Unite Group (UTG.L): Downgrade to Neutral

Research evidence excerpt

Unite Group (UTG.L): Downgrade to Neutral

Action |

31 Jul 2026 16:09:48 ET │ 24 pages

Unite Group (UTG.L)

Downgrade to Neutral

CITI'S TAKE

The execution of Unite’s repositioning strategy remains contingent on pace

and pricing of disposals in a market where we expect structural headwinds

to persist near-term. We estimate 2030 EPS slightly down compared to

2025 and NAV broadly flat as management pursue disposals and deploy Neutral ↓ from Buy

proceeds into share buybacks and developments. Majority of near-term Price (31 Jul 26 08:21) £5.45shareholder return is expected to be driven from dividends. We estimate

portfolio value decline of -15% over 2026-27, LTV peak at 35% and 2027 Net Target price £5.79↓

debt/EBITDA at c7x. On the other hand, there are upside risks from from £9.06

dissipating macro/geo-political risk, reducing HMO supply supporting

direct-let demand, rental income certainty from nomination agreements Expected share price return 6.2%

and improvement in international demand. In our view, these risks appear Expected dividend yield 6.9%

to be relatively balanced and adequately reflected in the current valuation Expected total return 13.2%

supporting our downgrade to Neutral with an ETR of c13% driven by share

price upside of c6% and c7% dividend yield. Market Cap £2,802M

US$3,773M

We estimate a further -15% portfolio value decline — Driven by a simulation of 10-

year DCF of Unite’s portfolio and reflecting the lower rental growth we expect from

persisting structural headwinds. Our estimates reflect a portfolio value decline

range between -9% to -26% where we expect direct-let values to be more Price Performance

significantly impacted (scenarios in the note). Unite’s portfolio is broadly evenly split (RIC: UTG.L, BB: UTG LN)