Unite Group Stock

Good morning, everyone, and thank you all for joining the call. I'm going to take you through a few slides, and then we'll open up for some Q&A. So if you have any questions for me and Mike, please drop them into the webcast.

Overall, we're pleased with our progress against the priorities that we shared earlier this year. We've delivered a strong leasing performance in an evolving market, helped by the strength of our best-in-class platform. Our enhanced commercial approach has delivered reservations of 96% at the upper end of the range guided back in July. Whilst annual rents are down a little, this largely reflects a mix towards more undergraduates and resulting in shorter tenancy lengths.

We're also especially pleased with the performance of Empiric with occupancy of 92%, meaningfully ahead of last year. Income growth is in our range, and our EPS guidance for '26 is underpinned.

Our best assets are performing strongly, and we have confidence in the strongest universities that we are working with. Our portfolio of the future is outperforming the disposal portfolio. And we're making solid progress on disposals. We've sold GBP 200 million so far this year and remain on track to get to our GBP 300 million to GBP 400 million target.

The transaction market is being impacted by the challenging macro backdrop but we continue to see good engagement and are working to the targets and time lines that we've previously set out. We remain disciplined to our capital allocation framework, managing leverage, funding our on-site pipeline. And as shown earlier this year, we will allocate surplus capital to share buybacks. We are moving at pace, and we're making progress.

The trends that we've spoken about earlier this year have continued to play out through August and September. More than ever, students are prioritizing the best universities, and we believe that they will continue to do so. And the strongest universities are winning in this environment. They're continuing to attract students to live away from home, and have a greater need for accommodation than the lower-ranked universities.

International postgraduates are down at all but the very best universities due primarily to the shortening of the post-study work visa from 3 years to 18 months. This is being partially offset by more international undergraduates with China particularly strong.

And universities responding by growing their U.K. student numbers and the likes of Manchester, UCL, King's, Liverpool, Newcastle are all recruiting strongly. And there's even stories of Exeter and Bristol and the news facing a shortage of accommodation for first year students. And these trends support our strategy to increase alignment to the strongest universities where the outlook for accommodation demand and rental growth is the most positive.

The Unite platform consistently drives superior performance from PBSA assets, and that means high revenues, income visibility and lower costs. And this is because, firstly, our brand and reputation, we're clearly recognized by the U.K.'s leading universities and the students who attend them, and this gives us an edge across the spectrum from multi-decade university partnerships through to short-term lets.

Secondly, the scale of our operation means that we can deliver higher occupancy for a lower cost. We have a deeper and wider sales channel than anyone else with the 24/7 call center, international office, best-in-class technology, and scale being focused on 20 top cities for students brings efficiencies in the cost to market and servicing each bed. These brand and scale benefits are tangible. The chart on the bottom left shows a clear example of how we're outperforming the market from the latest due rents data and that we're gaining share.

In the middle, our nominations of 54% of the portfolio is nominated. Universities need students, students need beds, and this is mission-critical to those universities. And uniquely, we're both large enough and trusted by universities to provide long-term accommodation solutions.

And finally, our cost to serve is low. I think Empiric is a great example of this, where we've reduced the cost base by more than 40%, which is ahead of our underwriting expectations. The typical PBSA bed is more valuable on the Unite platform than anywhere else. And these are significant and enduring advantage of our platform, improving our profitability and creating value.

Last November, we set out our leasing strategy for the '26-'27 academic year, and I'm really pleased with how we have delivered. We saw universities become more cautious around committing to nominated rooms where we pivoted and sold 5,000 more beds on a direct let basis to return us winning share from the HMO market. And in response to fewer postgraduates, we have shifted to undergraduates. We are front-footed and applied the lessons from last year. We adjusted pricing early rather than waiting for clearing. Our developments are fully let and Nottingham, Bristol and Edinburgh have all come back strongly.

We took over Empiric when it was behind and made a material improvement in performance with more to come in our first full year of ownership. And this doesn't just happen. The market is changing, and we are adapting, but it takes a huge amount of work to deliver this performance from our commercial teams, property teams, technology and city teams have all responded well to the challenge, and this sets us well for the '27-'28 academic year.

In this sales cycle, we focus on delivering overall income and price to secure occupancy early. Occupancy is above 95% in all of our stronger cities, where we have seen lower occupancy, this is largely supply-driven. Weekly rates were up modestly supported by indexation and multiyear nominations. And the shift to undergraduate students has meant we've sold more shorter tenancies, meaning that overall RevPOR is down by 0.3 percentage points. And we've also seen our overall cost of sale, agent fees and pay-per-click marketing costs up year-on-year.

Given the shortening of tenancy lengths, we do see the opportunity to grow utilization through our flexible lettings business. We've already grown this income this year, and see the opportunity to add up to a further 0.5 percentage point to income growth in 2027.

We set out our future portfolio at the interims, and we're clear then that these assets have the strongest track record and our conviction that this will continue. Our target portfolio of 55,000 to 60,000 beds is across 20 cities, and these have again outperformed in both occupancy and rental growth, as we'll see from the 2 charts, and we expect this to continue. We're focused on moving as fast as we can to this future portfolio as I'll come back to discuss with our disposal progress.

A new supply in these cities beyond 2027 is very limited. Viability is incredibly challenging, and there are signs that the Renters Rights Act is starting to have an impact on the HMO market.

Turning to Empiric and our Hello Student brand, we're really pleased with the performance to date. The brand is clearly benefiting from the power of the Unite platform, driving improved performance right across the portfolio. When we took it over in January, bookings were 13 points behind year-on-year, we applied our understanding of each city to market effectively. We broadened the sales network, introduced our dedicated international sales team, and this has resulted in both occupancy and income being ahead of last year and expectations.

We're in the advanced stages of preparing for our first full sale cycle. The early rebooking window offers opportunity for us to retain more customers at a lower cost and cross-sell from the Unite portfolio and continue to win share from the HMO market as well. We completed the bulk of the integration and will deliver the GBP 18 million synergy target that we've previously discussed.

Nominations continue to provide us with income visibility and growth with inflation linkage in multiyear deals and have an average remaining term of 5 years. The strongest universities need more beds, and we are seeing this. So far, we've agreed 4,300 new beds with deals with the universities like UCL, London School of Economics and Bristol, and these have been at a 10% increase to current passing rents. And this supports our trend of our shift towards strong universities and higher-quality nominations.

Renewal discussions for single year deals are underway now with universities and typically run through Q4 and into early Q1. And depending on where we end up, our experience shows this year how we have a range of commercial levers to drive a beneficial outcome. The pricing differential between multiyear noms and direct lets gives us the room to play with. We are already on this and actively managing over the next few months.

