Unite Group PLC shares fell almost 9% to 530p as the student accommodation developer's £100 million share buyback was not enough to sweeten the pill for investors as it reported earnings at the bottom end of guidance for 2025 and a softer outlook for 2026.
Following a decline in occupancy, the group is focusing on shifting the weighting of the portfolio towards higher tariff universities where there is greater demand.
The disposal of a property in London was announced as part of a target to accelerate disposals to £300-400 million per year, with some development projects also put on hold or cancelled.
Adjusted earnings rose 9% to £232.3 million last year, with adjusted earnings per share increasing 2% to 47.5p. It had previously set EPS guidance at 47.5-48.25p.
IFRS profit attributable to owners fell 78% to £97.6 million, reflecting a valuation decrease for the property portfolio compared to the prior year.
For 2025/26, rental growth was 4.0% with occupancy at 95.2%. Reservations for 2026/27 are 68%, compared with 71% a year ago. Unite said this reflects more cautious booking trends.
Chief executive Joe Lister called it "a robust performance in 2025, with strong trading across the majority of our portfolio offset by weaker demand in a small number of cities for the 2025/26 academic year."
The dividend was increased 1% to 37.7p, alongside the new buyback.
Unite also announced the agreed sale of St Pancras Way, a 571-bed property in central London, for £186 million to the Unite UK Student Accommodation Fund, where the sale price represented a 1% discount to December book value. Unite expects at least £115 million in cash proceeds and may lift its stake in USAF to as much as 32% following the equity raise.
For 2026, adjusted earnings per share are guided at 41.5-43.0p, with rental growth expected to slow to 2-3% and occupancy seen at 93-96%. Current bookings for the next academic year stand at 68%, compared to 71% at the same point in the prior year.
Broker Stifel said: "Following declines in occupancy, the company remains committed to its self-help measures, including a share buy-back and an accelerated disposal programme."