Unite Group PLC (LON:UTG) has said it expects a 10%-20% drop in rental income, with 88% of bed spaces currently let across its whole portfolio, compared to 98% a year ago.
The student accommodation provider said new lettings were partially offset by a higher than usual volume of cancellations following the recent increase in coronavirus (COVID-19) cases, as a result, rental income for the academic year will drop.
READ: Unite acquires 300-bed development in Edinburgh
The FTSE 250-listed firm is targeting additional sales from January 2021 from direct let customers as well as universities, where discussions are underway.
The group said UK students account for a 45% share of direct-let bookings, up from 38% last year, while 21% of bookings still have to check-in compared to 4% at this stage last year.
The company, which has 30,209 beds in 79 properties across 22 UK towns, achieved its £12mln-15mln of targeted cost savings for 2020 but said it is too early to commit to the reinstatement of dividends.
“We believe UTG is well positioned in a market that is attractive on a medium term view, however, we remain cautious on the near term outlook for student accommodation occupancy and the company’s ability to drive rental growth in the upcoming academic year,” analysts at Liberum Capital said in a note to clients.
Share dipped 1% to 872.62p on Thursday morning.