Moving on to property valuations. We've seen valuations reduced by 3.7% in Q3. This movement largely reflects the higher interest rate environment affecting all assets. Values have also reflected lower income on weaker performing assets. This makes up about 1/3 of the decline, and these assets largely sit in our disposal pool. We continue to focus on bringing leverage back in line with our target of 6x to 7x net debt-to-EBITDA and have allocated recent disposal proceeds to deleverage. As we deliver further disposals, we'll continue to allocate capital according to our existing framework, and that's managing leverage, funding costs to complete our remaining on-site developments. And where we generate surplus capital, share buybacks remain attractive and as we've demonstrated by our purchases of GBP 165 million early this year.

We also continue to progress with a number of university partnerships. And as I said, we're making solid progress on the disposal program and remain on track to deliver our target of GBP 300 million to GBP 400 million this year. Last week, we announced the sale of our King's Place development land, exiting an asset which no longer meets our investment hurdles, bringing the year-to-date total to GBP 200 million. We have a further GBP 225 million of assets under offer. There will be no surprise to you that the market is not straightforward and conditions are continually evolving.

Funding costs are increasing. Buyers are weighted to the end of the sales cycle, and then our pricing of passing income rather than an equivalent yield as they have historically done, and cladding diligence is taking 2 to 3 months to complete. We remain pragmatic but disciplined when selling assets. We're not sellers at any price, and we will hold assets for longer if it makes sense for shareholders.

And in closing, the strongest universities are still growing, and that supports improved performance on the portfolio of the future. We are responding to the changes in the market. We're being proactive to drive the best commercial performance and to win market share. We're working at pace to increase our alignment to the strongest university to create the portfolio with pricing power and we will continue to use proceeds in line with our capital allocation framework. And we remain focused on delivering the best outcomes for shareholders.

So as you can see, there's a lot to do, but we're pleased with the progress to date.

So with that, we'll turn to your questions. Thank you for those who've already done so. But if you haven't, please pop any further into the webcast. And Mike and I will just now work through those questions, particularly ones we haven't covered.

Thanks, Joe. Good morning, everyone. It's Mike here. I'll start to run through the questions on the webcast, starting with Ana Escalante at Morgan Stanley.

Firstly, could you provide more color on the 0.5 percentage point potential increase in income from short-term rentals?

Yes. So short-term rentals for us is made up of 2 or 3 elements. We have semester lets where we're seeing demand for students for the first and the second semesters. We also see it then in our summer business, which has always been part of our offer and then also a short-term letting cycle, particularly over the summer months as well.

We've grown the proportion of our income from this pool of revenue to about 2%, and that's up by about 50 basis points this year. And given the increased availability, particularly in the stronger markets like London, Manchester and Edinburgh, where we have seen some of that shortening of tenancies because they were the ones primarily with a 51-week tenancies that gives us greater opportunity to drive further income over that summer period. And that's what is really working through the availability at the current pricing, the cost to deliver that, which gives us the opportunity to drive that additional 0.5 percentage point through '27.

And the second question is on capital allocation. Could you please help us understand how to think about surplus capital? How to think about the use of disposal proceeds? Are you still targeting one university partnership per year? And how are you thinking about loan to value at the moment?

Yes. On surplus capital, I think, as I set out, we are clearly focused on managing our leverage and the 6x to 7x net debt-to-EBITDA target that we've been running to. We are currently slightly above that, and that's because of the acquisition of Empiric as we knew about. We brought that down slightly through the allocation of proceeds from disposals, and we will continue to work towards that.

Similarly, as we've previously outlined, we have our remaining on-site deliveries in Glasgow this year and then the 2 development JVs. And we've always felt that around 50% of the disposal proceeds would be needed to allocate it to those schemes over '26, '27 and '28.

I think then as we generate further surplus capital, we see share buybacks as the most attractive use of capital in this environment and where our shares are currently trading. So we continue to step to that framework that we've previously outlined.

On university partnerships, I think what is interesting in this current environment is that universities are clearly thinking about their own balance sheets and their needs for accommodation very deeply at the moment. And that is opening up some really good conversations with universities.

Now most of the universities that we are talking to in this space, they are the strong universities. They are saying that they do see a need for more accommodation over the next 5 years, which is encouraging. But like us, they are seeing it is incredibly difficult to develop viably. We think that you need to be charging GBP 12,000 to GBP 13,000 per annum to justify doing a development scheme at the moment. And there's very few, if any, cities other than London that you can generate that type of rent.

So the conversations with universities continue and probably are shifting slightly more to stock transfers and the release of capital from existing assets rather than development of new. But as I say, we're really encouraged by those conversations. They are ongoing, and we still believe that doing one a year is certainly possible. I don't think we'll do anything. We certainly won't be announcing anything this year, but we have a number in the pipeline, which are providing us with real opportunities into '27 and beyond.

The next question is from Tom Musson of Berenberg. Can you give some color on capital growth in the quarter between the assets you want to own long term and the non-core assets to be sold?

I'm happy to pick that one up, Tom. So what we've seen, as Joe discussed, is an outward move in yields this quarter. I think it's fair to say that that's impacting pretty much all assets, both what we see as the future portfolio and those assets we're planning to sell. However, where we have seen those rental growth deductions, they are primarily focused on those disposal assets, and that's because those are the properties that are operating at lower levels of occupancy and that's where the valuers have made an adjustment in the period. So they have seen a slightly weaker valuation performance than the averages that we're reporting for the 2.

Next, moving on to Chris Millington at Deutsche Bank. What trends are you seeing in the international postgraduate market given the Visa data looks weak?

Yes. So as I mentioned, the decline in international postgraduates, we've seen over the previous 2 cycles, again, continued into this '26-'27 academic year. And that is -- it really is linked closely to the quality of universities in the QS Global Rankings. You see quite a high correlation in performance related to those universities.

Probably the big policy change that has impacted that this year is the shortening of the post-study work Visa from 3 years to 18 months. So those students who seek to come to the U.K. to get a good postgraduate degree and potentially to work here for 3 years to help to fund some of the cost of that investment, are sort of taking a different economic decision and thinking about alternatives.

And that probably, given some of the pressure that we're seeing in the U.S., Australia, around student visas and they are also seeing this decline has seen a spreading of postgraduates going to broader international markets. I think the overall global demand for high education continues to rise. So the number of global students is rising and is expected to continue rising. We have seen a growth in undergraduates coming to the U.K. from around the globe.

As I mentioned, China is up strongly this year. And it seems that students are saying, if I'm coming for 3 years on making an investment to come study here as an undergraduate and that's less linked to that post-study work visa.

I think one thing just to sort of touch on is the policy environment. We've obviously got a new leadership, new government. And certainly, Andy Burnham has talked very positively about universities. And I think you've seen the impact that universities can have on a regional city like Manchester, both on, sort of, supporting regeneration, bringing growth to the local economy. And certainly, we are expecting a more stable policy environment and no further changes to certainly migration policy around international students going forward, which hopefully will lead to stabilization of that postgraduate market.

