This was in line with our expectations, and we expect a similar impact in 2026. Total accounting returns were 2.1% for the year, reflecting the change in NTA and dividends paid in the period.

We now move on to discuss the outlook for income, costs and earnings for 2026. As Karan discussed, we've seen a slower start to this year's sales cycle. This has been most impactful for nomination agreements where we expect a reduction of around 1,000 to 2,000 beds. We continue to target additional nomination agreements and have various conversations underway with university partners. Where required, we will pivot these beds to our direct let sales channel. Rental growth for our bookings in the year-to-date is 2.4%. As expected, growth has been stronger for nomination agreements and lower for direct let beds, particularly in those markets where we've reduced price to drive increased occupancy and income.

Based on current trends, we expect performance for the next academic year to be at the lower end of the guidance ranges provided at our investor event in November for occupancy of 93% to 96% and rental growth of 2% to 3%. Together, this translates to 0% to 2% expected growth in like-for-like income for the academic year, which is at the lower end of our initial guidance for 0% to 4% growth. There remains six to seven months to go in the sales cycle and significant time to influence performance. While undergraduate student numbers look encouraging, we've learned the lessons of last year and are calling the risks as we see them today. We will review guidance over the remainder of the sales cycle as we firm up university demand for nomination agreements and make progress with our direct let sales, which are more heavily weighted to the end of the sales cycle.

Cost discipline is one of our strategic priorities, and we're taking steps to rightsize our cost base to reflect a more competitive operating environment. We've identified GBP 30 million of annual cost efficiencies across the Unite and Empiric businesses, which will be executed by the end of 2026. Before the year-end, we reduced our central team costs by approximately 20%, responding to lower income and making savings where we'd invested in anticipation of stronger future growth. In addition, we're starting to realize the benefit of our investment in new technology platforms with GBP 2 million of our GBP 7 million of annual savings expected to be realized in 2026. Together, these changes will help to offset the impact of inflation, meaning we expect to hold the Unite cost base flat in 2026.

For Empiric, we're now one month into our ownership and have spent the time reviewing the synergy assumptions made at the time of our offer. Our original target assumed GBP 13.7 million of annual cost savings on a risk-adjusted basis through removal of duplicate activity and roles and the benefits of our economies of scale. We've now confirmed those cost savings, giving us the confidence to increase our annual synergy target to GBP 17 million. We expect to recognize GBP 9 million of those savings in 2026 and achieve the full run rate in 2027.

We have a strong balance sheet, and we will ensure we maintain leverage appropriate for the operational and capital intensity of our business. Net debt EBITDA is within our target range of 6x to 7x following completion of the Empiric acquisition, and we will continue to manage leverage through our disposal program so that we remain within our targets. This translates to a loan-to-value ratio of around 30% to 35% on a built-out basis. We expect a further gradual increase in our cost of debt as we refinance at higher marginal borrowing costs. We are forecasting a 40 basis point increase in the cost of debt to 4.3% in 2026 and then further increases of around 20 basis points per annum thereafter. Liquidity remains strong for new debt, and we've seen the cost of new borrowing reduced by around 25 basis points over the past year through lower rates and tighter spreads.

Joint venture capital is a key part of our capital structure and an attractive source of funding for the group. Just under half of our operational beds are held through funds, which generate recurring management fees equivalent to around 2/3 of our overheads. We will look for opportunities to leverage new third-party capital and are pleased to have agreed the disposal of St. Pancras Way to USAF. The GBP 186 million disposal will be funded through GBP 115 million of existing cash in USAF and an equity issue in USAF underwritten by Unite. The transaction helps increase USAF's exposure to London, the U.K.'s largest and most liquid PBSA market through acquisition of a prime Central London asset. For Unite, the sale allows us to remain invested in a high-quality property and earn additional management fees. It also recycles capital to fund the cost of delivering our university partnerships and committed developments. The transaction will see our stake in USAF increase to a maximum of 32%, which we then expect to reduce over time.

Our earnings guidance for 2026 reflects the outlook for income, costs and funding described on the previous pages. In November, we highlighted a 7% to 10% year-on-year reduction in EPS for Unite from a combination of factors. This included lower occupancy for existing properties and new openings, the loss of nonrecurring JV fees linked to our university partnerships, the initial earnings drag from disposals and the impact of higher funding costs. Since we issued that guidance, we've committed to an initial GBP 100 million share buyback, which will deliver modest earnings upside in 2026. However, we've also seen the outlook weakened for '26, '27 academic year income, meaning we expect earnings for the Unite business to be at the lower end of our previous guidance.

Our 41.5p to 43p adjusted EPS guidance also includes Empiric for 11 months of the financial year. As we said previously, Empiric's income was below our expectations for '25/'26 academic year, which will particularly impact earnings in the first half of '26. This impact is partly offset by increased cost synergies. However, we still expect a 1p to 1.5p reduction in EPS in the year. Thereafter, we're continuing to target earnings accretion from Empiric through an improvement in income performance and the full benefit of cost synergies from 2027. We intend to hold our dividend flat in 2026, which would mean an increase in our dividend payout ratio just under 90%. We expect this to normalize back to our existing payout ratio of 80% over time.

I'll now take you through a review of our investment activity in the property portfolio. In November, we set out our revised capital allocation framework based around 4 key priorities. And I'm pleased to say we've made good progress against each in the past three months. We formed our first two university partnerships in Newcastle and Manchester and started construction of new on-campus beds. For our off-campus developments, we reflected a more challenging leasing environment, which has seen us exit or defer future schemes. We're also committed to accelerating disposals and have today announced the sale of St. Pancras Way to USAF. This capital allocation supported our decision to launch a GBP 100 million share buyback in January.

As Joe set out earlier, we see a clear trend towards the strongest universities outperforming and growing student numbers. These are also the institutions where students see most value in the residential experience, and we see the most enduring demand for our product. Our target is to increase our alignment to high-tariff universities to 80% of our portfolio over the medium term. Our investment activity in the past year has supported this goal by exiting lower-growth markets, developing in our most supply-constrained cities and acquiring Empiric's high-quality portfolio, all of which have increased our high tariff alignment to 67%. Our future investment activity will see us focus our portfolio on fewer cities and the strongest university partners. This will be achieved through the delivery of our university partnerships and developments and by accelerating our exit from lower-growth assets and markets.

We've been delighted with our progress with university partnerships over the past year. We're now on site in Newcastle and Manchester for the delivery of 4,300 new beds. Universities recognize the value we bring through our design, planning and development expertise, which has helped to unlock these substantial projects in a difficult environment for new development. There has been significant appetite to lend to our university partnerships with Rothesay and PIMCO providing debt at borrowing costs below our initial underwriting.

As Karan mentioned, the strongest universities want more high-quality affordable accommodation on their campuses. As a trusted partner with a growing track record of on-campus deals, we have a significant opportunity to add future joint ventures. We have half a dozen live opportunities with high tariff universities, and our target is to secure one of these deals per year. We're targeting low to mid-teens unlevered IRRs for future projects with demand underpinned by university partners who have an aligned financial interest in the schemes.

I'll now turn to our off-campus developments. We delivered two new developments in 2025 in Bristol and Edinburgh totaling 1,000 beds, and we have a further two schemes under construction in London and Glasgow for delivery in the next two years. The cost to complete our committed schemes are around GBP 100 million. Our 2025 deliveries were 65% less in the year of opening. And as Karan said, these properties are leasing up well for the '26, '27 sales cycle. Our focus is on stabilizing the 2025 openings and leasing upcoming deliveries. Together, this would add GBP 27 million to net operating income from the end of 2027.

At Hawthorne House in Stratford in London, we will complete construction in June for the delivery of 719 new beds in an academy school let to the Department for Education. The project is our first development delivery subject to approvals by the building safety regulator. We recently secured the second of three gateway approvals and are fully engaged with the BSR to derisk opening in time to welcome students for the start of the '26-'27 academic year.

Our uncommitted pipeline also includes sites for an additional 2,400 beds where we own the land, for which the bulk of the value is in consented schemes in London. We will be highly disciplined over new development starts and recently took the decision to exit our TP Paddington project due to it no longer being viable. We've also deferred the development of our Freestone Island site in Bristol. We're currently exploring all options to realize value from these uncommitted projects, including outright sale as well as joint ventures where a partner would fund future CapEx.

In the wider market, we see other developers facing the same challenges around development viability. New supply of purpose-built student housing increased in 2025, but remains around half of pre-pandemic levels. Net of beds leaving the market due to obsolescence, new supply remained modest at around 1.5% of stock. High build costs and longer development programs due to the Building Safety Act gateways mean weekly rents now need to be at least GBP 230 for projects to be viable. This is above the rents in 80% of our markets and runs contrary to what Karan said about universities focusing on more affordable product. Where new supply is coming forward, it tends to be focused on more premium studio product and the small number of prime regional cities, which can support rents at these levels.

We expect new supply in 2026 at similar levels to 2025 with markets such as Birmingham, Leeds and Glasgow set to absorb the highest levels of deliveries. Looking beyond 2026, we expect to see a material reduction in new supply as indicated by fewer new planning submissions for PBSA schemes over the past year. We also see the same viability challenges impacting development of build-to-rent, which has become a source of competition at the premium end of the student market.

We saw good levels of investment activity in the student housing market during 2025 with just over GBP 4 billion of assets traded. Interestingly, we've seen a change in the makeup of transactions, which have shifted from funding of new development towards purchases of standing stock. This reflects the viability challenge for new development in the current market. Institutional investors remain active with the likes of AustralianSuper, QuadReal, L&G and KKR, all deploying capital in 2025. After a year of softer occupancy, leasing performance for the '26, '27 academic year will be key to pricing for upcoming transactions. We're targeting GBP 300 million to GBP 400 million of disposals in 2026 from a combination of lower growth or mature assets that have made a good start through the sale of St. Pancras Way. We will be bringing further assets to market in the coming months and have identified around GBP 100 million of future disposals from the empiric portfolio.

Positively, we're seeing good interest from value-add investors for portfolios at affordable rents valued significantly below replacement cost. We expect further disposals to follow the conclusion of the '26-'27 sales cycle in the autumn. This reflects the importance of current leasing performance as well as the time required to complete technical due diligence linked to fire safety.

We are fully focused on deploying capital where it delivers the strongest risk-adjusted returns. This was demonstrated in January through the launch of a GBP 100 million share buyback program to return surplus capital to shareholders. This was funded through reduced off-campus development. Looking ahead, we expect to generate around GBP 100 million to GBP 200 million per annum of surplus capital as we execute on our disposal plan and development CapEx reduces over time.

Share buybacks and university partnerships remain the best uses of our capital, and we will decide how and where we invest based on the opportunities we have available to us. New investment must demonstrate clear accretion to both earnings and net tangible assets, and we will not compromise on maintaining a robust balance sheet. This means future investment will need to be funded out of disposal proceeds.

And with that, I'll hand you back to Joe.

Thanks, Mike. So, we set out a clear plan in November, and we've made a good start. We know that we've got a lot to do, and it will take some time, but we are really clear on our near-term priorities. We will be relentless in our focus on sales from both nominations and direct let across both Unite and Hello Student. We will deliver further cost efficiencies from the delivery of our tech platform, complete the integration of Empiric by the end of the year, securing additional synergies and drive earnings accretion from our sales platform.

We've announced the sale of an asset to USAF and launched a portfolio that supports the portfolio repositioning, and we will be pragmatic and agile in the delivery of that. And we will be disciplined in our approach to allocating capital to new development, prioritizing nominations and joint ventures, and we will consider further share buybacks as we make progress with disposals.

We remain positive on the sector and believe that the fundamentals remain strong. U.K. higher education is an amazing asset to this country. It is globally recognized. There is a more stable policy environment and the strongest universities are growing and targeting further growth. We're confident in our platform and our ability to integrate and drive value from the Empiric acquisition and our university relationships, and we are underway with our portfolio repositioning and seeing new supply slowing.

We are pleased with the progress that we're making, and we believe that we are well positioned for the future and building momentum in our performance.

On that, I'm going to open up for some Q&A. So I suggest we start in the room, and then we can go online. I got a couple of mics at the back.

Callum Marley from Kolytics. Two questions. First one on Empiric. So, Empiric occupancy came in weaker than expected. And Joe, I think you mentioned that they failed to pivot away from their core postgraduate market. Was this priced into your original offer? And I guess, was this a foreseeable miss?

So we did reduce our price because we saw that there was weakness in their sales, but they still came in below that. So that was a disappointment in terms of where they've ended up. And I think that was in part, as I say, because of that lack of failure to effectively reposition and also just from some of the market changes that we saw across our own portfolio.

Okay. Then the second one, why should investors have confidence that today's guidance represents a floor rather than another step down?

Look, I think that we set out in November that the -- effectively the fundamentals of our business that we believe that we should be focused in on those high-tariff universities that we have seen changes in the marketplace coming from the move to more students staying at home and the growth or the fall in international postgraduates and that repositioning the portfolio will take some time.

We've also been encouraged by the applications data that has come in for the next academic year, both from U.K. undergraduates and from international undergraduates. And that gives us confidence that we will continue to see that high tariff -- that growth of high tariff universities, but it will take us some time to reposition the portfolio.

It's Paul May from Barclays. Just following on from that last one. I think you mentioned a few times in the presentation about making good progress since November, but yet you announced another profit warning, which is your third in four months. What confidence can you give us that you have full control and understanding of the market? You highlight demand should be stronger year-on-year and yet you're guiding to the bottom end of operational expectations. There was stronger demand last year and yet the market suffered from operational challenges. How do we know that this is not the start of a multiyear rebasing in occupancy and rate growth given the supply-demand dynamic appears to have broken.

Yes. Universities are taking a more cautious approach, and we've seen that. And the current occupancy position is driven primarily by that shortfall in nominations agreements. I think we are encouraged by the quality and number of conversations we've had since the release of that applications data. But that's why we are reducing our occupancy guidance to the lower end of our range. We set out in November 93% to 96%, and we are saying that given that current position that we are saying that we will be towards that lower end of the range. The reduction in the earnings guidance is primarily because of the Empiric acquisition, the 1p to 1.5p, and that's because of their sales performance before the business was in our control.

We fundamentally, and hopefully, we set out our belief of why we see the longer-term performance of the sector and aligning to the high-tariff universities where we have seen strong growth in numbers. We've seen a return in growth or growing numbers of undergraduate students as well. But fundamentally, that's why we believe that we will be able to return to that core occupancy back to where we've historically been.

So I think in November, you also mentioned an expectation to bounce back to 97% plus occupancy and inflation plus rental growth from academic year '27, '28. I assume this is no longer expected.

Yes. I think the delivery of that to 97% was when we repositioned the portfolio. I'm not sure that we sort of believe that will all be done by '27, '28. I think that we do need to go through that portfolio repositioning. And we've highlighted GBP 300 million to GBP 400 million of sales this year. We've launched the portfolio.

As I say, we will be pragmatic in the delivery of that, and we will have to go again into '27 as well. So I think the delivery of that is around the alignment point and that we will need to effectively get back to that focus or greater focus on high tariff to enable us to get to that levels of occupancy.

A very quick one. then share count you're using for EPS guidance just given the issuances and other things.

Yes. What I can say, Paul, is there's a few moving parts in the share count, clearly. So, the Empiric acquisition completed at the end of January. So, essentially, you have 11 months of own shares. The other variable is clearly the share buyback. We've talked about deploying GBP 100 million over the course of essentially the first half of the year. So you should probably assume around nine months of those shares being out of the share count. So clearly I can't give you a precise number, but hopefully, that gives you the key moving parts.

Sorry, last one on Pancras Way. Obviously, sold to a related party, one could argue. Why did you decide to sell to USAF? Was this a competitive process? If so, what was the price of the underbidder? And how much was the asset written down in '25 versus the portfolio?

Yes. So it's probably fair to say for context. So USAF is a fund in which we established it over 20 years ago. We remain a big investor. We've got a 30% stake in the fund. And clearly, these are investors who want to -- they see value in the student accommodation sector and they want to be invested there. We've been talking to USAF over the course of the last two years because they've made a number of disposals, which have freed up capital. So the fund has had capital. We've historically sold into the fund and generally, that's helped us recycle capital to fund things like our development pipeline.

We knew USAF had a requirement to grow in London. It's about 15% of their portfolio, and they'd like to upweight. And we discussed the number of assets with them. That was on a bilateral basis, but it's arm's length. So the way decision-making works in USAF is for them to approve a transaction, there's a vote which is outside of -- Unite is excluded from that vote essentially.

In terms of the valuation of that asset, we saw the yields move out by about 15 basis points over the course of last year, which net of the rental growth meant it was modestly up in value terms, but that's pretty consistent with what we saw in the broad market. But it's fair to say this was an arm's length negotiated transaction. We're pleased to sell it to USAF, and I think USA are pleased to have acquired it from us.

Just wondering if you can talk to the markets that you had to execute pricing adjustments in and whether you expect any other markets, I guess, with oncoming supply to be impacted there.

I can take that. So I think as we've set out in the Capital Markets Day, there were three cities where we had the most challenged performance, Nottingham, Leicester and Sheffield. So in those three cities, we did make pricing adjustments. And we've done a combination of adjusting the headline price, but also adjusting tenancy length to marry to the needs of the universities. So where we may have historically have had 51 weeks, we've gone to some of those 44 weeks as well.

In a lot of the other cities, we've done tactical price changes. I don't think we've done strategic citywide price changes. So individual properties. A good example of that is the 2 new properties that we launched last year, Avon Point in Bristol and Burnet in Edinburgh. We've adjusted some of the pricing and tenancy lens there as well to rebuild the base and secure the rebookers as well.

Apart from that, it's different in different cities, but those are the key ones where we've made adjustments so far. For the rest of the cycle, obviously, we will see how the performance varies and then depending on where we see demand coming or softening, we will make more adjustments.

