Brokerage Stifel downgraded Unite Group plc (LON:UTG) from Buy to Hold on Thursday, cutting its price target to 600p from 975p and pointing to more cautious occupancy expectations in the student accommodation sector.
The downgrade follows Unite’s completion of the Empiric acquisition and a subsequent reassessment of occupancy assumptions for the 2026/27 academic year. Stifel said sales rates for the coming academic year have been slower than in prior years and set guidance for Unite assets at 93%-96% occupancy with rental growth of 2%-3%.
Stifel highlighted a number of headwinds facing the Purpose Built Student Accommodation (PBSA) sector. The research note pointed to a fall in university applications from international students after visa rule changes, affordability pressures for domestic students, and early indications that some students are choosing to remain in family homes and attend nearby institutions. The broker said these trends have had a negative impact on the sector.
Market performance for Unite has reflected those pressures. The company’s shares have fallen by around 30% over the past year, while the EPRA UK Index has risen by 10% over the same period, according to Stifel.
In response to the more uncertain outlook, Unite has scaled back its development ambitions, raised annual disposal targets to 350 million annually and initiated a 100 million share buyback program.
Stifel’s view on distributions is restrained. The firm expects limited dividend growth across its forecast horizon and said its 600p target assumes the shares will trade on a 6.5% dividend yield, a level the broker sees as consistent with other income-focused companies in its coverage universe.
The downgrade underscores how occupancy trends and student demand are influencing investor sentiment toward PBSA landlords. The sector-level pressures cited by Stifel - visa-related declines in international applications, affordability challenges for domestic students and behavioural shifts among cohorts of students - are central to the firm’s reassessment of expected cash flows and dividend prospects at Unite.
Investors considering Unite will need to weigh the adjusted operational assumptions and the company disposition program and buyback in the context of the firm current trading and the sector "
Note: This article presents Stifel