Second question is a follow-up from Chris at Deutsche. On disposals, what cohort of buyers are showing most interest? Also, please could you comment on what proportion of planned disposals could be non-PBSA or developed land?

Yes. So I think in this first round of disposals, Chris, we've focused on sort of the, a proportion of the portfolio, which we think is, we need to move through relatively quickly. And the value-add buyers have been the most interested group in those assets. We are selling these assets well below replacement costs. And those buyers see an opportunity to enhance the NOI, both from growing the occupancy and also reducing costs, and that allows them to drive relatively attractive IRRs that meet their models.

In terms of the GBP 200 million of assets we've sold so far this year, so there's been a couple of development sites within that. And we've got a few further development sites and our build-to-rent asset, which is on the market. So of the GBP 300 million to GBP 400 million, probably is around 1/3 to 1/4 of that is, is non-student. I think we're then into the bulk of those going forward and will be student assets.

The next couple of questions from Andres Toome at Green Street. First one is, what is your marginal cost of debt? And how does paying down debt compared to other potential uses of sales proceeds?

I'm happy to take that one, Andres. So our marginal cost of debt today, clearly, it's fluctuating in the current market, but we would say it's between 6% to 6.5%. I think as we've seen the cost of funding go up, it's given us greater conviction on the desire to bring down that leverage. As Joe said, as we think about the progress we made with disposals, we are looking to bring the leverage down to target. As we get to lower levels of leverage, it will free up some surplus capital, and we'll then have a choice in terms of what we do with that, as Joe discussed.

Second part of Andres' question is, which cities are in the under offer portfolio and at what yields are these now marked?

Again, I have to say that one, Andres. I think it's probably helpful to go back to the slide Joe touched on earlier, showing the range of occupancy performance across the different cities. For the 22 cities in which we operate, as Joe said, the vast majority are operating at higher stabilized levels of occupancy. However, we're seeing a number of cities, which are operating at 95% occupancy or below. And generally, our disposal portfolio is over-indexing to those lower occupancy cities.

In terms of where the -- where we expect to trade yield on those, as Joe said, we're expecting yields on in-place income to be around 6% to 7.5% on those disposal assets, and that's based off the sales performance we've achieved for the '26-'27 academic year.

Next question is from Rebecca Parker at Goldman Sachs. Could you provide more color on the investment and transaction market liquidity for U.K. PBSA?

Yes. So as I said, the overall market is not straightforward. And I think that largely is down to the macro factors we're seeing and the higher funding costs. And also, I think buyers trying to get their heads around what is happening in the operational and lettings market. So we've seen buyers wanting to and putting much greater focus on the '26-'27 letting cycle. And as Mike mentioned, using passing income to price assets, whereas historically, they may be more prepared to use equivalent yields to do that.

And so the level of transactions in this financial year has actually been significantly lower, I think as buyers have been trying to come to terms with that.

Having said that, I think we are seeing a very high level of engagement. We're seeing lots of parties looking at the sector here. And I think we are expecting now that we're through this end of the sales cycle that we'll see more trades happen as we go through to the back end of this year and early into next year, albeit I say, the fire diligence is something which does add an added layer of complexity into the student market.

Rebecca's second question is on nomination agreements. Please can you walk us through the expiry schedule into next year, comment on your partner retention as well as the appetite for long-term agreements? How are you thinking about pricing on renewals versus direct let channels?

Yes. So, universities have been more cautious on nominations agreements this year, as we've previously discussed, particularly at those universities who've got less confidence in their ability to predict and secure students. We're encouraged by the fact that we saw an additional 450 beds come through clearing, again, from some of our stronger partners and that we've been able to renew just over 4,000 beds from those universities I mentioned earlier. And I think this plays into our overall strategy of focusing on sort of stronger universities and actually an opportunity to improve the overall quality of our nomination agreements over the next few years, particularly as we move through to that portfolio of the future.

So our target of 50% to 60% nominations and where we operated historically is definitely where we believe we can end up and moving towards the upper end of that as we make progress towards that portfolio of the future. We have 9% of those multiyear agreements mature this year. We've renewed effectively 7% of that 9% already, and we're now into the phase of renewing and having the discussions around those single year deals that typically runs through Q4 and into early Q1. And we look at the overall net income that we can generate from those nominations agreements effectively after all marketing and sales costs. And that does give us some flexibility on pricing.

And it really is down to a city level, city performance, and we will drive that thinking around nominations agreements into our overall sales plan, as I say, with a view on driving the best and optimizing income across the portfolio.

Thanks, Joe. Next question is from Aakanksha Anand at Citigroup. The first of the two actually, what was the rent growth for nomination agreements and direct lets?

Aakanksha, so we reported that the 0.3% reduction in revenue per occupied room, which is how we talk about rental growth, that we have seen stronger growth in the multiyear nomination agreements. They've seen growth of just over 3.5%. Where we have let beds new this year, so either direct let or on new agreements they have seen rents reduced by just over 2%, which gets you to the 0.3% as a blend.

And as Joe said that is a function of that shift to slightly shorter tenancies and a shift in favor of undergrads and slightly fewer postgrads bookings in the mix.

Aakanksha's second question is, with current visibility, when can we expect to see a return to EPS and dividend growth?

Yes. So I think we've effectively seen the occupancy and the academic year income coming through. We've decided that we will update the market around '27 earnings guidance into '27, where we've got more visibility on that nominations, renewal performance and our really important earnings rebookers campaign that we're about to launch. So we are seeing the stabilization in the overall demand. We have got some headwinds coming in from funding costs, and we'll provide an update on the earnings guidance early in '27.

Next question is from Matt Saperia at Peel Hunt. He's interested to understand the type of buyers we've sold to are under offer to. Are they seeking value-add opportunities or alternative uses or just attractively priced opportunities?

Yes. I think at the moment, it's value-add, Matt, as I mentioned, that people are seeing, is this a time when yields have moved out on those weaker assets. They are generally lower occupied or lower rented and they think that they can bring in a different operating cost model to drive better NOI. So the bulk of people are still seeing an opportunity to drive sort of attractive IRRs, probably mid-teens IRRs from those purchases. As I say, there's still capital and plenty of capital if there are business plans to support that type of return.

I think the only thing to add to that, Matt, is we have the earlier question on non-PBSA assets. I think the buyer pool is slightly different there. So for the build-to-rent asset that Joe mentioned, we're still seeing core style capital that wants to allocate to the residential sector. And where we've got our sort of long income asset we're selling, which is an academy school let to the government. Again, there's a pretty active long income market that's still out there in addition to that value-add capital for PBSA assets.

Our next question then is from Marc Mozzi at Bank of America. You touched on the opportunities for university partnerships. Do you still want to build the universities given the cost of building now and movements we're seeing in valuations?