Also, just with the direct let, I guess, underperforming nomination agreements, how, I guess, under-rented are those nomination agreements? And does that come up in your discussions with universities that nominations are achieving a higher rental growth than the market?

Yes. Rebecca, it varies by agreement clearly. But sort of broadly speaking, they tend to be sort of around 10% under-rented on an annual contract basis versus direct let. However, what we get with those agreements is clearly visibility and security of income. So there are some benefits.

One of the other things we think about the nomination agreements beyond the income security are the savings we make in cost of acquisition as well. So they can be something in the order of 3% to 5% of booking for a direct let sale. So we tend to think about these things in the round. Yes, we hope to capture reversion, but we're also looking to grow that nominations space, as Joe discussed.

Yes. And then just on Empiric's letting performance, you expect it to be in line with the direct portfolio. Just wondering if you can give some, I guess, some numbers around that. And then also just given the current slower leasing cycle, just wondering if you can talk to, I guess, because they have that higher weighting towards tariff universities, what's really going on here? Yes.

Yes. So if you look at the Unite guidance for this year, we've talked about being at the lower end of the 93% to 96% and nomination agreements being probably around the mid-50s as the share of beds. What you can imply from that is our direct let occupancy would be in the mid- to high 80s, and we think Empiric's portfolio will be in a similar place.

And I think your second question, Rebecca was on high tariff and how that's performing for them. Fundamentally, those institutions have performed well and their properties are located in strong micro locations. I think the impact on performance has been around that post-graduate intake. So we often talk about high tariff in regards to the undergraduate data, which is trending very positively. However, what we have seen is softness in post-graduate demand and particularly a reduction in bookings from China for Empiric.

It's Tom Musson at Berenberg. Just a question on the portfolio valuation. Am I right in thinking that in this period, the valuers will have made a specific deduction to the value in some places due to lower occupancy? Or is the portfolio still valued based on assumption of full occupancy?

Yes. So, yes, Tom, you're right. When we have buildings that are under-occupied versus, say, a standard 97% occupancy assumption and valuation, what the valuers will do is make a pound per pound reduction for the shortfall in that income for the next 12 months. However, what they will also reflect and they have reflected in the Q4 valuations, in some cases, are reductions in expected rents because of the lower occupancy performance. So what you will have seen in the Q4 valuations is they've taken account of the sales outlook that we've reflected in our guidance for the '26, '27 academic year.

In pound million terms, are you able to sort of say how much that is?

The pound per pound reduction in the income, Tom. It would essentially be that gap. So if we're saying we were 95.2% occupied for the academic year, it would essentially be the 1.8% occupancy reduction relative to the value.

All right. And then just quickly on software implementation costs. You mentioned the upgrade program will complete next year. How much more cost should we assume for '26? Anything else beyond that?

We have about GBP 10 million to go, Tom.

Ana Escalante from Morgan Stanley. One question on the nomination agreements because in January, you reported 56%, if I'm not mistaken, of reservations coming from nominations, and that has gone down to 55% now. So I was wondering why -- or what's the reason behind that reduction? And if that 55% that you are reporting today is totally secured for academic year '26, '27?

Yes, I can take that question. So the reason for why it's sort of gone down since the January update is we were still in the middle of the conversation with universities on what volume they were going to take. And what we have seen is that we've lost very few accounts in full. What we have seen is where universities may have taken 1,500 beds, they've sort of said we're going to take 1,300, and we're going to guarantee you 1,300, but we need to see where the applications are going to be before we can commit to the next 200.

So they've sort of taken the top off a little bit, and that's kind of what has led to the number going down from 56 to 55. So it's a lot of small little adjustments rather than one or two big accounts that we have sort of lost as well.

Sorry, I missed the second part of your question.

Yes. Of that 55% that you've currently reported, how much do you think is 100% secured.

Yes. So we're pretty confident on the 55% that's in there right now. So they represent either contracts that we have already signed. Most of them are multiyear agreements. So they are pretty secure. We also have a pipeline of further conversations, which are what we are hoping will get us the 1 to 2 points of additional occupancy on that 55% right now.

And then the discussions that you're having with universities are mostly around what they're saying, right, that they don't want to commit on certain number of beds? Or are they, to some extent, some price sensitive and therefore, they are demanding for some price adjustments?

It is very much the former, which is do we have confidence that we will have the student numbers securing -- seeking accommodation. I think overall, they are actually very happy with our relative price points. They are happy with the rate of rental growth that we've got in there. And historically, we've been quite prudent with what we've sort of pushed through as rental growth as well. I think they've been quite appreciative of the fact that we've adjusted tenancy lengths to reflect where they might need a 41-week or a 44-week rather than last year, we might have sold that as a 51 week.

So we have a lot of positive commentary from them around our flexibility and not really a lot of issues around the headline price right now. I think ultimately, what they want to just get confidence on is the application that they're seeing, which is more positive than initially may have thought is actually that turning into acceptances, which really does happen through May and June.

It's Max Nimmo from Deutsche Numis. Just on the integration with Empiric, I think you were talking about kind of technologically bringing that together for the next sales cycle. Just how confident are you on that in order to get that kind of sales rate back up? Is it sort of a plug and play? And kind of related to that, you mentioned also about the build-to-rent risk as well in the market, particularly in some markets where there's quite a lot of new supply, and we're hearing of build-to-rent assets with 40% to 50% of students in them. Just how you see that risk versus the kind of the rent reform bill and things like that.

Yes. So, Max, on the first point, I wish it was plug and play, but I think from -- I think anybody -- any of us who ever been in a technology upgrade knows that it takes the complications and the surprise as you get through your deployment.

I think the advantage for the Empiric team coming over to the Unite platforms is that we are actually going through that process within the Unite properties first. So we've already transitioned to our new service platform. We've implemented Fusion in finance. So a lot of the core platforms that they'll be coming on to, we have already tested, embedded within the Unite system. So we know how to move them across platforms.

The big unknown for us right now is our property management and booking engine because we're in the final stages of its design and testing and the testing really starts in earnest in April. So that's probably the unknown where if that goes well for the United systems, United Properties, then actually the process to bring an Empiric on would be just another group of properties. But again, I think it -- I need probably the next three to six months to see how the testing goes before I can give you the confidence whether it will be a plug and play. But the intent is very much to have it ready in time for the sales cycle for the next year.

I think on your second question with build-to-rent risk, we have seen build-to-rent emerge as a competitor, especially for international students and especially for returners who are looking for that more independent living experience. That's part of the reason why we were quite excited by the Empiric portfolio, which offers a very different proposition. There will be more risk within build-to-rent because they will be -- they will not have the benefits of the assured tenancies that we will still have within the student portfolio. So we think there is more volume that we can shift from the HMO market where if you're a landlord, it's yet another challenge that you have to deal with. So we're hoping the supply side does become a little bit better for that second and third year in the returning market, which will benefit Empiric as well.

Not sure we'll allow a second go, Paul.

Apologies. Just had one which came up, I think, at the Capital Markets Day, which you mentioned about a reduction in utilization of space through the year. Just wondered if you're seeing that in the continuation in the direct let in terms of shorter lease cycle.

We are seeing a slight shortening in lease duration, Paul, and that's reflected in the price guidance we give. So when we said being at the lower end of 2% to 3%, that's annual contract value. So that's the combination of weekly rate and the length of tenancy. We saw that length of tenancy tick up for a number of years, and we saw it slightly reduced last year, and we're seeing a similar sort of attrition in that this year. So it's reflected in the guidance, but it's fair to say that probably that affordability trend means that we're seeing those contracts get slightly shorter.

And part of that is driven by the shift of international postgrad towards undergraduates and generally, the undergraduates want a shorter tenancy length than the postgrads.

I think you mentioned some leasing per term. Have you seen an increase in that as well?

Not really.

Not massively, Paul. But we are actually quite good at backfilling our rooms where we do have either vacancies or somebody needs to leave early because of any issues. We've done fairly well. We have seen some jam starts come through as well as universities have started to add courses in that particular period as well. It's something that we're actually fairly good at. It's never been a huge part of our business, that in summer income. But as we have shorter tenancies, we've actually bulked up that business development muscle.

And it's fair to say, Paul, when you end up selling a first semester, let's say, it's generally because you might have vacancy. So we haven't really started doing that yet. It's focused on annual contract values. As you get towards the end of the cycle, you may pivot towards selling some of those shorter tenancies as well.

And very last one. I mean, we've obviously seen quite a share price decline over the last basically a year or six months, another decline today. Just wondering, should we expect to see direct purchases of shares going up seeing your confidence in the future has increased or deferring a part of your salary into share options given that confidence?

Yes. I think we've already increased our shares that we've been buying, and there is also a bonus deferral element to our remuneration. So yes, it's something that we actually consider. I think that along with the share buyback program that we've announced is sort of hopefully demonstrating the commitment and confidence that we've got in the value of the business going forward.

Mike, I think we've got a few coming online. Do you want to pick up any that we haven't sort of covered?

Yes. So I'll start with a couple from Marc Mozzi at Bank of America. First one, are university partnerships included in your earnings guidance?

Yes, they are. It's fair to say though that we're in the development stage. So it's just a case of the CapEx coming through and those beds will become operational in future years.

Marc then had a separate one on what is the initial yield we should expect for your disposals?

It will be a blend of different types of disposals. We've clearly made the disposal to USAF we've announced today. We do think that the yield on disposals will probably be in the order of 5.5% to 6%, albeit some will be high yielding, some will be low yielding.

I'll then turn to Denese Newton at Stifel. What is the likely impact of your price matching offer where early bookers will still get the best price?

Yes, I can take that. So any time that we are considering a price reduction from what we have already launched, we do look at what's the actual net impact of that from -- in terms of incremental revenue it can drive net of what we have to give back to students, be it on the incentive or the headline price as well. In most cases, it's not massively significant. So if you're offering a GBP 250 incentive and there's 100 existing students, that's GBP 25,000 that we'll be doing.

So, so far, it's not material, but it is an active consideration when we look at price reductions because we want to make sure that we are making net-net more cash rather than just trying to drive pure occupancy in itself.

Got one from Andres Toome at Green Street. How do you perceive the risk of missing income for 2026 new openings? Are you able to fully let new schemes open in 2025?

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I can take that. So we've got one scheme coming up in London, which is Hawthorn House. 51% of that building is already nominated with the London university, which is a great sort of base to come from. We've also had interest in that asset from another high tariff university in London, which if we're able to secure, which we'll know in the next few weeks, I think that will then put that property on the track of full occupancy. It's a great asset in Stratford, really well-priced rents as well. So -- and sort of taken the lessons from last year around what we need to do to drive initial occupancy, initial pricing incentives, et cetera. So right now, we are confident that we can -- on the back of the nominations that we should be in a good position.

We've then got a couple of questions that I'll combine on build-to-rent. How is your build-to-rent strategy progressing? Have you thought about repurposing PBSA into BTR where you may be facing lower occupancy?

Yes. So we've got the one asset build-to-rent in Stratford. I think just given the current capital position of the business, we won't be looking to grow and add to that portfolio. Indeed, we'll probably add that one to our overall disposal program either in '26 or '27. I think in terms of repurposing student accommodation to build-to-rent, that does come with some real complexities around affordable housing and change of use.

So I think where we have more flexible consents, we may look to open up lettings and actually, the Empiric portfolio plays into that, but it's not something that just given the overall demand and the outlook that we're spending too much time on at this moment.

I think got one from Roy Kulter at ABN AMRO. Historically, you've guided to a total accounting return target of 8% to 10%, excluding you movements. given the current environment, do you still expect to hit that figure?

So I think we've laid out the sort of the key elements really that sort of go in to give you the total accounting return. Generally, in any given year, about half of that 8% to 10% comes from recurring earnings. You can clearly see the guidance for this year, which is for a slight reduction in earnings, but you would still expect about 4.5% of return on the NAV from that recurring earnings growth. Thereafter, the valuation impact will be a function of the rental growth we achieve. We've given you a sense of how we're trending and clearly, the property yield movements that may or may not happen, but we don't guide on those. I think that's it.

Great. I don't know if we've got any calls on the -- questions on the calls.

Great. Well, thank you all for coming and joining us this morning. Thank you for all your questions, and look forward to seeing you all.

Good morning, everybody, and thank you for taking the time to join the call. I'm joined here this morning by our CFO, Mike Burt; and COO, Karan Khanna. Hopefully, you've had time to read our announcement that was out this morning. And as an intro to this call, I just want to provide a bit more color on the following 3 areas: our reservations progress, our capital allocation framework and the launch of the share buyback program and the Q4 valuations. We'll then open up for Q&A.

Before we get going, I think it is worth just stating that we're only 6 weeks on since the investor event, and we are still early in the sales cycle. However, we are reiterating the guidance we set out at our investor event in November, and we will come back at our prelims in February, as usual, to provide detailed earnings guidance for 2026, and this will include the impact of Empiric.

So looking at reservations progress, reservations for the next academic year are currently at 64%. Whilst this is below the 67% at the same time last year, as I say, it is still very early in the sales cycle, and we remain on track to achieve the 93% to 96% occupancy and 2% to 3% rental growth that we provided 6 weeks ago. UCAS applications data will be out at the end of this month, and it is expected again to be positive based on demographic growth and continuing the trend that we saw at the October deadline, which saw applications up 7%.

High and mid-tariff universities are actively targeting more U.K. students, and so we expect there to be more students in our markets than there was last year. Direct-let sales have continued in line with last year and represent 8% of total beds sold, and we are continuing to be proactive with our sales and marketing approach, as Karan outlined in November. Encouragingly, we are ahead of last year in some of the weaker markets, although, as I say, there remains some way to go in the sales cycle.

Universities have taken a more cautious approach at this stage of the cycle, and that is what they're telling us until they get a better view on their numbers, and so delaying or pausing renewals and take-up of beds under nominations agreements, and this currently sits at 56%. And we're seeing the impact of the financial pressures on universities. They are less willing to take on financial risk through those nominations before the UCAS application window is closed at the end of January. They just don't want to be left with void rooms that they have to pay for.

And based on our discussions with the universities, and it is fairly typical for this stage of the cycle, we expect to see further demand for beds over the next few months, as they firm up on their numbers. And as I mentioned, we will provide updates as usual in late February, and then, again in early April, and we will be more proactive with our guidance ranges than we were last year.

Moving on to capital allocation. We set out the revised capital allocation framework in November, and this will see us transition to being a net seller as our disposals accelerate and our development activity becomes more selective. Where we have surplus capital, this will be deployed into university partnerships and share buybacks. Consistent with that approach, we are today launching a share buyback program of up to GBP 100 million. This reflects our confidence in Unite's long-term return prospects and our focus on shareholder value.

This will be funded by the capital from deferred development activity while maintaining the strength of our balance sheet. And in order to maximize returns, we have taken the decision to defer the delivery of our Freestone Island scheme in Bristol and have also decided not to proceed with the TP Paddington scheme that now has planning. And as we set out 6 weeks ago, we are targeting GBP 300 million to GBP 400 million of disposals in '26, and we are now starting to execute against that plan.

This revolves around 3 strands. First, we're exploring the sale of assets to our JVs. Secondly, we are preparing a portfolio to bring to market in the next few weeks. And thirdly, we are engaging with buyers for potential single asset sales.

As I'm sure you're aware, there are several portfolios on the market at the moment more broadly, but assets are trading. And as you know, we have a good track record of selling assets, and we will continue to push against this target throughout the year. We expect to generate further surplus capital as we make progress with these disposals, and we will look to invest where we see the strongest risk-adjusted returns.

On valuations, as we flagged a few weeks ago, valuations for the quarter reflect lower-than-anticipated rental growth and a slight softening of yields. USAF has seen a 4 basis points yield increase and a decline of 0.6% in the quarter, up 0.8% in the year. LSAV has seen slightly stronger rental growth, albeit offset by 16 basis points of yield compression, leading to a decline of 1.3% in the quarter, up 0.6% in the year. Based on our conversation with the valuers, we expect the group's property yields to be broadly in line with the increase seen across the USAF portfolio.

So just to finish and before I open up to Q&A, last November, we set out a clear set of strategic priorities, which were focused around our operational excellence and capital allocation. And I remain excited about the opportunities ahead of us, as we start to execute against the repositioning of our portfolio through that accelerated disposal program, which will enable us to return to 97% occupancy with above inflation rental growth, and we will continue to implement a lean cost structure.

We will deliver the Empiric business plan and continue to focus on securing one new university joint venture each year. And as we demonstrated today, preparing to deploy surplus capital to share buybacks. And I believe that delivering against these priorities will lead to a meaningful impact on our performance.

So now, I'm happy to open up to Q&A. So perhaps Laura, our operator, can first go to the conference call to take any questions.

[Operator Instructions] We'll now take our first question from Callum Marley of Kolytics.

Just one. On the yield expansion seen in the London assets, I think 16 basis points in the quarter, do you believe these are now fairly priced? Or is further outward pressure on yields likely in 2022?

Callum, yes, I think it's fair to say on the yield movements we saw in Q4, not a lot traded. And really, it's a sort of a sense of sentiment from valuers in terms of we've seen clearly slightly weaker occupancy for the '25-'26 academic year, and they've moved out yields in London and in other markets as a result.

London remains one of our strongest markets operationally. And generally, what we see when we speak to investors is there is a significant amount of capital still targeting London. Portfolios in the market, which include London assets generally have most traction as well. So clearly, the values will need to reflect whatever transacts in the market over the next 12 months. But generally, we still see a good bit on London.

And then maybe just one quick extra one. How do you expect LTV to trend going into next year based on the valuations and share buybacks?

