RBC Capital Markets started coverage of Unite Group on Thursday with an ‘outperform’ rating and 1,025p price target.
The bank said student accommodation should prove resilient in a downturn, while hedged utilities and an attractive product offering improve Unite’s value proposition relative to houses in multiple occupation (HMOs).
RBC said it forecasts an 8% earnings per share compound annual growth rate for 2022-25, supported by like-for-like rent growth and developments, as supply continues to lag demand growth.
“Unite’s 5.8% 2023e earnings yield and circa 8% net asset value/share discount look undemanding at a spread to the UK REIT sector that is comparable with historical levels, despite a more positive outlook than most subsectors,” it said.