Yes, I think that we don't -- we won't build at full universities if the returns on them don't stack up versus the alternative uses of capital. And as I said, it's very difficult to justify building at current costs and at current rents. Where we are seeing opportunities with universities is more on their existing estate. And potentially, if they do want to build new, then there is effectively an element of subsidy that would be required from the university either through a reduced land price or even effectively a subsidy if the university is seeing, new accommodation is fundamental to their strategy.

And there are certain cities where universities aren't able to grow without new beds. And so that is something which universities are starting to think about how they can release value from existing student accommodation assets potentially to support the growth of new. But as I say, our primary focus at the moment is more on university partnerships where there are existing beds and universities are seeking ways to release capital either to refurbish and modernize those beds or to allocate into other parts of their academic infrastructure that they will need to meet the demands of a growing student population.

Thanks for all the question, guys, I think that brings us to the end of them.

Great. Thank you all, and thanks all again for joining the call. Hopefully, you've heard that we are making progress against the priorities that we shared with you earlier in the year, that our platform and our enhanced commercial approach is delivering results and helping us gain share. We're on track with our disposal target for this year, and we continue to move at pace towards the portfolio of the future that will maximize shareholder value. So thank you all and look forward to speaking soon.

Good morning. Good morning, everyone, and thank you all for joining us today for our half year results. Today, in addition to our updates on performance, today's presentation will start with a deeper focus on strategy, and we will update you on our key initiatives, which are enhancing our position as the home for students at the U.K.'s strongest universities and how that's really then driving and impacting our financial performance.

Karan will then take you through our operations, including what we've been doing to drive income ahead of the year and occupancy at Hello Student. And Mike will present the finance and property review, explaining how portfolio and capital allocation decisions are contributing to our future earnings growth. So before talking about the past 6 months, I just wanted to explain our vision at Unite.

Our business model is to provide modern accommodation to students at the very best universities across the U.K. For these universities, demand from students significantly exceeds the supply of places. And these universities are at the heart of our major cities, where land is scarce, most new development is not viable, supply is tight, and it's probably getting tighter. And we'll explain how we're sharpening our focus on these top universities through our disposal and investment programs and how our leading operating platform enables us to deliver higher occupancy at a lower cost than other providers.

So looking forward, our focus is growth, both organically through rental growth across the portfolio and externally through partnerships and winning share from the HMO market.

It's been a busy first half and it's an exciting transition. We're improving the operational performance. We're delivering the portfolio of the future, and we're fully focused on making this happen, and we'll update you on our progress that we've been making today.

So let me start on that focus of being the home for students at the U.K.'s strongest universities. These universities continue to excel. We've seen a 7% applications growth to high tariff university, which is the fastest growth for over 10 years. And we see more than twice the number of applicants for each place at these universities. And that's because they have the best outcomes and also the highest demand for accommodation. And that's why we're increasing our share and our alignment to these universities with our ambitious disposal program through the completion of our committed pipeline and providing more homes to returning students.

The middle box shows we're being disciplined with our capital, focusing on completing our pipeline and using surplus capital to buy back shares. And it's great to see that our platform is driving positive leasing momentum. Reservations are up, and this is down to our insight, our marketing campaigns, our targeted pricing in a few cities and empowering and incentivizing our local teams to drive sales. And I really want to thank them for their hard work and focus because without it, it wouldn't be possible.

And reservations are up at Unite Students, and we have transformed the Hello Student sales cycle from a slow start, and we're now 9 points ahead of the same point last year. We've got the best operating platform for student accommodation. We're 11 points ahead of the market. I'll come back to explain that. And we're cost efficient across our operations, and we're showing this through our progress on Empiric synergies.

The next few weeks are critical for sales, so we're not getting ahead of ourselves, but we're pleased with the progress across both Unite and Hello, and we're well set to deliver into the critical clearing market.

It's clear that the stronger universities are performing better. Bifurcation across the sector is accelerating, and we expect this to continue. High-tariff universities now receive twice as many applications as low tariff, and that's reversing the position from 20 years ago. Universities are facing into their financial pressures, and they are getting more efficient. They're competing for students and the strongest are winning share.

U.K. universities are actually quite small on a global basis, but they are getting bigger. The majority of that is through organic growth, but we're also starting to see some consolidation as well. And young people still see the value in university. Applications are up 5% from 18-year-olds this year. Students want to go to university and they want to go to the stronger universities. They are more focused on outcomes and they're more focused on the experience. And as more head to strong universities, they're more likely to travel and need accommodation. And this is why we are increasing our alignment.

The strongest universities is performing and growing to meet student demand and enhance their financial strength. So we've looked hard again at which universities to build our business around. And as you can see from the boxes on the top of the slide, we are using a combination of factors. The league tables are important, but there's no single league table that tells its own story. So QS Global Top 200, Times Top 50 and the tariff groups all feed into our analysis.

We look where there is the strongest demand and that demand exceeds places. We look where the best student outcomes are delivering across employment, earnings and value add and where students are more likely to live away from home, and we will work with the most financially robust universities.

These universities are the ones which will continue to grow and are best placed to withstand future challenges. The market has changed and will continue to evolve. So we are upping our game on how we use data to stay ahead of these changes, the data and analysis is more important now than it ever has been. We know that these universities want to work with us, and we can help them to deliver a fundamental part of their offer, the accommodation. We're seeing how when we get it right, they will trust us to go deeper, giving us more opportunities for nominations and joint ventures.

Whilst university strength and demand sits at the heart of our portfolio selection, where we position our portfolio also takes into account wider factors, supply and constrained comply clearly plays into that across university stock, purpose-built, HMOs and build-to-rent.

We also want to focus where we have the best relationships and the highest potential for joint ventures and nominations and ensuring we have the prime locations for our target universities, which means that we will often be reducing our exposure in cities to more peripheral assets. We are making an ambitious statement to realign to these universities that will have enduring performance and demand. And we will focus our portfolio on 55,000 to 60,000 beds across 20 cities. We will work with fewer, stronger universities, and we expect demand growth to outpace supply in these locations, supporting our 95% to 97% occupancy, CPI plus rental growth and higher margins.

We will also serve customers for longer. By extending the customer life cycle, we will use the Hello Student brand to retain customers after living with us for the first year. And Mike will provide more color on the portfolio direction and how this will evolve.

This is the portfolio of the future. These are great institutions, and we are proud to be working alongside them, providing homes for their students whilst they spend their time at university.

So disposals and investments are working in tandem to reshape the portfolio for the long run. We will sell 15,000 to 20,000 beds to make sure we are aligned to those strongest universities. And our pipeline will see us deliver 6,000 new beds in London, Glasgow, Manchester and Newcastle.

We sold GBP 130 million of assets in the first half, and there's GBP 500 million of assets, which are currently being marketed across 12 different processes, and we have just over GBP 100 million under offer today. We've kicked off a wider portfolio disposal process, and we are exploring all options to ensure that we can deliver the portfolio of the future as quickly as we can. We are speaking to investors now, and we are making progress.