Yes. We can't give you a steer on valuations for next year, Callum. But in terms of net debt, the capital allocation framework sets out that we would be selling those GBP 300 million to GBP 400 million of assets in next year. Our sort of capital investment in terms of the university partnerships and developments is about GBP 150 million to GBP 200 million per annum. And then, as we've said, where we have surplus capital, we'll be reinvesting that. So I think it's fair to assume that net debt will be broadly stable, and that hopefully gives you a steer in terms of how the LTV might trend.

And we'll now take our next question from Andres Toome of Green Street.

Just firstly, just wondering that 300 basis points difference in university nomination agreements, how many actual university agreements does that equate to?

Yes. So we have agreements with over 60 universities. And within those agreements, the -- generally, we were speaking to universities about the take-up that they will have each year. We have about 12% of our beds are renewing under single year or maturing longer-term agreements. So it's probably around a dozen universities where we've seen universities amending or deferring the confirmation of their overall numbers.

On the flip side, we've also seen a few new universities come to us for beds. And so it's fairly normal at this time of year that we're having lots of conversations with all of our university partners just to firm up those numbers. But as I said, that they are just taking a slightly more cautious approach this year, which we feel is being driven by those financial pressures that they are feeling and wanting to ensure that they are not left with a financial liability based on having overbooked too many rooms.

And then my second question is around supply. And of course, you are adjusting your pipeline ambitions. But how are you seeing new construction starts in the broader market evolving after a softer leasing year? Is the behavior of other market participants similar to yours?

Andres, I think we're seeing, akin to our behavior, people are finding it more difficult to make schemes work and stack up. I think we're still expecting to see a similar level of supply in 2026, as we did in 2025. However, our sense is you will start to see a reduction in that level of deliveries from 2027 onwards. Clearly, when you look at our pipeline, where we're committed in the medium term, is those on-campus university partnerships where the schemes are unlocked through the relationships with universities. We do think viability off-campus is a lot harder though, and that will see supply reduce.

And then any sort of indication of what's the lending market for PBSA like at the moment? Have spreads moved at all? Or any sort of indication on that would be helpful.

Yes. So we've been in the market more on the private credit side in recent months with our university partnerships, but it's still a sort of pretty good barometer of credit appetite for PBSA, and lender appetite is still there and is still very healthy. So we haven't really seen any change in lender behavior, Andres. And I think it's fair to say spreads are -- have been pretty stable over the last sort of 3 to 6 months. And probably on a sort of 12-month view, they probably come in about 25 basis points.

And we'll now take our next question from Tom Musson of Berenberg.

I appreciate the updated 2026 guidance is going to come with the results later in February. But can you just clarify whether the 7% to 10% reduction in EPS that you did outline at the Capital Markets event reflected the year-end restructuring and the additional cost-saving opportunities that you're discussing today or whether that's incremental?

And then a second one, just a short one on the buyback, if we assume that GBP 100 million ends up being the number, over what sort of time horizon would you expect to be able to execute on that?

Tom, so in terms of the cost savings -- so the guidance we gave on earnings at the November Capital Markets Day, that included our guidance for costs to be flat in 2026 overall versus 2025. And within that, that assumes the savings in our central staff costs that we're flagging in the statement today.

Then, on your second point in terms of the time to deliver the buyback, we expect it to take between 3 to 6 months.

We have no further questions in the conference call. I'll now hand over for webcast questions.

Great. Thanks, Laura. I think we've got one question on the webcast.

We've got one question from Veronique Meertens at Kempen. You mentioned that you're in discussions with universities, but there's some hesitance around uncertainty on application numbers at this stage. Is there also a discussion about rent levels with universities regarding these nomination agreements that you can comment on?

Yes. The discussions with universities do revolve around both the volume of beds and also price. With the multiyear agreements, that is a fairly procedural discussion with the in-built annual inflators being reflected, and that is supporting rental growth of around 3% to 4% on those agreements where we have them. For single-year deals, there tends to be more of a commercial negotiation around pricing and what is being seen in the market. But we're not seeing any significant pressure from universities to reduce prices, and they are comfortable with the sorts of rental growth that we're seeing elsewhere.

Probably the one pressure that we are seeing, and particularly given universities' greater focus on U.K. undergraduates, is for some of those newer contracts to be shorter tenancy length, so going from 51 weeks to 44 weeks in some of our strongest markets. So a little bit on tenancy length as universities want to focus more on U.K. students, but that is on a relatively small proportion of those additional beds.

We've got one more question on the webcast. This is from [ Joe Mortlock ] at [ Millway Partnership ]. Why do you consider a share buyback the most efficient use of capital at this time?

Thanks for the question, Joe. So as we set out at our investor event at the end of last year, we said that we would deploy surplus capital into our university joint ventures and share buybacks. With the university joint ventures, that's going to be led by opportunities. We would like to add another one of those university joint ventures during this year, but we're not at the point of being able to announce anything at this stage. And having made some surplus capital available through that deferral of development and the headroom in our leverage ratios, share buybacks today are the best use of capital on a risk-adjusted basis.

Great. Well, thank you all. I think that picks up all of the questions on the webcast, and therefore, concludes the call. So thank you all for joining, and we look forward to catching up soon.

Thank you all for coming along today. And as I say, for being so prompt. It's great to have so many of you in the room, and I know that there's plenty of people joining us on the line as well. So thank you all for taking the time. I know it's a busy day after events of yesterday as well. So thank you for such a strong turnout today.

I just want to start by reminding us that U.K. higher education is one of our leading sectors in the U.K. It's recognized globally as one of the best places to come and study from across the world, and we believe that it will remain so. Demand for university education is enduring and the jobs market still needs highly trained young minds. And Unite is a great business. We're a purpose-led organization with a 30-year track record. We've built relationships and partnerships with leading universities. Our operating platform enables us to deliver great service at sensible prices. And we're lucky enough to be able to look after students at a really important part of their lives and help them get the most out of their time at university. We've got a great team who are committed and invested to work through the challenges that we have in front of us.

We're disappointed by the '25-'26 sales cycle and the impact that it's had on FY '26 numbers with a guidance for a reduction in earnings next year, but we've reflected on what we can do differently, and we'll set out a plan today of how we can return to growth. And it has been a tough few weeks, but over the years, we faced challenges before, and we've built resilience. Through the global financial crisis or the introduction of fees in 2012 and even through COVID, we face those challenges, and we've emerged stronger. We've done that by staying agile, focusing on what's in our control and taking clear decisive action. And today is no different. As an operational business, we can pivot and adapt and we'll take proactive actions on our sales, our costs, disposals and capital allocation, which we'll talk through today to position ourselves for success, and this will get us back to growth.

Before we get going, I just want you to hear from a couple of others in the sector about the condition of high education and how we are playing into it. So the short video I'll show you has got Professor Malcolm Press, who is Chair of Universities U.K., the leading membership group for University. U.K. -- for U.K. universities and also he's Vice Chancellor for Manchester University and also Nick Hillman, who's the Director of the Higher Education Policy Institute.

[Presentation]

Great. Hope you found that interesting. Very helpful to have partners like Malcolm seeing the value that we can bring and help the growth of their organization. So I'll just take you through the outline for the day, I'll start with an overview of the sector. We'll then move on to a look back to the lettings performance in '25-'26 and Karen will share his thoughts and approach for the '26-'27 sales cycle, which kicked off just 3 or 4 weeks ago. And then Mike will talk us through what this means for our financial performance and our capital allocation framework. And I'll come back to you at the end to pick up with where we are on empiric and pull the rest of the presentation together before opening up for some Q&A.

The structural drivers on which we've built our business remain intact. As you've heard, there are world-class universities in the U.K. and enduring demand from both U.K. and international students. And that's been driven by the demographic growth, which keeps going for the next 5 years and growing wealth globally. There is still a shortage of housing across the U.K. Whilst there are pockets of new supply in our sector, HMO regulation and development viability mean that this will continue to limit new supply.

A number of headwinds that we have been tracking have come faster and stronger this year than we had expected. And this means that the overall take-up of PBSA is down, and our occupancies end up 2 points down at 95% and we know that we could have been more proactive in some places. However, the vast majority of our cities have performed very well, we're at 97% occupancy in 19 of our 22 cities on average. And really, the shortfall has come down to a significant underperformance in 3 cities and a weaker lease-up on new buildings and major refurbishments, particularly where there's been new supply in those cities.

And what sits behind that is the fact that there are fewer domestic students have booked with us this year, and that is particularly at low and mid-tariff universities, and whilst the international recovery has not been as fast as we had expected, actually, our international sales are flat year-over-year. So we've learned from all of this, and we are going to take a different approach for this year's sales cycle. As I say, Karan will talk us through that shortly.

We know that we need to be proactive, and we know that we need to change to say we've been here before, and we are confident that we can do it again. We've got the best operating platform in the sector, and we can flex our offer. We will push harder into nominations agreements and rebookers, and we will use price in lower occupancy cities to grow total income. We will be ruthless on costs. We have already started the restructuring program underway, and we will use our new technology platform to drive and reduce costs further through '26 and '27. We will accelerate disposals and we also use our funds and third-party capital, and we have optionality over much of our development pipeline, and this will be reviewed given our current cost of capital.

Whilst our earnings will go backwards next year, we will plan to get back to growth for 2027 and beyond by repositioning our portfolio to make sure we are aligned to the strongest universities, getting back to 97% occupancy on our target portfolio and driving above inflation rental growth. We will use Empiric as a springboard to grow our share over the returners market, and we are delighted to have got the CMA clearance earlier today. We will focus our capital on university joint ventures and nominations, and we will be disciplined with our capital as we realize disposals, considering share buybacks, whilst maintaining the strength of our balance sheet.

We're confident that we can return to growth. We've got a best-in-class platform and a highly capable team who can deliver the change that we need. There are lots of questions about the HE sector right now. And as you heard from Malcolm and Nick, we believe that many of these are being overdone. The U.K. has a world-class globally accessible higher education sector. It is renowned the world over with the 17 of the top 100 universities, educating over 2 million young minds every year with world-class research and spinouts that drive growth. And high education makes a huge contribution to the U.K. economy and is now the fourth or fifth largest export that we have. It generates soft power as well. There are 58 serving world leaders who are educated here in the U.K. And whilst the U.S., Canada and Australia are all making it harder for international students, there is emerging competition from other nations particularly in Asia. In the budget yesterday, it was confirmed that a levy of GBP 925 will be charged on international students, and this will be used to fund the reintroduction of maintenance grants the students from lowest income households. And given the global competition that I just talked about, universities in the main will seek to absorb these costs.

Young people still want to go to university. 41% of 18-year-olds applied to go to University this year at or around record levels. 84% of parents and grandparents want their children to go to university and the residential element is a core part of the experience of going to university for so many. Overall, the degree is estimated to be worth between GBP 200,000 to GBP 300,000 as after tax and student loan repayments relative to what a graduate would have earned if they had not gone to university. And these premiums are weighted towards the higher universities. And actually, the average masks the fact that 20% of students don't generate a premium at all, and this is generally at those weaker universities.

Graduate employment is soft at the moment, but this is in the context of a soft employment market overall. And yes, AI cannot be ignored, but AI will not replace all jobs. However, it is true that people who know how to use AI will replace people who do not. And universities are responding and changing the way that they educate, and in a world where more skills are required, a high-quality university degree will be more valuable than ever.

The government is supportive of higher education. They see it as a fundamental pillar of the industrial strategy, as Malcolm Press said, and in the recent white paper, it is clear that they are looking for change from the sector. They are getting tougher on universities. They're tougher on their approach to quality, value for money, finances and immigration, but they're not looking to reduce the numbers of international students, but they want to ensure that they are of the right quality to come and study here and linking them particularly to better universities. They will continue to support teaching universities that do a great job educating delivering skills and employment outcomes for young people. And this is what's encouraging for the first time since 2017 to allow tuition fees to grow with inflation, which clearly helps university finances, which have been under pressure for some time.

And whilst universities may have been slow to respond to financial concerns, they're definitely doing so now. And they will continue to focus on efficiencies. We could well see more mergers like the one we saw with [indiscernible] earlier this year. But it is clear that universities need capital and this presents a huge opportunity for us, particularly as they see the value of high-quality affordable accommodation.

So what does this all mean for us? I'd pull out 3 key factors here. One is that the strongest universities are outperforming, and they will continue to do so. The second is that U.K. and international students will keep going to university here and they are being more discerning about seeking value for money from the investment they're making in their education. And thirdly, universities are getting their finances in order, but they are unlikely to be investing new capital into accommodation, and that's why we center so much of our strategy around it.

So in a market where the gap between the winners and losers is growing faster than ever, we need to reorientate our growth. This means that we will further reposition our portfolio, we will remain focused on university relationships and joint ventures, and we will grow our share of second and third year students who live with us. We've always believed that strong universities and a tighter real estate market drive the best long-term performance, and the last 12 months have reaffirmed this view. We've disposed of nearly 15,000 beds over the last 5 years, exiting 5 cities, and you'll see from the chart on the top right that these have been from some of those weaker cities. But we need to go again, we need to reposition our portfolio further and aligning to those universities and cities that will underpin growth. And we are targeting a portfolio that will now be in 18 to 20 cities and 80% aligned to high tariff and the best teaching universities.

We need to continue driving operational excellence from our platform, and that means adapting our sales approach, more nominations and using empiric to access second and third year students. And we will rightsize our overhead and drive further technology-driven savings. And we will leverage our relationships with the university partnerships, building on successes that we've had at Newcastle, Durham and Manchester.

So with that focus on operational excellence, optimal capital allocation and repositioning our portfolio, we see that as the way to return to growth. We set out our medium-term targets here, driving high-quality growing income, targeting 97% occupancy in our core cities with above average inflation rental growth. We will take nomination agreements back to 60% of our portfolio post the Empiric transaction and disposals and through the joint ventures. We will deliver our business plan for Empiric, and that will see earnings accretion in 2027, and we will increase our alignment of of our portfolio to high tariff universities, delivering 1 new joint venture each year and with our surplus capital from disposals balancing reinvestment into new joint ventures, we will consider share buybacks whilst maintaining our core balance sheet metrics.

So I'm now going to take you through a bit more detail. Looking back on the '25-'26 sales cycle, and then what we'll do differently in '26-'27. So looking back over what happened, we delivered 95.2% occupancy, 4% rental growth against our target of 97%, a shortfall of around 1,200 beds to that target. High tariff universities have performed well, recruitment up 8% at those universities, and they have taken share from lower mid-tariff universities, as I mentioned. And we've seen softer demand at lower-ranked universities, which has led to a 2% fall. Students still see the value of a residential degree, but as I said, are getting more discerning about the university and accommodation choices.

We've seen increased bookings from universities with nominations up 2% year-on-year to 59%, with international sales stable at 28%. New supply had a bigger impact on occupancy than in previous years in a few cities, and we saw that particularly where we opened new buildings or refurbs and the stronger cities continue to deliver with 4.3% rental growth in those cities with 97% occupancy.

And I'll now take you through the key elements of these in a little bit more detail. So that trend of higher tariff university is taking share has really accelerated since 2022 and have to admit has been faster than we had expected. Facing financial pressures, those high-quality universities have recruited hard for U.K. domestic students taking share from weaker ones, and students understandably have traded up where they can. We have grown our occupancy this year at those universities of what was already a strong base, but we've seen falls at medium and low tariff universities. We have just over 90% of our portfolio aligned to medium and high tariff universities, but as I said, we need to do more. Historically, we are focused on high mid tariff, but it is becoming clear that some mid ranks are also getting caught out by these trends. So we need to be even more forensic on which universities we are going to support and align ourselves to.

Hopefully, the Empiric acquisition increases our high-traffic exposure by 3 percentage points. Our nominations have provided us with a strong underpin of our performance once again. We've grown the number of beds, working closely with our university partners and we feel this demonstrates the real strength of those relationships and the quality of our offer, mid-market price points. Following the acquisition of Liberty Living back in 2019, our nominations dropped to 51%, but we have since grown them back to the highest ever level this year.

And following the acquisition of Empiric, norms will again drop to around 53%, but we will build that back to 60% over the medium term, primarily through those university partnerships. As I mentioned, overall international sales are stable with 28% of the portfolio led to international students. Encouragingly, we have seen a recovery in international students this year, up 7% year-to-date after last year's fall, which was caused by the much talked about visa changes and the perceived welcome that students receive when they arrive. And some of this data was captured in today's migration data that was released showing that drop in migration on student visa as up to June '25.

We have, however, continued to see a shift from international post graduates, to international undergraduate demand, and this was the principal cause behind the decline in our late cycle sales. We also lost a share of post-graduate demand to some of our competitors who are discounting heavily in this space, and we could have done more there.

Higher education remains a major export for the U.K., and the government is balancing the continued support for international students going to those high-quality institutions while stopping perceived abuses of the student visa system. So overall, we expect international students to stabilize at or around current levels, really driven by that growing middle classes in the developing economies. The U.K. is attractive given the much tougher stance being taken by U.S., Canada and Australia, where student visa numbers are down 20%, 50% and 15%, respectively. And we do expect the better universities be attracting more of those international students.

So this chart gives a really helpful overview of our performance by city and sets out a lot more granularity than we have traditionally given. And you'll see that our vast majority of our estate is performing with an average of 97% across those top 19 cities. That's really been across nominations, rebookers and international. And this is what gives me confidence that repositioning of our portfolio will drive a recovery in our performance.

Sheffield, Leicester and Nottingham have performed very poorly. The void beds in these cities totals about 1,200 beds or 2% of our occupancy and makes up the bulk of the shortfall. And that has been driven by poor recruitment at low and mid-tier universities in those cities, and Sheffield and Leicester have already been or been fully supplied for a few years and nothing has seen about 2,500 new beds delivered this year, feeding into that reduction in occupancy.

We've also seen unexpected weakness in Edinburgh and Glasgow, well below historic levels. Edinburgh University did not recruit as hard and clearing as a number of other top universities, but we also did not help ourselves in Edinburgh, we delivered a building that was too close to term start date, and we overpriced a major refurbishment in the city. In Glasgow, we saw weaker recruitment at the lower tier city center universities with more students committing to those universities as well. And there was also some additional supply in both of these markets.

So boiling down what's actually happened and the driver of the shortfall in our occupancy is a deterioration in the bottom 3 cities where we have higher exposure to weaker universities and secondly, some supply disruption, and that led to lower occupancy and new openings and our major refurbishment projects. So by repositioning the portfolio and driving our performance in these cities and better managing openings will see us recover occupancy.

Overall, supply remains about 50% down compared to peak levels, and this has been driven mainly by viability challenges, but we have seen much of that new supply being concentrated into fewer cities. And the biggest impact has been felt in those fully supplied cities and/or where demand has not grown. And this, therefore, has impacted our occupancy in Nottingham, Leeds, Glasgow and to a lesser extent, Liverpool. However, other cities like Bristol, Manchester and London have been able to absorb this new supply.

And students are being more selective they're not booking into new and refurbished buildings, where there is other choice, their wary about buildings not being finished on time. And we have seen our new and refurbished buildings taking longer to stabilize with 600 voids across 8 buildings in this category. The outlook for new supply remains muted, and that's down to viability and building safety regulations, and that is making new starts increasingly rare. And where it is being delivered, we will be more focused on how we market and open our own stock, supported more to a greater extent, our nominations agreements, and we will also respond to other supply from other competitors and recognizing the disruption that it can have.

Students are increasingly focused on value for money. We're seeing students and parents looking for value, not necessarily affordability from their investment into university. That means more focus on courses, outcomes and employability. Students are going to university and choosing courses to get a better job these days, not just studying something that is interesting. And with the graduate premium widening, this is feeding into their choices. However, students do still see the value in the residential experience, and there has been an overall growth in student-seeking accommodation this year, up just under 2%. But this has been concentrated in high tariff with the weakest demand at low tariff.

But it is important to note that this does differ significantly by university, and we need to get under the skin of that in determining where we will locate our buildings, but it has driven the underperformance in cities where we have a higher exposure to low tariff universities and/or the high tariff university as not being able to grow its own demand.

And this theme is backed up by our demand at different price points. We offer a range of price warrants across our cities and continue to provide value for money affordable accommodation. But interestingly, we've seen our strongest demand at our mid-price points and in London and the lowest demand in lowest priced rooms. And our prices overall still screen well relative to the competition, including the HMO sector and the university beds and occupancy is being driven by university quality more than price.

We still see an encouraging outlook for rental growth in most cities, but we have seen a widening range across our portfolio. As you'd expect, the top 3 cities have delivered rental growth at 4.3% and but that's been down to about 1% in the bottom 3 cities. This was underpinned by the strongest rental growth on nomination agreements. This year, we expect both of those trends to continue into '26, '27. And Mike will talk you through this shortly.

Our nominations continue to provide good income visibility and rental growth outlook for us with an average unexpired term of just under 6 years and index linkage supporting rent growth of 3% to 4% going forward. 12% of our beds expire this year. These are mainly single-year deals. We've got a really good track record of renewing 1-year deals with about 85% to 90% of these renewing EG. And given their price point at around a 10% discount to open market rents, this helps to explain why universities are keen to renew. And rental growth has outperformed this year. That's actually reversing the trend that we've seen over the last 3 cycles, where direct let growth has been much stronger.

So enough for me. Karan, over to you.

Thanks, Joe. So building on what Joe just shared, I wanted to add a bit more color on our strategy for the opening sales cycle. These plans reflect the market trends that Joe talked about, but also the lessons that we've learned from last year. At the heart of our strategy are our norms. At Unite, we see nominations as the bedrock of our business, and it's a -- and we've always valued the income certainty they provide us. They give us real competitive advantage, which is extremely difficult for others to replicate at scale.

As Joe shared, since the Liberty acquisition, we have steadily increased the percentage of rooms on the nominations of 59% and converted more and more of those agreements to multiyear deals with inflation-linked rental reviews baked in. This year, we are being very proactive and have already started advanced discussions with our existing university partners as well as with past partners and potential new accounts to further grow our share, where we need to. We have been aligning start dates and tenancy lens as well to ensure that we are best placed to deliver to their needs.

Second, returners are becoming more important to us as we look to grow share. And to better meet their needs, we are revamping our offer. From the ability to choose the best rooms at the start of the cycle to an early bird loyalty discount with a best price guarantee commitment, which means they will always get the best deal in the market. Soon, we will also have Empiric properties that offer a more independent living experience. This will further help us drive retention but also gain back some of the market share that we lost in the International segment.

Third, we are taking a more balanced approach in our lower occupancy cities. Here, we intend to remain positioned for value and have lowered some prices where we felt it would drive occupancy and total income. In addition, we are exploring a range of other options as well. This includes securing more nominations where we can, but also reviewing the incentives we offer to exploring tenants needs with a start date in Jan which will coincide with the new intake that some of our universities have started offering now as well.

On both price and incentives, we are seeing the market stay very balanced at the start of the sales cycle. We do have the ability, though, to react to changing behavior, if required.

Next, we are revamping our sales and marketing approach for new as well as refurbish properties. As Joe shared earlier, this is an area that we know we need to get better at as it accounts for nearly 1 point of the occupancy miss from last year. So we're looking at several improvements from how we market these newer assets on our channels to how we develop both physical and virtual showrooms to showcase the full experience that students will have living here through the introductory offer we give them to drive up leasing in our first year of operations.

By improving our performance here, we will also address some of the shortfalls that we had in the International segment. We have major opening in 2026. This is Hawthorne House in London, 50% of which is nominated. But we're also focused on our 2025 openings, Avon and Burnett Points as well as our major refurbs in Bristol, in London and in Edinburgh as well.

Finally, in early 2026, we will start to be in a position to leverage several new commercial capabilities from our new property management and booking engine. We will launch a new web booking journey. We will improve our ability to do attribute-based pricing, and we will be able to execute better our marketing campaigns to both rebookers as well as new students. We expect this investment to help lower our cost of acquisition, improve conversion of web traffic into sales, into bookings and drive up higher sales overall.

So how is this landing in terms of sales performance this year? As of earlier this week, we were at 62% sold, which is pretty much in line with last year. I do want to say, it is very, very early in the sales cycle. It's just been 4 weeks since we launched and that we're in the midst of several nomination conversations, which don't conclude for a few more weeks. Our existing first year students are still deciding what they want to do next year. So there's plenty to play for. And like I said, it's very early days.

In fact, it's just worth looking at how the sales cycle actually develops through the year and how we market ourselves through each of those key milestones. Without going into each element, it basically breaks up into 4 phases. Phase 1 is all about winning rebookers and returners. This usually starts at the end of October and goes through to the end of December. But this year, we expect it to extend into the new year as returners work out exactly what they want to do next year.

Phase 2 is when students submit their UCaaS applications, and universities know what their intake is going to be for the next year. This is when we secure a bulk of our single year nominations and some agents and students start to make early bookings as well. This goes on from late Jan, which is the UCaaS deadline through to the end of March.

The third phase is the main new student acquisition phase. Universities send out their conditional offers by May, so we start to really see U.K. students look to book and also universities start to confirm with us if they want more beds based on the intake that they think they will get. For international students, they usually wait for their visa and they start to book more July onwards through into August.

Phase 4 is the world of clearing. Over 60,000 students normally go through clearing of which nearly 20,000 are new applications with the rest basically changing universities based on their final grades. Usually, we would tend to do anywhere between 4% and 7% of our sales here. And last year, we actually did 3x as many sales as we did the year before. But after an exceptionally strong buildup to clearing as well as its first 2 to 3 weeks, we were surprised by just how quickly it did tail off mid-September as the demand from Chinese international Chinese postgrad students did not materialize in the expected volume.

Now in each of these phases, as you can see, we adapt our marketing messages and channels from exclusive offers sold through our on-site teams for rebookers, to leveraging our international agent network as well as our in-market China team to drive up international sales. During clearing, it's all hands on deck as we help students find their home. This year, we are doing several things differently across these touch points.

As I mentioned before, we have revamped our rebookers offer and our returners offer, and it will run for longer to reflect the slightly longer booking cycle that they're going through. We've also simplified our room classification and the feedback from agents as well as students alike has been that it's made it easier for them to choose the room that they want and also decide what to pay extra for.

We're also adapting our marketing programs to reflect the growth in AI-based search. This means that we are spending more time and effort on making sure our content is best-in-class, and we're also driving reviews to various channels.

Finally, we are holding enough marketing firepower to drive sales through clearing and aligning our incentives to ensure that we capture a greater proportion of the international market before the end of clearing. And it is a sum of all these actions that I believe will help us navigate these changing times. And we do have a track record of doing just that. Take Leeds as an example, one of the largest student cities in the country with multiple universities, including University of Leeds, which is in the top 100 globally and where historically, we, as Unite have done very well across a large portfolio.

But over '23 and '24, the city did face several challenges. From a demand point of view, the reduced -- it had with student numbers due to falling international demand as well as more students commuting at the lower tariff universities. At the same time, there was a lot of new supply entering the market. And to add to it, we had major refurbishment projects at 2 of our properties. Our occupancy fell to just over 90% and rental growth went backwards. As a result, we've had a total reset in the market. We've sold our less well-located assets. We focused our efforts on driving nominations with the University of Leeds where we have a very strong relationship, we've also adjusted prices down in a couple of properties to drive up occupancy and income, and we've invested in our teams and our properties to drive significant improvements in Net Promoter Score as well. The net impact is that we've started to improve occupancy and we're forecasting a return to rental growth this year.

Our university partners here have already reached out to us to see if we can store them with more rooms as they continue to see strong undergraduate demand, this sales cycle, just like they did last year.

So on that note, I'm going to hand over to Mike.

Good afternoon, everyone. I'll now take us through our financial outlook based on our operational indicators and planned investment activity. I'll start with our income guidance for the year ahead. Hopefully, the page is just presented by Joe and Karan provide helpful background to the following guidance, the '26, '27 academic year and beyond. Our overarching assumption is that student housing demand will be broadly stable for the next active year. This is based on a largely 18-year-old population and our expectations for broadly stable international demand and a further increase in students choosing to live at home at medium and low tariff universities.

Our rental growth guidance reflects different dynamics for our nominations and direct let channels as well as a tailored approach to strong income at a city level depending on the occupancy. As you'll see on this slide, we're targeting occupancy of 93% to 96% and rental growth of 2% to 3% for the academic year. Breaking that down, nomination agreements covering almost 60% of our beds will continue to deliver real benefit through annual inflation-linked uplifts on the majority of those agreements, which will result in rental growth of 3% to 4%.

The direct let beds, as you've heard from Joe, are higher occupancy cities, representing around 25% of our beds are in good health, and we expect them to deliver rental growth of 2% to 3%. As you've also heard, we'll adapt our approach in markets with higher vacancy to drive improved income. Pricing will be up in some of these markets and down in others where there's more price vacancy. These markets represent the remaining 17% of our beds and we see thereby seeing broadly flat.

Taken together, our guidance for occupancy and rental growth results in like-for-like income growth of 0% to 4% for the next academic year. The range in our guidance reflects the fact that it's early days in the sales cycle, and we'll look to narrow this guidance over the coming months. As we come to our earnings guidance, it's also worth remembering that only 1/3 of this income falls into the 2026 financial year.

In response to lower occupancy, we've been proactive in reducing costs and improving the efficiency of our platform. Today, our operating expenses at property level account for 30% of our rental income. Our overheads then account for another 6% of rent. These overheads are substantially offset by the management fees we earn from USAF and our LSAV joint venture, which offer a highly valuable source of recurring income. We pride ourselves on this overhead efficiency, but to recognize we need to do more. This is either by reducing cost or generating new management fees, such as those that will come from our university partnerships.

We've already taken action to reduce the full costs and are targeting a 20% reduction in our head office staff costs before the end of 2025. This change is expected to mitigate the impact of inflationary increases in our operating costs from wages and utilities and higher marketing costs in 2026. And as a reminder, we typically look to hedge out our utility costs 18 to 24 months in advance to provide cost certainty. As a result of all of these actions, we expect to see costs in 2026 flat versus 2025.

Next, we turn to earnings and the factors driving our performance in 2025 and 2026. For 2025, we continue to see adjusted earnings in line with existing guidance of 47.50p to 48.25p. This reflects income modestly above expectations, the '24, '25 academic year and costs slightly below budget in the year-to-date. We also expect to realize the benefit of a nonrecurring fee of around 1p on formation of our Newcastle University Venture.

Together, these factors offset the impact of lower-than-expected occupancy for the first term of the current academic year, meaning our guidance remains unchanged.

As we look ahead to 2026, we expect a high single-digit percentage reduction in our adjusted earnings per share from a combination of factors. We expect like-for-like rental growth to have a broadly neutral impact on earnings in the year. This reflects an income reduction from shorter tenancies for the '25, '26 academic year, the impact of which will fall into the first half of 2026. We then expect this to be offset by growth in income for the first term of the '26-'27 academic year. Our development completions will have an initial drag on earnings as they take longer to achieve stabilized occupancy in rent.

For our 2 new buildings and 1 reopening in 2025, we achieved 65% of our target income in year 1, which reflected the challenges Joe noted in leasing off plan in a more competitive market. The combination of reduced income and higher interest expenses on completed projects will reduce earnings by around 2% in 2026, albeit we see it being recovered over time as occupancy reaches target levels.

Our university joint ventures will deliver us 2 sources of fees in the future. Larger fees at the formation of joint ventures, followed by recurring management fees once those properties are operational. We expect to realize lower nonrecurring development fees in 2026 based on the contractual milestones we expect to deliver during the year.

Capital recycling is also expected to have a modest drag on earnings due to increased disposal activity. This reflects the disposals already delivered in 2025 and the GBP 300 million to GBP 400 million of planned asset sales in 2026. As previously guided, higher interest costs will reduce earnings in 2026. This reflects an increase in our cost of debt to around 4.5% due to refinancing activity as well as higher marginal borrowing costs on new debt.

Our EPS range for 2026 reflects the spread in occupancy and rental growth guidance for the next academic year. How we deliver will determine what our earnings come in within this range.

Looking beyond 2026, our focus is on delivering a return to earnings growth. This slide sets out the building blocks on the path to growth from 2027, and it starts with delivering operational excellence. We will grow our like-for-like income by achieving occupancy of 97% or higher in our target portfolio. As you've heard, this will be delivered by stabilizing occupancy in our new developments and positioning the portfolio towards high tariff universities in our strongest markets.

Over the long term, our business has delivered rental growth averaging 70 basis points above CPI inflation, and we expect to continue to deliver above inflation growth in our core markets, this will be supported by index rental growth in our nomination agreements and growing housing demand at the strongest universities. It will also take bold action on costs to ensure we recover our margins over time. This has already started. And as Karan mentioned, our investment in our next-generation technology platforms will unlock material efficiencies in both our cost of sales and overheads over the next 1 to 2 years.

Joe will come on to discuss the strategic opportunity provided by our acquisition of Empiric. In the near term, our focus is on delivering our business plan. We are confident in delivering our cost synergy target for the combined business and see significant opportunity to drive improved occupancy through our larger platform. Together, this activity supports earnings accretion from the acquisition in 2027.

Optimal capital allocation is also a key to ensuring a return to growth, which I will come on to discuss in more detail. We will deliver over 5,000 beds in university partnerships and developments between 2027 and 2030 at a target yield on cost of 7.3%. Around 80% of these beds are in university partnerships, which provides significant visibility over future income.

Our capital recycling will also help drive earnings and NTA growth as we reinvest our disposal proceeds into accretive new investment. However, this will be partially offset by the ongoing adjustment in our borrowing costs to higher market interest rates. As we execute on this plan, we see a pathway for returning to earnings growth in 2027, delivering on these elements also supports total accounting returns of 10% through a combination of recurring income, rental growth and profitable investment activity.

I'm now going to move on to discuss our working capital allocation, following on from the priorities set out by Joe earlier. Our capital allocation decisions are framed around 3 key goals: increasing our alignment to the strongest universities, driving growth in earnings and attractive total accounting returns and maintaining a robust and flexible balance sheet. However, our capital allocation decisions need to reflect the fact that market conditions have changed.

Our cost of capital is increased and occupancy and rental growth has softened. This changes both how and where we will invest in the current market. Our revised approach to capital allocation centers on 4 key areas. Firstly, we'll focus on our development activity around university partnerships, delivering on-campus accommodation at affordable rents. This is an area where we have significant opportunity for growth by leveraging our strong university relationships.

Secondly, we'll be highly disciplined over new development commitments off campus. This will see us reduce CapEx and look to extract best value from our uncommitted schemes. Next, we will accelerate our disposal activity to increase our focus on the strongest universities and mostly constrained markets, which offer the strongest prospects for future rental growth.

And lastly, we'll show flexibility in our investment approach. We will not compromise the quality of our balance sheet, but where we have surplus capital, it will be deployed towards those opportunities offering the strongest risk-adjusted returns.

University partnerships are the key strategic growth opportunities for our business in the next 5 to 10 years. This reflects the enduring appeal of the residential experience, strongest universities and the vital role of high-quality accommodation plays in attracting students. University partnerships will enhance the quality of our income by delivering the accommodation in the best on-campus locations at affordable rents. We will also benefit from significant income visibility, thanks to our joint venture partners' financial interest in filling the rooms.