And this will see us delivering our portfolio of the future over the next 12 to 24 months. The market is softer than it was at the start of the year, as I'm sure you know, due to sustained higher funding costs and macro uncertainties, both at home and abroad, and real estate transactions take time, and we're not sellers at any price, but we will continue to operate at pace and evaluate offers based on forward returns from the assets and the alternative uses of that capital such as share buybacks.

So we remain focused on allocating capital to high-quality accommodation. To say we're investing in 2 areas: first development, high-quality, high income returning schemes such as the Hawthorne House scheme opening this summer, which is now fully let. We're also on site with over 4,000 university beds, and we continue to see a meaningful opportunity to add further joint ventures.

We've completed GBP 165 million of share buybacks in H1, and we still see Unite shares as the best way for us to invest in high-quality student accommodation today. And we will continue to evaluate further buybacks as we complete on disposals. And our platform is a sustainable competitive advantage for Unite in both revenues and costs. And we see the benefits of this in our operations every day, and that's why we're ahead of the market.

If you look at the chart on the bottom left, StuRents now produce a monthly market report, which covers around 2/3 of the direct let beds. At the end of June, the direct let sales across the sector were at 59% reserved. On our direct let beds, we were 11 points ahead at Unite and 10 points ahead at Hello. And this is showing the great progress that we've been making on our sales, and Karan will talk in more detail about the precise actions that we've undertaken to drive that.

We also see it in our lower costs because of our scale and our efficiency. We're on target to capture GBP 18 million of Empiric synergies ahead of target, having closed the head office and taking out the cost of city teams while improving performance.

And we're working on further improvements to manage costs across our portfolio. There's more to come from our new IT infrastructure. We're embracing the benefits of AI, and we're focusing on both improving margin and investing alongside and into student welfare and our building quality.

We know that we've got work to do, but we've been busy and we've been effective in the first half, and it's good to see momentum building. So I'll now hand over to Karan to provide more detail on the great work the operations team have been delivering.

Thanks, Joe. So overall, we are pleased by how teams across the business have responded to the changing market dynamics and grown share for both brands. On the Unite portfolio across nominations and direct let, we are now 89% reserved versus 87% last year.

Strong growth in the undergraduate applications at U.K.'s strongest universities has underpinned this performance. In addition, direct let bookings have increased with returners up almost 1/3.

Pricing has been pragmatic but disciplined. At the outset, we took a decision not to offer high incentives. Instead, our simple, transparent pricing with tenancy lengths that work for the undergraduate market have helped us win more customers. Some prices have been adjusted to drive overall income. Nottingham is a good example of this, where we will be fully occupied this year versus 70% last year with income up 20%.

Overall, we are on track to achieve occupancy and rental growth guidance -- rent growth in line with our guidance with focus very much on maximizing income. Clearing is a critical period, and we have an important few weeks ahead of us. We are taking decisive action to make sure we capitalize on every opportunity, and we will share a sales update in mid-September.

One of the strengths of our platform is that we have great long-term inflation-linked nominations and a commercial engine that can drive direct let bookings. Nominations continue to be critical for the U.K.'s strongest universities as their offer of guaranteed accommodation for first year and international students is a core part of their value proposition. This has enabled us to improve the overall quality of our nominations. 94% are now either with high tariff or medium tariff universities who continue to drive a great residential experience.

We also have a strong pipeline of future nominations with early renewal requests from several leading universities. We have 3,500 rooms in advanced stage negotiations on long-term agreements ahead of previous cycles. That said, as we have seen this year, universities are being more cautious and some lower tariff universities have taken fewer beds with us. Where we have seen nominations reduce, we have successfully sold these directly. We have sold nearly 1/3 more rooms through our direct let channels this year.

In addition to our pricing strategy, two initiatives that have contributed to the success are worth calling out. First, our city teams have done brilliantly to retain more of our current customers. On-site sales are up 80% year-on-year. And as you can see from this visual, this was our mobile advertising van in Leeds that went around campus on open day, generating hundreds of leads for the team. We have been more local and more creative with our marketing efforts.

Second, we have optimized our website and refined our marketing programs, which has helped drive nearly 30% more online bookings. Overall, direct lets still command a 10% premium to our nomination beds, and we will continue to invest in our platform capabilities. This ability to sell both to universities and direct to students is a great example of why I believe Unite has the best operating platform in the U.K. and why we have consistently beaten the market.

So what happens next? Here is the typical sales cycle. We are now starting its last leg. The international booking window is very much open, and our sales teams are exceptionally busy helping students make the right choice. That said, this market is still tough to predict, especially post-graduate demand from markets like China.

On the home front, in 3 weeks, U.K. students will find out how they've done in their A levels and where they are going. Clearing is always massive for the undergraduate segment. Around 77,000 students use clearing either to find a course, switch their university or do both.

We expect stronger universities to go hard for U.K. domestic students to compensate for any international post-graduate uncertainty. And some of our existing partners have already approached us to see if we could hold some rooms. We have a critical few weeks to go, but we are well prepared and well positioned. We are talking to our nomination and university partners weekly, which will soon become daily. We have stress tested all our sales channels, including our websites, and our teams are trained and ready to go.

Let me shift gears and talk Hello Student and how we have driven value by making it part of our best-in-class operating platform. At the time of the Hello acquisition in February, there were questions about our ability to sell a proposition and operating model that differed from Unite's traditional offer.

While we still have work to do, I am really proud of how our teams have seized this opportunity. They have made great progress, and we are confident we can unlock the full potential of the Hello brand as part of the Unite platform. At the headline level, we are 77% occupied. That's up 9% on last year. And as Joe shared earlier, Hello is now 10 points ahead of the market.

A key part of the success has been the introduction of a dedicated international sales team who are all native Mandarin speakers. They have adopted the same sales tools and processes that we use on the Unite portfolio and have driven nearly GBP 22 million in sales in just 6 months. We have also enhanced their marketing programs and brought the same sales focus that we have at Unite Properties to the Hello frontline as well.

As a result, we have increased the weekly sale -- weekly rate of sale by 50% since they joined the group. We now expect occupancy in the 88% to 90% range, which is well supported by the current weekly sales trajectory. Rental growth will also be broadly in line with the Unite portfolio. Again, we are targeting overall income growth rather than purely occupancy or rental growth.

On the integration side, we are ahead of plan as well. Citi teams are now operating as one, above property teams have been streamlined, finance platforms have been migrated and central roles and contracts have been rationalized. As a result, I'm pleased to say that we have increased the annualized run rate savings to GBP 18 million and have already secured GBP 9 million of that in '26.

Final bit for me. Unite has built a market-leading position in first year accommodation with nearly 60% of our residents in this segment. And we will grow our share here through our on-campus joint ventures. However, first year students represent only about 1/4 of the total student accommodation market. The biggest segment is students who are returning undergraduates.