Our 2 existing joint venture partnerships are progressing well, and we expect to be in a position to formalize the joint ventures with Newcastle University and Manchester Metropolitan in the coming months. This will enable the delivery of 4,000 new bed -- 4,300 new best over the course of 2028 to 2030 at yields on cost superior to those can deliver off campus. We see a significant opportunity for further partnerships, and we're in discussions with a number of high-quality universities.

Our target is to deliver 1 new partnership deal per year. This isn't easy, but we're confident our platform and university relationships give us a significant competitive advantage. Our off-campus development pipeline now totals GBP 1.2 billion and over 5,000 beds in the U.K.'s strongest university cities and 90% of this pipeline has planning approval. We are committed to 2 on-site projects in London and Glasgow for delivery in 2026 and 2027, which have GBP 110 million of cost to complete. Beyond that, we have flexibility over all future development comments, for us to commit to any new development start, development yields would need to improve and be substantially derisked by nomination agreements.

For us -- more than that, we will also need to recognize the risk to development programs from the new building safety regulation. This has led to delays in construction starts and also poses risks to the schedule occupation of buildings as the new regulations become established. As a result, we expect to see CapEx in our off-campus pipeline reduce materially over the next 2 to 3 years.

Our focus now is on optimizing the value from our land bank, of which 75% by value is in London. We will explore a range of options for doing this, including joint ventures with third-party capital as well as forward funds and outright land sales. For those schemes where we have option agreements, such as our Travis Perkins site in Paddington, we have the ability to exit schemes where they are not viable.

As Joe mentioned earlier, we've been a regular seller of assets, but will now accelerate the pace of our disposal as we position ourselves for a more focused portfolio with increased exposure to high tariff universities, we will target an increase in disposals to GBP 300 million to GBP 400 million per annum, which is roughly a doubling of our recent run rate, and that will come from a combination of different sources.

Firstly, we'll accelerate our exit from some cities and dispose of assets in core markets where we see low returns based on their university alignment. Secondly, we'll also look to realize value opportunistically from disposals of core assets at the right price. We will consider doing this via sales to existing or new joint ventures, which bring the benefit of new recurring management fees. We will also consider outright disposals where we can achieve fair value and see stronger returns from reinvestment.

The final pool of disposals includes nonstrategic assets and development sites, which are now yielding or not viable for future development. We expect these disposals to be modestly earnings dilutive in the near term as we initially repay debt. This becomes earnings accretive over time as these proceeds are redeployed into new investment opportunities. We've continued to see investor appetite from the PBSA sector from a range of institutional private equity and trade buyers with student accommodation forming part of their growing allocations to the living sector. Around GBP 3 billion of assets are transacted this year, which is slightly below the long-term average. We have seen sellers holding off on bringing portfolio to market ahead of the end of the '25-'26 sale cycle as well as in anticipation of the recent U.K. budget, but we now expect to see more stock come to market in 2026.

We've been active sellers over a number of years and see 2 main buyer types in the market. Firstly, core investors seeking modern assets in London and prime regional cities. And secondly, value-add investors seeking higher returns through income upside, cost reduction and CapEx initiatives. Over the long term, valuations of student accommodation have been underpinned and driven by rental growth, which remains fundamental to investors' pricing for the sector. There are a number of transactions currently in the market, which will dictate trend in valuations over the coming 6 to 12 months.

We benefited from a strong balance sheet, which provides the business with flexibility around its capital allocation decisions. This is absolutely appropriate for a business with operational intensity and ongoing investment through development. We continue to target a net debt to EBITDA ratio of 6 to 7x on a built-out basis. And we're currently in the middle of this range after adjusting for the acquisition of Empiric and remaining committed CapEx for our university partnerships and developments.

Our appetite for leverage also reflects our current and marginal borrowing costs. We expect our cost of debt to rise steadily as we refinance existing in-place debt and deliver our committed development pipeline. We'll also explore the opportunity to use third-party capital as a source of cost-effective funding. We have a long and successful track record with our USAF and LSAV funds and see opportunities to access new capital seeking a best-in-class operating partner.

Bringing this together, the increase in our planned disposal activity and reduction in development CapEx means we expect to move from a net investor to a net seller over the near term. Successfully delivering on this plan would result in surplus capital of around GBP 100 million to GBP 200 million per annum. We will deploy this capital where we see the strongest risk-adjusted returns which today means investment in university partnerships and share buybacks. Our investment decisions between the 2 will depend on our opportunity set for university partnerships as well as the returns implied from a share buyback.

Share buybacks provide an opportunity to reinvest in our high-quality portfolio at returns today that are superior to direct investment. We've commit to them where we have surplus capital, and we can demonstrate clear accretion to both earnings and NAV but this will not the expense of maintaining a robust balance sheet.

And with that, I will hand you back to Joe.

Thank you, Mike. So our conviction on the rationale for the acquisition of Empiric remains strong. Over time, we will be in fewer cities but we will serve more students and customers who live in those cities. There are 1 million students living in HMO today. And this market continues to be under pressure from regulation and further increases in the tax burden announced yesterday. And Empiric gives us the scale and the platform to go after that in a meaningful way.

And the PBSA sector is growing up, and it's growing up as a sector. We, as Unite started out as a norms-only business back in Bristol, some 35 years ago, and really then extended and pushed the boundaries of the sector pushing into a direct let business still very much focused on first year and internationals. The student demands and choices are evolving. And whilst we have a certain age may scoff at the thought that customers are telling us that they -- or I am ready for something different in my second year. I'm done with the halls of residence experience. I want more independence. I want it to feel different.

And Empiric provides us with a chance to provide that difference. And we feel that we can extend our customer life cycle by retaining more second and third years by offering that different experience. And in our building in Edinburgh, we opened this year, support that view, we delivered 100 new beds in 1, 2 and 3 bedroom flats in separate blocks. That was 100% sold this year in a market with occupancy of 88%.

And the quality of the portfolio is high. I was up in Edinburgh and Glasgow last month, and I saw it firsthand the quality is excellent. Across the portfolio, the buildings are well located and it supports our shift to high-tariff universities and will help us to reach our 80% target. The buildings are small character full, and they are a different product that allows us to play in that return of space and grow our share of second and third year students.

We will sell around 10% of the portfolio in those cities where the alignment to highs is not enough. And we're also comforted by the fact that we're buying the asset 20% below replacement cost. And at the heart of this deal, we see an opportunity to improve the performance of the portfolio over the next 2 to 3 years using our platform, targeting occupancy of 95% plus of the net 2 sales cycles in line with our underwrites.

And just to put that into context, the Unite portfolio has 35,000 first-year students living within it and about 18,000 internationals. We currently retain around 20% of our first-year customers through rebooking. And then 80% of those who don't rebook with us tell us it's because they want a different product. The Empiric portfolio is 8,000 beds, and they are 89% sold this year. So we will need to sell another 500 rooms to get them to 95% occupancy. We sold 800 rooms per week in the 3 weeks following clearing this year. So we're confident that we can drive a better performance from the portfolio, selling to our existing customer base, those rebookers who are looking for a different experience, using our sales techniques, our data and our tech platform, we speak to all of our customers. We understand what they are looking for, and we can now follow up with the different products. We do this with our sales inquiries as well.

And using the scale that we have with international agents offering those agents more rooms, again, at different price points, with our scale gives us greater reach into the agency in that channel that Empiric never had. And then finally, we have around 15 to 20 properties that we can convert to the Empiric model, and we see revenue opportunities here as well.

So we were delighted to get the CMA clearance today, and that was confirmed with no disposals of the portfolio, and that means that we will be able to get our hands on the business in January. And whilst we've missed the start of the rebookers campaign, gives us much of the sales cycle to go after rebuilding their occupancy and also gives us a great run at that synergy delivery through 2026.

We talked publicly about the synergies a lot already, and we aim to deliver that GBP 14 million target by rationalizing in city and regional management costs across the operation by the removal of duplicate costs such as offices, IT platform and plc costs and the benefit of bringing activities such as finance, marketing, HR and IT onto our scalable platform.

With the Liberty acquisition, we outperformed our public target by 20%, and we are looking at best value -- looking opportunities right now to extract best value from cities in 2026 to offset their lower year 1 occupancy as every 1% of occupancy shortfall equates to around GBP 1 million.

And we have a fully kitted out integration plan, which will be phased over 2026, and we will see the transfer and phases of the sales and marketing teams, city teams, the technology transfer and also their back-office functions. So we shared a lot with you today, very conscious of that, and I'll try and bring that all together now about how and where we are taking the business.

And as I touched earlier, our priorities center around delivering operational excellence and optimal capital allocation with our focus on high-quality, growing income and a strong balance sheet. We've set out our medium-term targets around 97% for occupancy, with 60% of that through nominations agreements, delivering above inflation rental growth repositioning the portfolio to 80% aligned to high tariff and the best teaching universities, delivering our revenue and cost plan for Empiric, delivering earnings accretion from 2027, and continuing to see a real opportunity amongst our university on-campus joint ventures, targeting 1 a year and considering share buybacks as part of our capital allocation options with surplus capital while sticking to our leverage targets.

So the fundamentals of our sector remain intact. It is a great higher education sector, the demand for university education will continue and the jobs market will still need highly trained young minds. Unite is a great business, and we support young people at the time of their growth through those great relationships and partnerships we have universities through our best-in-class operating platform, the high-quality portfolio that we have and our highly capable team.

We have been surprised by the pace of change and the impact this year, and we have learned lessons, but we will be proactive, as you've heard today around sales costs, disposals and capital allocation. We will grow our share of second and third year students whilst maintaining our focus on universities, nominations and joint ventures. And this will see us returning to a position of earnings growth.

So once again, thank you all for coming and listening so intently. We'll now open up to some questions, and we'll start with some questions in the room. Hands up, we've got a mic coming.

Sam King from BNP Exane. Three questions, please, guys. One on strategy and 2 on guidance. Just to start on strategy and maybe challenge the alignment to high tariff point, which might sound counterintuitive, but does that actually solve the occupancy issue? Because if we look at performance this year, noting them in Sheffield at both high tariff and had occupancy issues. I see Leeds and Edinburgh also had lower occupancy than average. And then if you look at Portsmouth, for example, that's not high tariff and has traded very well, and that's a market where actually, rental growth has been quite soft recently. So is the decision actually not a bit more nuanced here and it needs to be pivoting the portfolio to focus on markets where say rents are sustainable or there's undersupply. Just any thoughts on that?

Yes. I think it is dangerous to oversimplify and just do pure groupings on tariff groups, you're right. But I think you need to understand. So in Sheffield and Nottingham, which are 2 underperforming cities. Both of those high-tariff universities have seen broadly flat numbers slightly down actually, but it's been in the low tariff universities in those cities where we've seen the weakest level of demand. So it is having to think about in which cities, there is that blend of high and low tariff universities.

And those cities, those 3 cities also suffer from slightly weaker housing markets, I guess, of local weaker local economies. So it's not as simple as focusing on high and low tariff, you're right. But in terms of our analysis and then we do where we will be located, we believe that's the best shorthand for us to be pointing to, to talk about where we will be aligning our portfolio.

Okay. And then second one on -- second 1 on occupancy guidance, which might be for Karan. In the low end of your guidance at 93% implies you get to just 81% for the direct let portion of your portfolio, which is a slowdown versus this year despite the fact that student numbers will up for next year. So any comment around that, what are the specific markets that you're concerned about looking into the next academic year?

Sure. So that the lower end of the range reflects the uncertainty that we continue to see in the properties where we're aligned to the lower tariff university. So that is your Leicester. It is part of your Sheffield. But even in some of the other cities to Joe's point, we have even in a Glasgow, some properties that are more aligned to the city center to those properties.

So I think -- and also, those are also the cities where we tend to have more direct lead rather than nations because those lower tariff universities don't tend to underwrite the deals at the same level. So that's kind of why we're guiding to that lower occupancy level at that stage.

Okay. And then final one for Mike on earnings. You can see the guidance is down some 10%, but I understand that excludes the impact of Empiric, which on my numbers, is 1% dilutive next year. So should we think about the actual downgrade for earnings being 8% to 11%?

Yes. So as Joe said, we will acquire the Empiric business at the end of January, we will be able to give you guidance incorporating Empiric at the time of the full year results. The guidance for the transaction is that it will be broadly earnings neutral in 2026 with the view that it becomes accretive in FY '27.

What's the level of occupancy you need for Empiric for it to be earnings neutral?

To get back to earnings neutrality, we need to get to occupancy of 95% on a stabilized basis.

It's Veronique from Kempen & Co. So for me, one question on the nomination agreements. Obviously, it's a bit part that derisks the portfolio. You have the target to increase it. So just want to get a feeling on feasibility of actually increasing it. And also, you mentioned that for this universe, obviously, they've also had some tough years on the financial side. Is there anything changing in your discussions to maybe moving a little bit towards the Continental WALE agreements with universities that don't have actual guarantees, but are just more soft agreements if you're seeing any changes in those discussions.

Maybe I'll start, and Karan, if you pick up if I don't miss anything. Yes, so the first up is the delivery of our development pipeline and university partnerships gives a strong underpin to that growth back in terms of nominations over the medium term.

I think the second thing that we are doing is using pricing in some of those markets, particularly in weaker assets to approach universities now and secure nominations agreements with those universities. The 1-year deals generally don't have income guarantees beyond -- well guarantee beyond year 1. So that gives the universities the flexibility to sort of flex up their requirements over the short term. So we've got a good level of renewals on those agreements that we see. But ultimately, it's down to us to be able to demonstrate that we're offering value for money for students and the highest level of customer service because they are intently focused on that. I think that's one of the things that gives us real customer competitor differentiation through those nominations. I don't know Karan's missed any...

I mean a couple of other points. I think the one big trend that we see this year is the affordability point, the universities, especially for their first tier underground product are really looking for affordable rents. So there are several properties where we have sort of historically directed them. They haven't wanted them, but actually on the affordability level, they're actually keen to talk to us about that. This is a key universities in Bristol, Edinburgh as well.

On your point around soft norms, what we actually tend to do is we often towards the end of January, agree a certain volume with the university that they will feel comfortable to Edinburgh. But as they start to see their demand firm up, that number does tend to pick up, and you'll see that reflected in the different trading updates that we do as well. There's a couple of accounts where we will have just a recommendation on their accommodation portal, which is important as well because parents do trust that approach as well. But over the last 3 or 4 years, we have pushed for more income security because that's something that does then help us financially plan the rest of our year.

Maybe one follow-up on that. You indeed mentioned affordability, but at the same time, for this nomination agreements, you still target 3% to 4%. I appreciate you mentioned like it's 10% under-rented. But isn't that still something that then comes up in those discussions?

It does come up. But I think this is where I think I was talking to somebody earlier, we do have a lot of credit in the bank with the universities. I think they look at us as a long-term partner. They know the things that we did during COVID to support them. They know over the last 3 or 4 cycles when some of the direct lens and cities were going double digits, where we were much more balanced in our approach. So they know they are good years and bad years. And the rental clauses that we have in there are reflective of those caps and sort of ceilings as well. So so far, we have had no real challenge from the university. And at the end of a 10-year agreement, we might reset that rent to be, again, market plus or minus 5% depending on the assets.

But I think the good thing for us is -- and which is why I say it's such a competitive advantages for us and difficult for competitors. It's built on multiple years of performance, not just a transaction.

Rebecca Parker from Goldman Sachs. I'm just wondering if you could talk to more -- are you all thinking around capital deployment, just given you've released some yields that you've got for your development and your JVs and how you're thinking about in context of where the shares are trading and share buybacks and whether you'll need to execute upon these disposals to then consider that capital deployment?

Yes. So I think we've set out a revised capital capital allocation framework today, you've heard us talk about, and we do see that as a medium-term framework. I think the principle of not increasing leverage to buy back shares is kind of firmly felt and firmly established. And so therefore, we will need to generate surplus capital from our disposal activity to then consider whether we allocate that into buying back shares or not.

I think given where the shares are trading at today, it certainly makes it a more attractive cost of capital than deploying into straight off-campus development. I think that's sort of something that we are very clear on. With on-campus development JVs, we still see the IRRs as very attractive, and we still see the opportunity to deploy capital to that space. So as we release capital, we will be looking at that through a very firm lens as to whether we can deploy capital. And as Mike's chart sort of set out that if we're able to sell that GBP 300 million to GBP 400 million of disposals, and that creates quite a meaningful chunk of capital that we've got our ability to make decisions on.

It's Tom Musson at Berenberg. Just following up slightly on Sam's question about the 93% occupancy at the bottom end of the range for next year and -- you mentioned wanting to, I think, focus harder on occupancy. So if the 93% occupancy was to transpire, would it not sort of mean the sales cycle has got increasingly competitive? And so how does that align with still delivering 2% rent growth? Because I think in the Leeds case study that you showed in the years where occupancy was 92% and 93% rent growth was either minus 4 or 0.

Yes, happy to say that, Tom. So yes, I mean, we talked about the conditions we see in the market for next year. So we think actually overall housing need will probably be flat to slightly up. We've clearly given a guidance range that is slightly below in the midpoint where we were this year. If market conditions are the same, and if we execute better, we can be at the top end of that range, at the end of the range, we're arguably being slightly cautious now, but we're still very early in the sales cycle that Karan said, and we'll need to work through that. And hopefully, we have to tighten that range for you over time.

I think in terms of price, it's important to say that you do have a significant underpin in the rental growth from the nomination agreements. That is 3% to 4%, and it's across around 60% of the beds. And as much as in that scenario, you pointed out where we might be at 93% occupancy, there would -- yes, I think it's fair to say probably be more discounting and we'd be using price to drive occupancy. We still think there will be a number of strong and undersupplied markets. We will be able to grow rents for those direct leads.

Can you hear me? Aakanksha Anand from Citi. Two questions from my side. I'll go one by one. The first one is on the returns that you're expecting, the IRR returns that Mike briefly mentioned on the university partnership JVs. How have those returns changed given that now we are forecasting 2% to 3% rental growth compared to 3% to 3.5% we were forecasting before?

Yes. Aakanksha, so on those university partnerships, we've been targeting IRRs, including the fees we generate in the mid-teens. And generally speaking, there is a rental growth mechanism within those agreements that has been contractually agreed at the outset of those discussions. So it is an inflation plus rental growth mechanism over the long term and the university will contract to take the beds on an annual basis.

So as much as, yes, the wider market has probably seen rental grade soften somewhat. In the case of these university partnerships, we have real visibility over the future income growth, which also protects our return.

In addition the starting rents within those university partnerships are below the market rate on day 1. So it does give them flexibility and some protection around that rental growth over time.

Understood. The second one, just long term, what thoughts do you have on the split between direct lets and nominations? Is it still expected to be a 60-40? Or can we expect it longer term to get closer to like an 80-20 split?

Yes. We've always liked nominations agreements, and I think they provide a good oil to the sort of or lets, which tend to move more with markets. And then, I guess, in the very strong years, you see better rental growth on direct lets in softer years, you see better rental growth on nominations. And obviously, you get the income guarantee as well. So having that balance is important.

I think as we've talked about today, we see that opportunity to take more second and third years in our portfolio, and I think that will -- some of those won't be covered by nominations agreements. We -- whilst occasionally, we talked to universities about whether they were nominate second and third years and international students. I don't see that they will do that going forward.

So we may see a stretch above 6% particularly if we're able to secure those or we see our sensible rents and sensible terms. So we don't see that as an upper limit. But I think we're setting that out as a target to build to post Empiric acquisition, and then we will to see whether we can go beyond that at some stage.

Camille Tan from [indiscernible]. Two questions. First one on occupancy, part of your path to growth, you're targeting 90% occupancy again. If I just look on Page 13, most of those yellow bars are below the '24, '25 levels. Why should investors believe that 2027 is an inflection point rather than the beginning of a structurally lower growth or occupancy environment?

Yes. I think that within those cities, where we've seen the shortfall in demand that has been the shortage of recruitment at the lower tariff university. So as we talked about briefly around Sheffield and Leeds, they have 2 universities. And where we've seen the shortfall in the drop-off in occupancy has principally been at those lower and mid-tariff universities. So the repositioning of the portfolio, setting out a target GBP 300 million to GBP 400 million a year over a few years means that we will be reducing exposure at those maintaining exposure to the better universities where we expect to continue to see growth. So I think it is that repositioning the portfolio, which is fundamental to allowing us to reposition and get back to that 97% underpin that we've historically had.

And then on the second one, what makes you confident that high-tariff universities won't experience a similar behavioral shift from domestic students living at home as affordability concerns remain high?

Yes, I think it comes down to a graduate premium and the difference in graduate premium between the better quality and the weaker universities and it is hire at those better universities. And I think the employability data, the customer's choice data that we're seeing through polling from UCaaS and that intention to stay home has been actually held up very well across those high tariff universities. So from a student behavior perspective, I think provided we continue to see that decent employment market for graduates of those high-quality universities. We believe that students will and parents will continue to make that investment to go away and study those and see it as part of the overall university experience.

And I think there's lots of kind of evidence anecdotally as well that university is much more than just about getting a degree. And if you want to succeed, then having that residential experience is part of that experience.

It's Paul May from Barclays. I've got 3 questions. Again, we go one by one, you're mentioning increasing disposals, but as you highlighted, the market has suffered and it's not just suffered for you, it suffered for everyone. Just wonder what confidence do you have that you can sell those assets for the prices you want? And should we expect those assets to be written down quite materially in the next coming results for you to -- ahead of selling those?

Maybe I'll start, Mike, and you can chip in. So -- we've long been a seller of assets, Paul. We've sold assets coming out of the financial crisis. We sold assets coming out of COVID, and we have generally sold assets in our weaker performing cities. So there are ways for these assets. The average price per bed in those bottom 3 cities value per bed is GBP 65,000. That compares per bed, not per building, 65,000 per bed. That would compare to about 150,000 to build in those markets. So there is real value still to be had there. And we've sold assets which aren't full. Historically, I'm not saying it's easy. It does take time to sell these assets, particularly if they aren't performing or aren't full.

And things generally are taking long to sell because of the fire safety investigations that are required at the moment as well. So I don't think this will be some Q1, you'll see GBP 300 million of as from those bottom markets, but we will work hard to deliver them. We've got the skills in our team. And as Mike said on his slide, we will supplement that with sales of lower-yielding assets, which are full as well. And I think that we see that if you can sell an asset in London, it in the 4s, and you can redeploy that capital somewhere in the 7s, that still makes sense for us to do. So that GBP 300 million to GBP 400 million of disposal program will be a combination of assets. As we say, it's going to be a multiyear program to finalize that refining to the quality and the 80% target that we want, but it's something that we will need to execute on, and we will need to execute on that over the next couple of years.

And Mike, if you would add anything to that?

No, I think the only other thing to say is sort of following on from Joe, the market will decide what these assets are worth. We think they are marked in the right place based on the disposal activity we've done in this kind of value-add asset historically. The question for us will be based on where the market sees pricing, what are the returns to Unite at holding those assets? And could we do better if we cashed out and reinvest it elsewhere, and that's how we'll think about it.

And I suppose it's -- the difficulty is looking back over history, the market was different, as you say. It's changed pretty much about a month, if you look at your September confidence of hitting your guidance and the October of not hitting that. It changed very, very quickly. That's going to have a material impact on people's decision-making surely. And when would we get some clarity over where the market is at, do you think?

Yes, there's still quite a few transactions in the market. I don't think anything's really traded of value since the closeout of the sales cycle. So -- but we'd expect to see in the next few months a few of those transactions start to trade. And I think the values at the year-end will hopefully have something that they can look to from a transaction. If not, I'd expect some of those transactions may have repriced if they haven't closed out.

So I think we really need to wait and see what those transactions point to both sort of the back end of this year and into the start of next year, but that will be the first time we'll get that visibility, whether there'll be a sentiment-driven value, who knows. That's sort of the art of valuation isn't it. But from a transaction perspective, I think we should see something reprice sort of around the year-end.

And then just following on from the question of the medium term and looking into FY '27. I appreciate you're not providing guidance for that. But looking at the sales you expect for the academic year '26-'27, which have an impact -- greater impact on '27, is there a risk we see another year of earnings decline in '27 versus '26 or a flattish sort of outlook? Is that a fair way to think about it?

Yes. It's fair to say, Paul, clearly, income is a big driver of our earnings growth in the medium term. So how we perform and how we deliver on that 0% to 4% like rental growth guidance for the '26-'27 academic year will have a big influence on our ability to grow earnings. And clearly, we want to execute and be it towards the top end of that range. I think if we're towards the weaker end of that range, we will have to go harder in some of the things we do. So that will be sort of -- we talked about being ruthless on costs going harder at the cost base. It will also mean slightly different decisions potentially around capital allocation. So we will have to adapt based on our income, but the target is very much to get back to that earnings growth 2027.

Any more in the room?

Andres Toome from Green Street. So just a few follow-ups on capital allocation, mostly sort of mentioned disposals and it's in the bridge for EPS as well. But it didn't -- it doesn't sound like there's maybe anything in negotiations or in the process. So I'm just wondering why do you already have it as a negative drag on your earnings this year -- or sorry, 2026? And then secondly on that, you made the case for share buybacks as well. So considering that, wouldn't that affect in any case be neutral at worst if you deploy that money into share buybacks?

Yes. So Andreas, in terms of the impact of capital recycling in the '26 guidance, we've obviously made some disposals this year, so we share around GBP 150 million of disposals and they were pretty much weighted to the end of August. So you do get the full 12 months impact of that. We think the GBP 300 million to GBP 400 million disposals that we're talking to next year will be slightly H2 weighted. But we are also already having conversations about bringing a portfolio to market. That's more sort of value-add stock we talked about, but we're also having conversations around core assets that we can sell maybe slightly sooner than that.

And then sorry, the second part of your question was around?

Reallocating that capital.

Reallocating. So this guidance does not assume a reallocation of that capital into reinvestment at a positive spread. Clearly, if we make good progress in good time on those disposals, it will give us scope to invest via we've said university partnerships or also potentially share buybacks. The mix of how we deploy that capital when it's available will depend on the opportunities we see in front of us. And -- we are looking to do more on university partnerships when we have that capital, it will depend on the opportunities we see in front of us.

And then secondly, on development and development yields, you sort of think 7% plus is good capital allocation. But I guess you're shares are trading at an implied yield which is above 7% on an unlevered basis. So why wouldn't that target be more like 8% to 9% perhaps?

I think Andrew is within 7% plus, there's numbers bigger than the 7% that we'd be pushing for. So there's a long way to go to go from development yields in the mid-60s to something that's 7%, 8%, 9%. Clearly, that will mean that some of those schemes would likely to be unviable, and the discipline for us is to say that we will not build schemes where they don't hit the kind of returns we need.

I think the other point we drew out there is that nomination agreements need to back those income returns. But your point is a very good one. We need to think about how long it takes us to get to that development yield. We need to think about the risk involved in delivering it. And if there are better alternative uses of capital through share buybacks when we have that capital available, we will think very hard about.

And then finally, how do you see the opportunity perhaps to tilt your product from student housing to other types of living perhaps in micro living, co-living, sort of niches where the product fit out -- fits the other side of that angle. Is there any impediments around that? Or is that even a consideration?

Yes. I think what we've seen in the sector is a number of the recent consents that have been gained are more open and more varied. So will either include co-living or a blend of co-living and PBSA. And it feels like that sort of combination and merging of use classes is happening. With our Manchester scheme, we've actually got 4 very different product types within the 2,300 beds that we will be delivering. Now they are all focused on students, but we're starting to see that blend of different product types and blocking of buildings into different products becoming more normal.

So I think as we look forward to and we get a to the track of developing, I think, a wider uses and wider kind of consent will be something that we will be pushing for? Because I think, as I say, we've seen success from other players in the marketplace of being able to do that and to be able to manage them more effectively than I think it would have been historically.

And I think students are more comfortable living in kind of nonpurpose-built blocks as well in a range of different tenants, particularly for those second and third years. So we see Empiric has a great sort of stepping stone into that space to just start to learn and understand that market there. And I think as we think forward to new schemes then that wider sort of sense of uses will be something that we do consider.

[indiscernible] ABN AMRO. One question maybe on the developments because you mentioned that the 2025 deliveries are basically running below budget. So what's today's occupancy rate for those developments? And you also mentioned that students are sort of hesitant to sign up for new developments because they are worried on the delivery date. Is that fare -- basically actual fare? Are you running behind schedule on some of these developments? And this is something that you can mitigate there if this fare is basically not another real fare that you do deliver on time. And I'll do the question after that.

I'll take the one on maybe to start with in the development. So as I said, in terms of the buildings that we opened new or reopen this year, we achieved 65% of our target income, occupancy were actually slightly higher -- but what we did when we realized that the conditions were tough around leasing up new buildings as we took decisions to, in some cases, shorter tenancies. So we went maybe a 51-week sale that was targeted in international students, when we saw that market was harder, we moved it down to maybe more than 40-week tenancy in the first year to try and stabilize that income. So there is a bit of a gap to go to recover, both in terms of selling out in terms of all beds, but also in terms of stepping up the length of those contracts to where we originally budgeted.

Karan, do you want to pick up the point around student behavior and choosing student buildings, which are under construction or nearing completion?

So what we have found is that as there has been more supply in certain cities where students have had choice, they've not wanted to take the risk and the agents who often advise these students have preferred to go with assets that have been open and stabilized. So especially in the first year, where there's a risk that might be delayed by 2 to 3 weeks, they've opted for more stable sort of solutions. We saw that last year as well with our property that we opened in Nottingham. It was about 2 weeks delayed. And in the end, it kind of rounded about half. This year, it's almost full. So as students have come back, realize quality, realized the experience. We've not only been able to keep a lot of the rebooks from the original 50%, we've also been able to attract and reposition the asset completely.

So the product quality of what we're delivering is actually really good the overall service provision is really good. They just don't want to take the risk when there are other options available. So for us, that means that we've got to try and deliver those properties a bit earlier. And we've got to do a better job of marketing them so people understand the overall experience and have contingencies if things do get delayed.

And I think with the building safety regulations now means that you need to get a sign-off once the building is being completed. It's got a gateway 3 that could take between 8 to 12 weeks. That will mean that student schemes have to be delivered significantly earlier than they have been beforehand. So you'll see that gap emerging. I think that does put further pressure on the ability to build new schemes.

Okay. And then on the shorter lease terms, so it's also mentioned in the press release that students taking a little bit shorter leases. So what's the trend? Do you think this is a trend? And can you quantify that?

Yes. So on the leasing, what we find is that when you're a U.K. domestic customer, you're really looking for a 40- to 44-week tenancy, which really mirrors the academic year that they're going through as well. So where historically, we may have preferred a 51-week if you're pivoting to a U.K. undergraduate or even an international undergraduate customer, that lease lend needs to change.

The other thing that we've also found is that some students are looking -- actually, could we take one semester, they want to commit for all 3 semesters at the same goal. So where we've got a bit of availability, we have offered that semester, and then we do a pretty good job of them retaining them and backing it if we need to as well.

I think this is a function of one alignment to the academic year. And secondly, just being a little bit more cautious about what if I don't like the university, what if I don't like the course, I want a little bit of flexibility on how I could make some changes.

So one follow-up question on that. Sorry, Veronique from Kempen. You mentioned indeed you offered shorter leases, but what's the actual rental growth that you saw in October versus September? In other words, did you have to give a discount to get to the 95% in occupancy? And if so, how confident are you that, that doesn't impact your next leasing cycle?

Do you want to go first?

Yes, I'm happy to. Yes, Veronique, so where we were at sort of July when we had our interim results, we were about 85% sold at that stage and on the bookings to date, we were running at about 5% rental growth, and that's sort of annual rental growth the way we calculate it. And a big -- that was really sort of pretty consistent across our direct lets and our nomination agreements. However, as you say, we then ended up the sales cycle at 95% occupancy with 4% rental growth. And really, the reason we saw that dilution in the last 10 points of occupancy because we were selling beds either on shorter tenancies than we planned or in some cases, on first semester lets.

So around 1.5 points of the occupancy we saw in the year was a first semester tenancy and that drags down the overall rental growth. To put that into historical context, we generally sell about half as many beds for a first semester, so that did have an impact in terms of whether rental growth it up.

We got about 10 minutes of questions, Mike, is there anything on the webcast that we need to pull out that we haven't covered?

We do have a few on the webcast, so I'll canter through these quickly. First is from Ian Richard, a private investor. Why are you targeting 80% exposure to high-tariff universities and not 100?

Yes. I think that we do see that there are good universities who aren't in that high tariff group. And I say the government is very supportive of and we're seeing strong demand from students to go to universities, which a very good employability outcomes. So Manchester is a good example of that. They've got one of the highest employment rates of all universities right across the U.K. They've been growing their student numbers by between 5% and 6% per year over the last 4 or 5 years, they've got low international exposure. That is a university, which has forged excellent relationships with industry, it does a lot of placements for their students, and it is meeting a need and a requirement for our students to go and study there.

It doesn't meet the category of a high tariff university, which is generally research heavy and focused on different types of products and different types of education. So -- that's why I talked about being even more forensic about which universities and which markets that we want to generate in. So there will always be an element of buildings that and universities that we want to work with.

Next one is from Guillaume Langelier at Columbia Threadneedle. As part of the Empiric transaction, were you surprised that international postgrad take-up was below its prior year levels.

I guess the short answer is yes. I think that we were surprised on our own portfolio that, that post-graduate take-up was lower than we were anticipating. We saw the Visa data was very supportive throughout the sales cycle, up 7%, and we were expecting to see a recovery in post-graduate sales as well. Through the Empiric process, we did reduce our occupancy assumptions in year 1 because there was them tracking behind where they had been historically. But they ended up being short of that underwrite as well.

So I think it was a similar level to our shortfall, and it really does come down to that shift of internationals from post grand to underground.

The next one, the webcast is from [ Daniela Lungu First Sentier ]. It sounds like your disposal program targets the weakest assets in the weaker cities. What is the likelihood that there are buyers for those assets? And what kind of discounts might you have to accept?

I think we probably covered that one, Mike.

Next one, Nick Baker MFS, what share of nomination agreements are effectively linked to inflation and what share are a function of local market rents, longer term, should we think about nomination agreement growing at a similar rate to the direct let market?

I can take that. Yes. So all of our multiyear agreements have rental flows in them that as a cap and collar based on either CPI or RPI, and we sort of normally use November-December data to set those. The single year norms, which are about 11% on -- so of the 59%, 48%, year 11% a single year. Those will get repriced every single year based on current market conditions.

On the second point around do we see them coming together. I think once we start to go to the disposal program, and we sort of have a comparable portfolio DL and nominations in a city and where we are targeting to drive rental growth sort of 50 to 100 basis points ahead of inflation. I think you will start to see some more commonality in the rental growth. But right now, the portfolios are quite different. So sometimes it becomes difficult to compare DL versus nomination rents because there are different cities, different properties, different products.

I think it's one of the features of having a multi-asset multi-tenant portfolio that we do see different levels of performance in cities and in assets every year, and it's probably something which you haven't seen because we've always sort of delivered at the upper end of our occupancy numbers, and we haven't seen that sort of slight movement you see and differences in rental growth between noms and direct let within cities.

So it generally is that where you have that very strong demand, you can dry your prices dynamically through the sales cycle, and that's what delivers your stronger rental growth from direct lets when you've got very strong demand and squeeze supply in those markets. And as we've seen this year, when you have some softness, that's when your nominations performance, and you may need to do a bit more price activity but that is sort of an element of dynamic pricing when you're selling 65,000 rooms every year across 22 different cities. So that will be something and is a feature of having an operational business with dynamic pricing across our estate.