We have a great opportunity to grow our share through this segment, which accounts for over -- for around half of the market but represents only 1/4 of our customer base today. The majority of the students are currently being poorly served by an HMO sector in decline with variable levels of quality and increasing regulation.

Hello strengthens our proposition for this segment, enabling us to retain more students and capture a greater share of this attractive market. I'm personally really excited that over the next few years, we can further differentiate our brands and provide students with a place they can call home throughout the university journey.

And on that note, let me hand over to Mike.

Thanks, Karan. Good morning, everyone. I'm now going to take us through a review of finance and property for the first half.

I'll start with a run-through of our H1 numbers. I'll then build on what Joe said earlier and dig a bit deeper into how we're delivering our strategy to grow our alignment to the U.K.'s strongest universities.

First, turning to our H1 performance, which is in line with our expectations. We're pleased with the operational performance delivered in what's been a challenging trading environment. We've also taken proactive steps to reduce costs in response to reduced earnings. This has come as valuations adjust to a new operating environment.

We've delivered a good operating performance in the first half. Rental income increased by 1.5% on a like-for-like basis as rental growth more than offset lower occupancy. This includes additional income secured since the start of the year through short-term lettings of unsold rooms, which has added 0.5 percentage point to occupancy.

We completed our Empiric acquisition in late January, and H1 includes 5 months contribution from the transaction. We've been proactive in reviewing our cost base, taking actions to deliver savings in staffing and central costs. This has held underlying costs broadly stable, and we'll continue to drive efficiencies now that we've integrated the Hello Student platform. Our target is first to stabilize and grow our margins as we transition to our future portfolio.

Earnings and EPS in the first half were in line with our expectations. Adjusted EPS reduced 8% to 27.1p, reflecting higher interest costs and the impact of the Hello Student acquisition ahead of full realization of the cost synergies to come. Our interim dividend is unchanged at 12.8p.

As Joe said, the investment market for student accommodation is in a period of adjustment with investors seeking higher returns to reflect increased funding costs and less certain occupancy. There's still significant capital targeting the sector, but transaction activity has slowed as buyers show pricing discipline and take time to work through due diligence, particularly around fire safety. We've seen this sentiment reflected in our first half valuations.

Property yields increased by 29 basis points in the half to an average of 5.5%. Yields have increased in all markets, but valuations have been less impacted for properties benefiting from multiyear nomination agreements with universities. We're seeing value-add investors remain the most active. They're attracted by the opportunity to acquire housing at substantial discounts to replacement cost.

Turning to the balance sheet. EPRA net tangible assets per share reduced by 9% in H1 to 865p. This reflects a minus 6.4% movement in property values, mainly driven by that increase in property yields. Rental values have reduced slightly, reflecting those properties where we've made targeted price adjustments to drive higher income.

Development properties were also impacted by lower assumed values on completion. We bought back GBP 165 million of shares in H1, representing 6% of our equity. This added 28p to NTA due to the discount at which we acquired the shares. We've continued to deliver our program of fire safety enhancements in the first half and expect to recognize further remediation costs in our year-end valuations. This will be partly offset by further success in recovering costs from contractors.

I'll now move on to discuss our priorities for capital allocation and how we're delivering the strategy set out by Joe earlier. Our approach to capital allocation is based on growing our alignment to the U.K.'s strongest universities. This is the same plan we set out at our investor event in November. What's changed is the pace at which we're delivering it.

We and our teams are fully committed to delivering this plan with a clear focus on the value this delivers for investors. Over the first half, we significantly increased our disposal activity and the majority of properties identified for sale are now on the market or set to be launched. This puts us on track for GBP 300 million to GBP 400 million of disposals this year and significant further asset sales in 2027.

The capital we released from disposals will be used in 3 ways: firstly, to maintain our strong balance sheet; secondly, to fund the investment into our committed development and university partnerships and where we have surplus capital, it will be invested where it delivers the strongest risk-adjusted returns for shareholders.

This next slide expands on how we reposition our portfolio for the future with a clear focus on the U.K.'s strongest universities. The column in gray shows where we stand today, 72,000 beds in 29 markets across Unite and Hello Student. This is already a high-quality portfolio, but performance has become more variable between cities and properties over the past 2 years.

Based on our detailed analysis of the market and our universities, we've identified 15,000 to 20,000 beds for disposal. This will see us exit a number of markets and increase the focus of our portfolio in the strongest locations within these cities. These disposals are priced at very affordable rents, but generate lower occupancy and rental growth and operate at lower margins. These properties are not part of our future portfolio, but other investors see the potential to drive healthy returns through higher occupancy, underpinned by valuations at significant discounts to replacement cost.

Our planned disposals account for around 1/4 of our operational beds, but closer to 15% by value of the portfolio due to their lower price points. These disposals provide the capital for us to reinvest in our high-quality pipeline of developments and university partnerships shown in yellow. Income for this pipeline is underpinned by nomination agreements on our university joint ventures, where we're building new beds in the strongest on-campus locations.

The column in blue shows our goal, a more focused and higher-quality future portfolio, which delivers stronger operating performance through income underpinned by a foundation of nomination agreements.

Here, we illustrate the operational strength of our future portfolio. The chart on the left shows our occupancy has significantly outperformed our planned disposals in recent years. This reflects stronger demand and tighter supply conditions. We also see greater opportunities for nomination agreements in these markets where our university partners are most in need of new beds.

London is a great example of this, where we have most demand for new long-term nomination agreements and healthy tension from a strong direct let market. There's a strong relationship between our occupancy and rental growth and the greater demand for our future portfolio supports higher rental growth. This outperformance has been borne out in recent sales cycles, and we expect it to continue.

This slide shows how supply is tightening in our markets. It is really tough to develop new student accommodation today due to high costs and longer development programs. Valuations are now significantly below the cost of new build in most markets, and this has led to fewer planning applications for student housing and a significant slowdown in new construction starts. The wider supply picture is also getting tighter with obsolescence in university-owned stock and further contraction in the private rented sector.

The net effect is the growth in housing demand is expected to exceed new supply in the next 2 to 3 years. And as the largest owner of operational student housing, we stand to benefit through stronger prospects for rental growth. Our development pipeline supports our strategy to grow with the U.K.'s strongest universities and will see us deliver 6,000 new beds over the next 4 years. We'll soon open Hawthorne House in Stratford, where we've delivered 700 student beds in a new academy school. We're fully let on opening with half the beds let to the University of Arts London on a long-term nomination agreement. UAL is ranked #2 globally for Art & Design, so it's elite in its field.

You won't see it at the top of overall league tables because it's too specialized, but it has surplus demand similar to the U.K.'s elite universities, and it's a great example of one of those strongest universities we'll partner with in the future.

University joint ventures remain a significant opportunity for us to grow in the future due to our partners' need for more high-quality beds at affordable rents. Building on the success of our joint ventures with Newcastle and Manchester Metropolitan, we have a handful of live opportunities for new joint ventures with high-quality universities.