Probably have time 2 more, and then we'll look to wrap up.

Neeraj from Barclays here. A quick one on your credit profile. Do you see a risk of negative rating action from S&P on the back of this operational weakness or any potential valuation to decline?

We're in a good place in terms of our rating in general, and we've generally been sort of closer to the better end than the worst end. Clearly, we want to keep our leverage in a conservative place. And I think that's what we set out in terms of our capital allocation strategy. We're not going to stretch the balance sheet, keep our net debt, EBITDA and interest cover at what we think are appropriate levels. And it's really all about how we can get back to growing our income, growing our earnings. And ultimately, that's the underpinning of look of credit rate.

Paul, finish this off.

Sorry. One, just a quick follow-up on the short tenancies you mentioned I think in the past, the 97% occupancy that you delivered has been on the academic leasing. So if it was all for 51 weeks, it was for the full year, and obviously, there's a mix of that. I assume the 95% is on a similar basis, but actually then if you think about it through the whole year, it's a much greater decline? Is that the best way to think about it?

The way we've always disclosed occupancy pull is on beds sold. So historically, it's always been the same, whether it's been sold for a semester or for the entire academic year, where you get the impact of short -- selling shorter tenancies or longer tenancies is in the rental growth. So rental growth figure is an annual rental growth figure. So where you would see it in last year's numbers, for example, is in that dilution of rental growth I talked about earlier as opposed to the occupancy.

Okay. So there's not an additional impact because it's left for 10 weeks less than it would have been if it was on a so if something should have been let for 51 weeks and it's been about for 40 weeks, it will be 100% occupied in the numbers, but you're saying the rent would be lower? Or how best -- sorry, just to understand?

I think this goes back to the point I made around how the rental outturn we deliver the '25, '26 impacts the guidance for FY '26. So to your point, sort of where we'd have shorter tenancies or more semester lets, you are getting that income through the back end of 2025. However, you may not be receiving it on all of those beds. As I said, semesters about 1.5 points of occupancy through 2026 and maybe not through the summer of 2026. So where we've seen that dilution in rental growth, that impacts FY '26 as opposed to FY '25.

Well, thank you all for calling and bearing with us as we took you through lots of information and lots of detail. I really appreciate you coming listening intently and we're around if you want to chat, but otherwise, we'll catch up with you all soon.

Good morning, everybody. Thank you all for joining. We've got a full house this morning, which is great to see. Thank you all for coming along, whether it's the latest start or something else happening, which has encouraged so many of you to come out. But thank you all for coming along this morning, and welcome to all of those who are joining us online as well this morning to take you through our half year results.

So delighted to take you through another set of strong results for the business, driven by our operational performance and rental growth. Our development and university partnership pipeline continues to give us good visibility over growth. And today, we are reiterating our earnings guidance and rental growth guidance, supporting a 5% earnings yield on our NAV. I'd like to just start by thanking all of the Unite team who do all the hard work to make this all possible, and great to see a few of you here in the room as well. Thank you.

Our performance demonstrates the strength and resilience of our model. And we talk about our platform, our portfolio and our partnerships, and these continue to be the things that underpin everything that we do. The alignment to the best universities, offering a real range of price points to a wide range of customers and our ability to flex our sales across nominations and direct let, domestic and international students. And that's really driving that performance in what is a more competitive sales cycle this year and also enabled us to secure our second university partnership with Manchester Metropolitan University, which we announced earlier in the spring.

The fundamentals for the sector still remain very supportive. We're seeing U.K. demand and participation to be strong, and will continue to be supported by the demographic surge that we're seeing over the next 5 years. And we've seen a rebound in international students, with international applications and visa issuance both up in the first half of the year. And we do see further growth in international demand for education over the medium term. New supply continues to be restricted by viability, regulation and funding pressures. And these fundamentals really do support our appetite for continued growth and our outlook for rental growth in the sector.

The opportunity set that we'll come on to talk about is as broad for us today as it ever has been, and is often the case in trickier markets. Actually, this can produce more opportunities. Universities are responding to the financial pressures. The visa changes that we saw last year have created some uncertainty, and the funding environment and development viability continue to make investment hurdles higher and harder to support. But I think we feel that we're very well placed to play into that uncertainty that those markets are creating through our unparalleled reputation and relationships with leading universities, the fact that we have the sector-leading operating platform and the capacity to drive efficiency from other portfolios and our ability to access funding.

So as others struggle to compete, actually, this does result in a wider range of opportunities for us to be looking at, which I will come back to talk through. And the offer for Empiric does represent one of those opportunities, and it would provide us with the opportunity to extend our product offer and target a specific customer segment group, who are currently underserved by our portfolio. The diligence on the portfolio is ongoing. There's no new information that we will be sharing today, but we remain committed to the strategic rationale of targeting this segment, but we'll remain disciplined on price and quality.

So looking at the numbers, we delivered a strong earnings performance across the first half across our 2 key measures of earnings per share and total accounting return, driven again by occupancy, rental growth and cost control. We're currently 88% sold for the next academic year compared to 94% at the same time last year. And importantly, our rate growth has been strong and consistent and is at the upper end of our 4% to 5% range on the sales that we've made to date.

Our sales performance is well supported by our nominations agreements at 56%, and international sales have picked up meaningfully after a slow start. So we are now trading in line with pre-COVID levels, and we talk about a more normalized sales cycle. And so when we look back to those pre-COVID years, we are very much in the high 80s, which is typically where we'd be this type of year. And it's true that students are being a bit more savvy, and they are waiting later to book. They did see some of our competitors offer fairly big discounts later on in the cycle last year. And so when we speak to students who are living with us who haven't yet booked, it is because they are saying they're waiting to see if there may be a better offer later on in the cycle.

So whilst we do have slightly less visibility on the outturn than we've had over the last 2 years, we see encouraging data that supports our occupancy target. And that's really the fact that applications to study in '25, '26 are up by 2%. And both of our core customer groups, U.K. 18-year-olds and international students, are up by the same amount, applications to high-tariff universities are up by 5%, and student visa applications are up by 19% in the first half of the year.

And then looking further out, the fundamentals for the sector remain attractive. U.K. demographics continue to provide a tailwind, participation rates are back at pre-COVID levels. And after the visa changes last year, we see international demand recovering. And we're not seeing any impact of university finances or affordability impacting applications. And the supply squeeze that we talked about 12 months ago, it's continuing to play out. New starts and deliveries remain well below historic averages, capital requirements per bed are significant, and the new building safety laws are adding significant time across the sector and can delay schemes for up to 1 to 2 academic years.

HMO beds available for rent are down by about 10% over the last 3 years, and we expect the increased regulation on these beds through the Renters' Rights Bill and the impact of ongoing high mortgage costs will continue to impact the supply. So the longer-term dynamics we see are supportive of our ongoing rental growth and our investment plans.

International students globally have grown significantly over the last 15, 20 years, and we expect that to continue to grow to around 9 million by 2030. The U.K. has a world-renowned higher education sector, 17 universities in the top 100. And in my discussions with government, it is clear that they recognize the higher education sector as a real asset class and a driver of two of their missions around growth and skills agenda. Yes, they are seeking to eliminate perceived abuses of the student visa system and effectively ensure that we are attracting the right color of students to come and study here and work here, but they're not looking to impose or restrict numbers through a cap. And on top of this, the U.K. is looking increasingly attractive relative to our main competitors, particularly given some of the behavior from the U.S. and a more restrictive stance in Australia and Canada.

The policy backdrop for higher education is starting to become clearer, and we believe the outlook is stronger. Government is supportive. As I mentioned, we saw higher education being called out in the industrial strategy. Universities are taking action to address the financial pressures that they see, and the 3% increase in fees opens a possibility for a longer-term increase in fee levels, which will provide more stability for universities.

We actively monitor the financial health of our universities, and our exposure to the most at risk is very limited, with less than 0.3% of our revenue aligned to the bottom 10% of the lead tables -- bottom 10 in the lead tables, sorry. And we've seen increased interest, I think, over the last 6 to 12 months around our longer-term partnership model as universities look to protect their balance sheets and use capital to focus on their academic infrastructure.

The immigration white paper that came out a few weeks ago seeks to address some of those abuses of the graduate visa system and also to use international students to support widening participation and that skills agenda. The changes reflect a focus on attracting the best and brightest. And under the current policy, we do expect to see good growth from international students, particularly at the better universities. And so our alignment to those better universities is more important today than it ever has been.

And then finally, on the Renters' Rights Bill, it is currently passing through Parliament. Similar legislation is also being drafted in Scotland. We expect purpose-built student accommodation to be exempted from this legislation and from the provisions in the bill both in England and in Scotland. And we're just working through the transitionary arrangements that could be in place in the first year of that legislation.

So we remain positive, as I said, on the outlook for student demand and supply over the next few years. It supports our strong and growing earnings yield and underpins our total returns of between 8% to 10%. We continue to see rate growth on this year's performance, and the university sentiment and applications data is supportive of us hitting our occupancy targets. And with this backdrop, we are continuing to push into growth. The number and quality of university proposals that we are having in conversations that I'm having with vice chancellors has accelerated in the last 6 to 12 months, covering both investment assets and developments. And we have a handful of ongoing conversations with Russell Group universities. We expect one of those to come to fruition in 2026.

Our development program is progressing well, and we retain flexibility over a number of these schemes. The acquisition market is open, and we're seeing some interesting portfolios being brought to market, often at prices below replacement cost, and where we can add value. We actually recently lost out on a GBP 400 million portfolio, primarily in London that had some reversion to it, again, showing the strength and depth of bids for portfolios like that. And we do see the opportunity to extend our offer, and this covers both affordable product, and as also as the HMO market continues to come under pressure to push into that return to market. And Karan will speak a little bit more about both in a moment.

So given that range of opportunities, we will continue to be dynamic and disciplined around how we allocate capital based on the risk-adjusted returns of each opportunity in front of us, with that focus on continuing to enhance our portfolio quality, aligning to the strong universities, delivering compounding, growing earnings and delivering total returns in excess of our cost of capital.

I hand you over to Mike.

Good morning, everyone. I'm going to take us through a review of financial performance and property activity during the first half. We delivered a strong financial performance in H1, underpinned by healthy rental growth. This resulted in 3% growth in adjusted EPS to 29.5p and a 3% increase in our interim dividend to 12.8p. EPRA net tangible assets per share increased by 1.4% to 986p, which supported a total accounting return of 4%.

The business delivered like-for-like rental growth of 7.4% in H1, driven by strong rental growth and occupancy for the 2024-'25 academic year. There was an additional GBP 12 million of net operating income generated from net investment activity. This includes our acquisitions from USAF and completions of development and asset management projects over the past 12 months.

Operating costs increased by 9% on a like-for-like basis in H1, reflecting increases to staff costs linked to the real living wage and hired employers national insurance contributions from April. Utility costs were unchanged over the period, reflecting a stabilization in commodity prices. We're fully hedged for utilities for the remainder of the year and see our costs holding flat.

Adjusted earnings increased by 15% in the period, thanks to growth in net operating income. Our EBIT margin was stable at just under 72% in H1, with growth in income matching increases in operating and overhead costs. We continue to anticipate up to 0.5 percentage point improvement in our EBIT margin for the full year, reflecting our rental growth expectations and slowing cost increases.

Finance costs reduced by GBP 2 million compared to the prior year through lower investment debt following our equity issue in July 2024. This resulted in 3% growth in adjusted EPS, taking account of the new shares issued over the past year. We've also declared a 3% increase in our interim dividend, consistent with our policy to distribute 80% of adjusted earnings. Adjusted earnings excludes GBP 7 million in the period for implementation costs linked to our next-generation technology systems, and we expect a similar level of investment in H2. This investment supported delivery of new customer management and finance platforms in the first half, and we're already seeing the benefits in terms of improved customer and colleague experience.

Our EPRA net tangible assets per share increased by 1.4% during H1 to 986p. Property valuations were the main driver of this growth, increasing by 1.4% on a like-for-like basis. This reflected further recognition of rental growth for the 2025-'26 academic year based on progressive reservations. This was partially offset by a small increase in property yields.

Development valuations remain broadly unchanged in the period, awaiting key milestones around planning and construction starts, and we expect the recognition of development profits to accelerate, the schemes are derisked through planning and approvals from the building safety regulator over the next 6 to 12 months. This NAV growth, together with the payment of the final dividend for 2024, resulted in a total accounting return of 4% for the period.

We've continued to see strong investor appetite for the student accommodation sector. In the year-to-date, GBP 2.5 billion of assets are either traded or are under offer. Transactions are though taking longer to complete due to technical due diligence, particularly around fire safety. Both private equity and institutional buyers remain active, attracted by the sector's positive outlook for rental growth.

The market remains well bid. And as Joe said, we were underbidder on a GBP 400 million portfolio in the period in a competitive process. We expect to see a range of portfolios come to market in the next 6 to 12 months, and we will remain disciplined in how we filter these opportunities. We're particularly attracted to those situations where we can add value to our operating platform, university relationships or asset management.

There's been a significant increase in build costs over recent years, and that means that PBSA assets are now valued below replacement costs in most regional cities. We expect this to severely limit new supply in regional markets in the near term.

As Joe said, our strategic focus is to improve the quality of our portfolio and income through alignment to the strongest universities. We achieved this through our accretive investment activity and capital recycling. In our off-campus development pipeline, we will deliver just over 1,000 beds this year in Bristol and Edinburgh, and we have a further 3,600 beds for delivery over the next 3 years, which are either on-site or awaiting approvals from the building safety regulator.

University partnerships are a source of significant future growth of the business. We've made great progress in the first half in adding to and delivering this pipeline. We announced our second university partnership with Manchester Metropolitan University, and we've now also secured planning approval for our 2,000 bed development at Castle Leazes in Newcastle.

We're seeing an increasing range of acquisition opportunities to enhance and broaden our platform, and this includes the possible acquisition of Empiric Student Property, whose portfolio would provide significant exposure to the attractive market for returning students. Disposals also remain a core part of our strategy by helping to enhance portfolio quality and provide capital for reinvestment. And we've agreed the disposal of 10 properties in the period to GBP 214 million.

Our off-campus development pipeline is 100% located in Russell Group cities in locations aligned to the growth plans of our university partners. This year, we'll see us deliver 2 new properties in Bristol and Edinburgh. Avon Point in Bristol is located directly opposite the University of Bristol's new Temple Quarter campus, which is set to open to students in 2026. We've secured a 14-year nomination agreement with the university for just over half the beds and see strong prospects for the building as the location becomes established.

Our Burnet Point development in Edinburgh will see the delivery of the hybrid student and build-to-rent scheme as part of the planning consent for the site. The range of product will appeal to a full spectrum of students from first year to postgraduate as well as young professionals.

A number of our development starts for delivery in 2027 and 2028 await preconstruction approvals from the building safety regulator. We continue to experience delays, but are working hard to mitigate the impact in partnership with our contractors. The current environment in terms of cost and regulation makes development more difficult and we're therefore ensuring any new opportunities provide us with optionality. Given the current bottleneck in securing BSA approvals, we expect development deliveries across the sector to be impacted until at least 2028.

We were delighted to secure our second university partnership in the first half with Manchester Metropolitan University. It will see the redevelopment of a Cambridge Hall site in Manchester City Center into 2,300 new beds. Manchester Metropolitan are one of the U.K.'s largest and most successful universities, and the joint venture builds on a relationship of more than 20 years.

We're actively reviewing a number of further partnership opportunities with high-quality universities and continue to target one new partnership per year. Each of these conversations is different, tailored to each university's needs. We expect future opportunities to combine both acquisitions of existing assets and development of new beds, which provides immediate income returns alongside future value add.

We have a high-quality balance sheet, which enables the delivery of our future growth plans, and we retain funding capacity as we continue to deploy the proceeds of our 2024 equity raise. Net debt to EBITDA is currently 5.3x, but expected to increase towards our stabilized target of 6 to 7x as we deliver our development pipeline. We will continue to manage our leverage through disposals, and expect to sell around 2% to 3% of our portfolio on an ongoing basis.

Our cost of debt rose 3.8% in H1, following refinancing activity at higher rates over the past 12 months. Our marginal cost of debt is currently between 5.5% and 5.75% as reflected in USAF's new GBP 400 million 8-year loan with Rothesay at a cost of 5.6%. As a result of refinancing activity, we expect to see our cost of debt rise gradually to 4.1% for 2025 and 4.5% in 2026.

Based on our strong performance in H1 and the encouraging outlook for the 2025-'26 academic year, our financial guidance remains unchanged for 2025. The growth expected in the U.K. and international student numbers and our sales progress to date supports rental growth of 4% to 5% for the next academic year, and we are targeting occupancy of at least 97%. This supports 2% to 4% growth in adjusted earnings per share to 47.5p to 48.25p. Growth in our recurring profit delivers an earnings yield of around 5% on our NAV, and this underpins our guidance for a total accounting return of 8% to 10% in 2025 before any movement in property yields.

And with that, I'll hand you over to Karan to take you through the operations review.

Thanks, Mike. As Joe and Mike shared, we've carried forward the strong momentum of last year into 2025 as well. Our student satisfaction scores are up. We started to see the benefits of our new technology platforms, and our relationship with universities continues to drive value and open opportunities. This once again highlights the strength of our operating platform, and you can see that in the strong top line performance we have delivered for half 1 of this year.

As Joe highlighted earlier, the fundamentals of student demand remains strong and applications have continued to grow for both U.K. 18-year-olds and so have student visa applications as well. We have seen the above translate into strong demand from universities for our core undergraduate offer, and we expect to see further demand from universities for nominations through clearing as well.