These take time to deliver, and we'll consider them alongside other uses of capital, such as share buybacks to ensure we invest where we deliver the strongest risk-adjusted returns.

We have a strong balance sheet and our future capital allocation decisions will ensure we maintain this foundation. Our net debt-to-EBITDA increased to 7.5x on a pro forma basis at June following the Hello Student acquisition. We expect this to reduce back to our 6x to 7x target over the next 12 months as we make progress with disposals.

The flexibility of our balance sheet is one of our key strengths, and our funds and joint ventures give us access to different forms of capital. The benefits of our structure were demonstrated in the first half through the disposal of St. Pancras Way to USAF. We will continue to use third-party capital to access opportunities we couldn't otherwise reach like university partnerships. And there's also the opportunity to generate new management fee income where other investors recognize the value of our operating platform. Our debt book is well hedged, but as we flagged before, higher marginal borrowing costs in our cost of debt will increase over time as we refinance.

I'll now finish with our earnings guidance for 2026, which remains unchanged. This reflects our performance in H1 and good progress on sales the next academic year. On the slide, we step through the key updates underpinning our guidance. Starting with rental income, H1 was slightly ahead of our expectations, thanks to additional income from short-term leasing. This is offset by a one-off reduction in income linked to the introduction of the Renters' Rights Act.

All new PBSA tenancies will be exempt under the act, but in the initial transition period, students have the ability to exercise early leave requests. And the result is a 0.6p impact to earnings in H2, which is greater than our initial assumptions.

Costs are tracking in line with our expectations, but H2 will see a reduction in management fees linked to lower valuations. And the extension of our share buyback program from GBP 100 million to GBP 165 million is accretive to earnings.

And finally, for Hello Student, the strong progress we've made on integration has led to us increasing our occupancy target. Taken together, these factors support a reiteration of our earnings guidance of 41.5p to 43p for the year.

And with that, I'll hand you back to Joe.

Thank you, Mike. Before we move on to Q&A, let me just summarize the key points from this morning's discussion. Unite is the home for the U.K.'s strongest universities, and we're excited about the strategy that we've set out today, and we are really focused on delivering it.

The strongest universities are performing and will continue to do so, and we are serious about aligning to these institutions. We will be disciplined with our capital and our best-in-class platform is delivering higher occupancy at lower costs. We have an important few weeks to go of the sales cycle, and we have an ambitious disposal program, but we're in a good place at this stage of the year. So taken together, the work that we are doing is improving our business and positioning us for a return to growth.

So let's take some questions. So if we've got any questions in the room, let's start there. We've got a microphone at the back. Thanks, Caroline.

Rebecca Parker from Goldman Sachs. Just regarding your disposal program, just wondering if you give us a time line there and maybe an expected NOI impact in the average yield, that you're expecting to dispose of those assets at?

And then maybe just from your discussions with investors for those assets how are potential investors thinking about pricing, just given some of the valuation declines that you've seen in the first half?

Sure. Hopefully, you've kind of understood the reason why we are embarking on this disposal program from what we talked about and the need for us to get to a place where we have more consistent occupancy and stickier rent growth. As we stated, the overall plan is to deliver 15,000 to 20,000 beds of disposals, representing 20%, 25% by beds and 15% by value, as Mike talked about.

And we've got a target of delivering GBP 300 million to GBP 400 million this year. We are restating that today given the progress that we are making. GBP 130 million of that has been delivered so far, and there's a further GBP 500 million, which is on the market through around a dozen processes, and we've got GBP 100 million of that, which is currently under offer.

Beyond that, we've started a process to look at the remainder of those disposals, and we talked about this back in April, and we are looking at all options around how we go about delivering those sales and doing that with the pace that we want to deliver it.

Yes, it's not a straightforward market to be selling into, and I think for all the reasons that we've been seeing. But we've seen good appetite and investor interest into the various processes that we're running. And as Mike said, these are good assets. They're high yielding, they're priced well below replacement costs. And the people that we're talking to see opportunities to drive NOI improvement from them and deliver the returns that they need to.

Ultimately, the market will determine what the price of these assets will be. And our job is then to determine on what we think we can generate from the returns on those assets, how that compares to the alternative uses of our capital. And the thing that we've hopefully reiterated over the last 6 months is that focus on capital allocation, capital discipline to make those right choices when we are faced with bids on these different types of assets.

So we are working at pace. We are set out a target for this year. And we believe that within 12 to 24 months, we will deliver the portfolio of the future that we think will then drive the long-term sustainable business and growth that we can take from there.

And just another one on nomination agreements. We've seen quite, I guess, solid student application numbers. How are your discussions with universities going post those numbers? And then perhaps into next year if application volumes are in robust, would you say, I guess, universities come back with those nomination agreements? Or is it more of a structural trend where universities are managing their finances differently?

Yes. I think as we've talked about on various trading updates, we have been a bit surprised by the fact that universities have not renewed nominations agreements at the level they have done in the past. And that doesn't quite fit with what we've seen around applications. And I think that reflects, as Karan talked about, a slight increase in caution, particularly among some of the lower tariff universities wanting to really wait until they see what their final numbers will be.

And we are seeing that through conversations with universities, I think they will go hard in clearing, but clearing will be competitive. So there probably is greater levels of uncertainty around where those final numbers will turn up. But we are talking to them regularly. I think the option for us to pick up a few more nominations beds is relatively high over the remainder of the sales cycle.

What is encouraging is, as we have those conversations, we look forward to the nominations agreements for '27, '28 and even '28, '29. And actually, with those stronger universities that we're aligning to, we're seeing actually really encouraging signs about the demand for longer-term agreements, which are sort of more akin to 7, 10, 15 years with CPI underpins as well. And we will obviously update as we make progress on those agreements. But I think this shift kind of plays into and feeds into the strategy that we've set out today that we think those nominations at the strongest universities are where we will continue to win and will be an important part of our overall lettings program.

It's Zachary Gauge from UBS. A couple of questions. First one on valuation. You were minus 6.4% on the portfolio. But if I take the weighted valuation change based on the USAF, LSAV valuations, you'd have been at minus 4.7%. Could you just touch on why there was quite a material difference between the Unite portfolio revaluation versus where USAF and LSAV would have implied? And is any of that related to the valuers having some early sight on where the disposals will go through at?

And then the second question is on your occupancy guide for '26, '27. Perhaps I'm being a little bit simplistic here, but if you're running 2% ahead of where you were last year and last year was 95%, why would you not expect your outcome to be slightly stronger than 94% to 96%?

So I'll take the first one, Mike, and then you carry on, on the second. Yes. On occupancy, I think we are ahead. And I think your simplistic analysis is fair. We know that it will be a competitive clearing process. We're seeing -- we're trading ahead of where the market is. So we know that a number of our competitors are clearly behind where we are. So as we've seen in previous cycles, that has led to some sort of quite strong incentivization and discounting from our competitors.