We have been disciplined both with our pricing as well as the use of incentives in line with our strategy to drive both sustainable rental growth as well as improve our margins, and we will continue to be disciplined through the rest of the sales cycle as we optimize for revenue. As of this week, we have sold 88% of our beds at roughly 5% rental growth on the sales to date.

I wanted to add a little bit more color on how we see occupancy build up towards our target for the rest of this year. At the heart are our nomination agreements with universities and they are currently at 56%. But as I said, we expect this number to grow from here, given our expectation that higher and mid-tariff universities will recruit heavily in clearing for U.K. domestic students. Our strong relationships with these higher education partners, which have been built up over decades, puts us at the front of the line when they need more rooms.

Second, rebookers and direct-let U.K. students, they typically are second and third year students, and should each account for about 10% to 15% of our customer base. They are down now on last year because many students, as Joe mentioned, are still waiting to rebook as they seek more affordable deals.

Finally, we expect direct-led international students to account for between 14% to 18% of our customer base. Most of these students are postgraduates. And if you will recall, this was a segment that didn't arrive in the numbers as we expected last year. This is also the segment that normally gets us offers late from university and they tend to book late through clearing and through into September as well. Our teams in China and our partner agents in other markets are keeping us abreast of what these students want and expect. And we are encouraged by the increase in visa applications to date and the fact that application from China, which is a key market for us, are on the rise, up 10% for undergraduates at the end of June.

Lettings have been a bit slow in Leeds and Nottingham, which have seen both a change in the ranking of its universities as well as short-term pressure from an increase in supply. In addition, we also expect a couple of our new builds to lease up a little bit more slowly than usual for new openings as students are favoring completed assets with greater availability. We had a similar situation last year as well, but that building is now on track to be fully let this year, so this is much more of a case of a new development taking a year to stabilize than at opening. So August and September are going to be very busy months for our teams as we look to gain another 9 points of occupancy towards our target.

As you can see from the previous slide, we are expanding the breadth of students we host each year and in the process of learning a lot more about what they want from us when they live with us. As a result, we are embarking on not just refreshing our core brand, but also expanding our offer to better serve these distinct needs.

Let me start with the co-brand, which is primarily going to be focused on our first year undergraduates with the strong nominations underpinned. We have now completed its full refresh. This has included new next-generation rooms for our own suite and our studio product as well as the creation of a new common room experience. All of this can be seen in our latest properties as well as major refurbs. The product improvements have been backed up by a reboot of our care service program as well as further improvements to the industry-leading support to state student welfare approach that we have. As a result of these investments, we are rated gold in the most recent GSL survey, and we have delivered the highest ever NPS.

At the same time as improving our core offer, we have worked on several concepts to create a more affordable offer for students, and we will be trialing the first of these concepts in our joint venture with MMU as well as at a major refurb in Liverpool.

Finally, we do see a major opportunity for returning students and have undertaken extensive research to understand how they want to live with us and how that differs to when they live with us in their first year. This has given us the confidence to further tailor our proposition to their needs. So we see the opportunity to create a targeted offer that specifically targets this customer, smaller building sizes, smaller flat sizes, more independent living, overall a more grown-up offer.

We have trialed this concept at a new build in part at the Burnet Point development that Mike mentioned, with 100 beds designed in this way, and they have leased up really well. We're also looking at further refurbishment opportunities for this product. The potential acquisition of Empiric fits within this approach and would allow us to accelerate our move into the return of space.

Finally, I wanted to talk a little bit about our value-enhancing asset management program. These new ideas that I shared and solutions are also a core part of these asset management initiatives. As we have shared before, we see a significant opportunity in our portfolio to improve not just the student experience, but also drive higher performance. This year, we are investing GBP 33 million across 2,000 beds at a yield on cost of 8.1% and have a program that will deploy a further GBP 200 million to GBP 250 million over the next 5 years into our estate. These projects are aligned to our strongest partners and cover a range of projects, from common areas to kitchen refurbs to full hard refurbs of the entire building. As part of this program, we're also taking the opportunity to address any ongoing maintenance issues as well as any life cycle needs as well as any sustainability needs as well. And the feedback that we have received, both from students and our own staff, has been excellent so far.

On that note, I'm going to hand you back over to Joe.

Thank you, Karan. Just a couple of slides from me to wrap up. So as we flagged back in February, and I talked about it a little bit earlier, we are seeing a wide range of investment opportunities that support the ongoing growth of our business. And we are looking wider than we have traditionally done. And with that comes the responsibility to think about how we allocate capital.

And as Mike mentioned, development is harder, time lines are getting extended, build costs are growing faster than rents in those markets. But on the flip side, that's making acquisitions look more interesting, and it is cheaper to buy than to build in most markets. And the asset management, which Karan talked about, and the university partnerships continue to be what we see really exciting opportunities and a good use of our capital. So we will continue to be dynamic in the way we think about these opportunities and disciplined about the way we allocate capital to them around those principles I mentioned earlier, around portfolio quality, around growing earnings and also delivering total returns in excess of our cost of capital.

So just to wrap up, we delivered a strong trading performance in the first half of the year and continue to deliver strong returns off the back of that earnings yield. We've got a good pipeline of opportunities that will drive NOI growth over the next 4 to 5 years. And the market fundamentals remain supportive of ongoing rental growth and investment. The policy backdrop is clear, and the demand and supply picture supports ongoing investments. And we're seeing other players find it harder to compete with us at this stage of the cycle. And universities are reaching out to us to talk about how we can help them with their need to provide high-quality, new and refurbished accommodation. So we will keep pushing to take advantage of these opportunities that are in front of us.

On that note, we'll go over to some questions.

Sam King from Exane. Three questions, please, guys, two on the market and one on numbers. I'll go one by one. So just firstly on UCAS applications. June data was clearly positive. But on the UCAS webinar last week, they cautioned more 18-year-olds are living at home and traveling to university now, so numbers are 1 in 3 live at home versus 5 years ago, 1 in 4 live at home. So clearly, that's quite a big chunk of demand that's coming out of the market. Just kind of interested in what you think about that trend? How much of a risk is that to your business?

I think we have seen that trend, and it's accelerated post-COVID, actually, that number. It's been fairly stable up until that date. And that is particularly marked at those lower-ranked universities. So we're still seeing a proportion of stay at homes at the higher ranked stay at those historic levels. So it sort of supports that view that we need to continue to be aligned to the strong universities.

And then secondly, on the investment market and capital allocation. I appreciate you flagged at the full year results, there's more acquisition opportunities. It feels like every week, sometimes every day, in the trade press, there's another portfolio that's being launched for sale. At the same time, you're talking about the development environment getting a lot more difficult for yourselves and the market. Should we almost think about that as a pivotal point or a change in direction of your growth strategy that will become more acquisition-led moving forward rather than historically what's been a development story?

I think the development is still going to be part of our story. I think we've got a real capability, which differentiates us from many others in the sector. But I think it will be more focused, and I think it will be focused on to 6 to 8 cities where the rents do support development and development costs. And also, I think, seeing increasingly those deployment of that resource into our university partnership activity. It's been clear with both Newcastle University and Manchester Met that we have a real skill set that we can bring to help enhance the efficiency of those schemes and through our supply chain, the more efficient delivery as well.

So if you look at the overall pipeline of build activity that we've got, it's bigger than we've ever had. I think that balance of what will be on campus and what will be off-campus may shift a little bit. And then beyond in those cities where the replacement cost is above valuations, then yes, it's unlikely that we'll be building in those cities.

And then last one, the numbers for Mike. On EPRA EPS, that was flat for the period versus your adjusted EPS that was up 3% from the software cost adjustment. I appreciate your comments that H2 costs will be in line, I think it was about GBP 7 million for the first half. How should we think about that cost adjustment from next year onwards?

Yes, so we're sort of making good progress through that program, Sam. We're sort of in year 3, I'd say, of the 4-year program. So yes, we guided GBP 10 million to GBP 15 million of software costs net of tax for the full year. There'll be the remainder of those costs in 2026. So we've got one key piece of the sort of technology renewal program that's ongoing, which is our property management system that will deliver in 2026. And I think you should anticipate around GBP 10 million of additional costs next year.

Andres Toome from Green Street. So I had 2 questions. First one, on just supply. You sort of mentioned that some markets are a bit weaker, partly demand-driven, but also supply. I guess when you look forward for the next few years, are there certain cities where you still see more supply coming that could be detrimental for rental growth? And how does that work together with your portfolio streamlining strategy? Are you looking to exit those markets?

I think we've seen over the history of Unite that we have pockets of new supply coming into cities, and it does have some short-term disruption on the rents and the letting cycles within those buildings. And so Leeds and Nottingham that we call out are 2, which have sort of met within that arena. And we're seeing quite a lot of supply coming into Bristol and Manchester at the moment over the next 5 years. So there is sort of an assessment of that's catch-up, where will it end up and what will that do to the overall leasing and demand supply picture within those cities. And yes, we do look to balance our portfolio where new supply is coming, either our own or other people developing as well.

So it is a dynamic picture and the demand and growth outlook of the universities is fundamental to understanding whether it can absorb that and existing supply. So we don't look at Bristol and Manchester, see the supply that's coming and stop panicking to say those are universities, which will suddenly have voids for the next 10 years, but we make sure that what we're building and what we have then fits within our overall portfolio strategy, and that's why those disposals that we target making and we have made every year are so important to ensure that we're not only meeting that needs and alignment to the best universities, but also thinking about the supply in cities where students want to live and what price points they will live out as well.

And secondly, just on operating margins. There's been quite a lot of cost inflation, of course. And as you noted, it's stabilizing, but operating margins are still quite a bit below historical norms. So how do you see clawing back to those historical levels? And what sort of steps would you need to take to get there?

So you're right, Andres. I mean we're guiding to a sort of 0 to 0.5 point increase in operating margin for the full year. That would still lever operating margins below where they were at peak if you went back to sort of 2019 levels. I think sort of 2 points to call out. I think we've made deliberate investments in some things that mean that I don't think we will get back to that level of margin, sort of 72% EBIT margin we saw in 2019. That's partly because of the investment in technology. So as much as there's a capital cost that investment upfront, there will be an ongoing licensing cost of supporting those platforms, but we think we get a payback sort of ultimately in terms of customer experience, colleague experience, and there will be some efficiencies that come through that as well.

I think the other factor is just the level of inflation. Clearly, we've seen coming out of COVID. So our rental growth has helped to mitigate some of that cost inflation. We are starting to see costs sort of turn the corner, I think. So I mentioned utilities. So utilities were flat in the first half. I think actually, if you look at the wholesale market, utility costs, we're starting to see probably flat to maybe small down in utility costs and a forward-looking outlook.

Staff costs, again, the increases have moderated, but we are real living wage payer, and so we've paid a pay increase, which is absolutely the right thing to do with just over 5% for this year, but we do see that softening slightly. National insurance is a bit of a one-off item, but that impacts our numbers this year as well. So we think with the rental growth we'll see for the next academic year, there will be a slight improvement in margin. I think the volume of beds we bring to the pipeline helps as well. But we're not expecting a meaningful improvement in margin from current levels.

None in the room. We'll go on to any online, Mike.

I've got some online from Marc Mozzi at Bank of America. And so the first one is, what are the drivers of the increase in capitalized interest in the first half 2025, up from GBP 7 million in the first half of '24 to GBP 16 million in the period.

Really, that is related to the level of development activity we've seen in the period. So we've got 2 schemes that are obviously almost at the point of completion, the schemes I talked about in Bristol and Edinburgh. We also went on site with our scheme in Glasgow, Central Key. That's where we started realizing costs. And we had a larger site, Kings Place in London, which we acquired out of last year's placing proceeds is in the demolition phase as we get ready for a construction start. So fundamentally, more activity, there's been no meaningful change in the rate at which you're capitalizing. So it's really all linked to activity in our development pipeline.

Second question then from Marc is what explains the increase in expected credit losses to GBP 1.1 million in H1 2025, which is similar to the figure for 2024 as a whole?

I think as I said, there's nothing meaningful to read into that. We do provide for credit losses if we see that coming through. But I would say, in terms of actual bad debts in our portfolio, they have been at around 0.5% of income in the last 5 years. We see nothing different meaningfully this year. There does tend to be sometimes some timing effects when they fall if it's first or second half, but I wouldn't say there's anything meaningful to read into that.

And then I've got one more question here from Daniela Lungu at First Sentier. Could you please give us more color on the increase in central costs and other costs, which are up 14% and 17%, respectively?

So I think there's a few things in here, albeit some of the figures are sort of small in absolute terms. What we have seen, in some cases, cancel tax increasing in local authorities, and this has really been local authorities pushing for essentially revenue collection at a local level. That's been one of the more meaningful items in those central costs. We've also started to see some of the licensing costs from our IT systems come into the P&L. So where we've launched things like new Salesforce and Oracle platforms, you start to see those costs in the central overheads. So they are the biggest drivers.

That's it for the questions online.

We've got one more.

We just need to turn to the conference call. So we'll invite questions from the conference call now, please.

The first question comes in from the line of Aakanksha Anand calling from Citigroup.

Can you hear me all right?

Yes.

Perfect. I have 3 questions. I can go through them one by one. The first one is just that you mentioned the increased acquisition opportunities that you are seeing in the market. Could you just help us with how important is immediate EPS accretion from any of these opportunities that you might pursue? And is there an EPS accretion hurdle that you think about?

So in terms of the outlook and within the numbers, I think, which we've previously guided, they're not required in terms of delivering that EPS growth. I think this would be additional growth if we are to make acquisitions, and that's where I referenced them being effectively returns being in advance of our cost of capital.

What was the second? In terms of the hurdle rate, it's hurdle rate. So again, it will depend on the level of risk, which is associated with these acquisitions. So say we start with that view that the returns have to be stronger than our cost of capital. And then we would look for an element of earnings growth, which should obviously grow to a larger number, the more risk that we're taking on to as acquisitions.

That's understood. The second question is on the possible offer for Empiric. Could you provide some color on the considerations for the deal that are -- I appreciate that they are basically taking longer to evaluate. And how do you think about the much higher dependence on international student demand for Empiric, so 70% of their customer base is international. And will there be an effort to align more towards Unite's split where 70% is actually domestic demand, if the deal goes through?

Yes. So we are limited in what we can say and we can only rely on what is in the public domain. And I think the strategic intent that we've talked about, and I think we've touched on this morning remains clear, that we do see that there is the option for us to address those returning students who, as you say, currently include a higher proportion of international students than we have within our portfolio.

I think the alignment to the strongest universities is one of the key features of that portfolio alongside their target group, and that's what gives us the confidence that for that product type, there will continue to be strong demand at those particular universities for that product. And we are sort of going through the process of completing our diligence on that portfolio, and we'll update the market at the appropriate times.

Understood. And the last one, clearly, more market-based basically. So clearly, affordability is a concern and that's also been a driver for relatively lower occupancy, as was touched upon during the presentation for '25-'26. Just wanted to get a sense of what proportion of the overall PBSA market at present is below Unite, right? So I appreciate there are differences in portfolio quality, et cetera. But if we talk only on a rent basis, what proportion is below Unite and probably split that between London and regional.

Yes. So we look to position ourselves as a mid-price point, mid-market price point. So we're probably at the lower end of the second quartile in terms of pricing. So I'd say that there's probably 50% to 60% of beds, which are cheaper than ours across the U.K. That doesn't take into account the fact that we are in generally better quality cities at higher price points. In London, actually, I think we're probably at the lower end, and we've probably been in the third quartile in terms of price points, that primarily because we built a majority of our stock or a lot of our stock over 10 years ago, and we've been able to retain those lower price points. So that differential is probably even more marked in London.

The next question comes from the line of Paul May calling from Barclays.

Just a couple of question for me. Just wondered, are there any additional indicators you can give? I appreciate university applications are up and supply in totality has not increased as much. Therefore, occupancy should be better than it currently is, but it isn't. So I was just wondering if there's anything in terms of inquiries on your website incoming from students where you can see people are delaying the decision but you're seeing more activity that gives you that confidence is leasing up post clearing.

Karan, do you want to just pick that one?

Yes. So just on the first point around sort of lead indicators. So if you look at our sort of online presence, web presence, we have seen over the last couple of months actually an increase in the level of conversion and traffic versus last year, which I think sort of shows as students have got their offers and have decided where they want to go. That is now translating into additional sort of search activity. I think you've also seen from where we had our trading statement to where we've now, we picked up about 3 points of occupancy as well. So again, if you sort of extrapolate that further, we should be in a good position going into clearing.

I guess the third element for us, which we do rely quite heavily on is conversations with universities. So that is a core part of our offer. In those conversations, universities have indicated that they are relatively confident on the U.K. domestic overall numbers, and they are looking to actually boost the U.K. domestic intake relative to what they did last year in order to manage if there was any sort of fluctuations in international demand. That said, they are actually quite confident of their undergrad demand as well, and that has come through the UCAS data as well. So a lot of the lead indicators are sort of moving into the positive territory, which sort of again backs up the target of 97.

Perfect. And I mean just given how important it seems this year, that post clearing event, are you willing to commit to put out an update at the end of August or early September just showing that occupancy to give the market comfort that you've achieved the targets rather than waiting until the October trading update, which obviously include the NAVs and that the USAF and LSAF, but putting out something earlier on that occupancy is that something you'd be willing to commit to?

I think the letting cycle actually runs a bit longer, Paul. So the end of September is when we will know. Now if we see that there is a big swing, either positive or negative, then we will consider doing it. I'm not sure we can commit today to doing it, but we will certainly look to keep the market as fully briefed as we feel as appropriate.

There are no further questions on the telephone line.

Not that I was trying to clear the questions, but I think that clears the question. So thank you all for coming along and for your insightful questions. And thank you very much, and we'll see you soon.