So we're probably being suitably cautious. We were surprised through last year's clearing that we didn't see the demand coming from international postgraduates in the second half of September. So I think at this stage, we're saying there is enough uncertainty for us to maintain our overall position on 94% to 96% just given that sort of environment, it is still a changing market. And we are -- we will play all the cards as Karan set out. We're having those conversations. We're ready for it. Hopefully, we can beat it, but we're sticking with that guidance of 94% to 96%.

And then Zach, to your question on valuations. Yes, there's always some differences between valuation movements between funds, so wholly owned LSAV and USAF fundamentally, the trends are the same. We've seen valuers move up yields in pretty much all markets. And I think if you stand back, as you might expect, we've seen the valuation movement on disposals be slightly higher than the valuation movement on the portfolio as an average.

It's Tom Musson at Berenberg. Just a question, just given the valuation decline, LTV now 36%, debt-to-EBITDA 7.5x. How do you see best capital allocation right now with any surplus capital you might have just between buying back more shares, investing in the pipeline or deleveraging?

Yes. So Tom, I think as we set out in our capital allocation framework, it starts with having a strong balance sheet as a foundation. So we'd expect that leverage to come down over time as we make progress on disposals. As you say, we're slightly above the 6x to 7x debt-to-EBITDA range today, but we'd expect that to reduce over the next 12 months.

Then as we release excess capital from disposals, there's 2 real uses. One is clearly to fund the development pipeline. We have costs that will continue to go into delivering that over the next 3 to 4 years, but we also expect there to be surplus capital, which we can reinvest. In the first half, some of that's gone to share buybacks. In the future, we'll consider whether that's share buybacks or maybe university partnerships.

Maybe second one, just on Hello Student. As you mentioned before, lease-up is going well ahead of last year. You're guiding to 88% to 90% occupancy. If the Hello Student occupancy ends up effectively full or at least in line with your target for the Unite Student portfolio, how meaningful could that be to earnings?

Yes. 1% of occupancy, Tom, and Hello Student is worth just under GBP 1 billion in income. So we are of the view that 88% to 90% is where we'll end up now. Clearly, we'll have more visibility as we move through the rest of the sales cycle, but that gives you a sense of where we could be, where we need to be any better.

Chris Millington at Deutsche. Just a quick one just about these risk-adjusted returns and when you're kind of weighing up one project versus another. Are you thinking more about cash back returns there or total returns when we're thinking about investment?

Next one was just really about the most active pools of capital in the PBSA market at the moment. You said it was a bit more difficult, but just curious about who the strongest bidders are.

And the final one -- oh yes, it was just about HMOs. Are we seeing an acceleration in exits from the HMO market? I don't know if there's any kind of current data you can provide us with that.

I'll take the second 2, Mike, and I'll throw back to you on the first one.

So in terms of pools of capital, the -- as I say, we've got a dozen processes which are running. That ranges from non-student assets, including the school at Hawthorne House to our build-to-rent asset down in Stratford. We've got some land, and we've got some lower growth assets. So we've actually got quite a wide range of different buyers who are exploring those options.

If we look at the PBSA assets because that's probably more relevant. For those assets, they are at the lower growth end. They are the assets which we highlighted back in November as hadn't performed as strongly last year. So that is value-add capital. And I say we've seen a very strong level of interest in terms of the number of parties who entered the data room who signed NDAs and have expressed interest in bidding on those assets, and that is value-add capital. And that is clearly those investors who happen to roll up their sleeves, make the assets work. They'll probably bring a different operating model and try and drive the NOI.

I think as we shift into that next round of disposals, which are probably more in a wider range of assets. We've got some in some really strong universities, but we feel maybe in the locations which weren't performing strongly. We're sort of moving up, I'd say, the sort of towards core, core plus capital and actually seeing those types of international core, core plus, some private equity, some institutional, but it is a wide range.

And I think the interesting about the residential market and also PBSA, it does attract quite a wide range of capital pools, and we're seeing that. I think they're active. They're looking and I guess, like all of us trying to figure out what the appropriate kind of returns and elements that they need to deliver on these types of acquisitions.

On the HMO market, yes, it's quite an interesting time for that market. I think the Renters' Rights Act is coming into play for the first time this year. Two impacts that will have on those HMO landlords. One is that they will not be able to enter into a formal tenancy until more than 6 months ahead of the start of the academic year. And secondly, those students who live there will be able to effectively give 2 months' notice to leave early. Now it's probably a bit too early to see what that impact will be. But intuitively, when we've seen changes like this before in HMO, that has led to a reduction in the numbers of landlords.

Over the last 4 years, we've seen about a 9% reduction in HMO licensed houses in the U.K. And so I think that comes with some of the changes we've seen around regulation, environmental compliance and the tax treatment for those landlords. So kind of the sense is that there is more pressure on that space. The fact that we've outperformed on our U.K. returner sales so far in this sales cycle, again, is positive in that some of the actions we've taken that students are starting to look at that potentially it's a squeezed supply.

So it feeds into that sort of broader feeling that those houses are coming increasingly under pressure, and we would expect to see a decline in that. And it's probably not going to immediate, but over the next 3 years, we would expect to see a decline.

And then coming back to your question, Chris, on risk-adjusted returns. What do we mean by risk-adjusted returns? So we think about it in total return terms, so income and capital. But clearly, there is more importance on income as an underpin there. So, income today matters more than income tomorrow. We think about the risk of delivering returns from different opportunities. We think about the time it takes to get there.

I talked about development, development taking longer. And this means it's harder to underwrite development now than it would have been in the past, which is why when we're thinking about allocating capital, things like share buybacks become relevant because we generate income today, we're essentially reinvesting in a portfolio, which we think is high quality, delivers good growth and is aligned to the strongest universities. So again, we always bring it back to the impact this will have from shareholders, and we're very conscious of the risk involved in different forms of investment.

Great. It looks like we've got no one in the room. Mike, is there any on the webcast?

Yes, we've got a few on the webcast. So I'll start with Andres Toome from Green Street. How do you see the impact of disposals on achieving future earnings growth given that these are higher-yielding assets? And then what do you consider as the minimum hurdle when thinking about the balance of disposals and new investments versus buybacks?

Happy to take that one. So yes, we are repositioning the business. As Joe said, our focus is very much on accelerating that transition to the strongest universities, and that will mean a significant volume of disposals over the next 2 years. We've set out where we are in earnings this year. We will be in a transition still during 2027, but that's all about us being able to deliver earnings growth from 2028 and onwards. And I think you can already see the foundations of that in the way those stronger future assets are performing. They're delivering higher occupancy, better rental growth at higher margins.

In the point in terms of the balance of new investments versus buybacks, it kind of goes to the question we just talked about on risk-adjusted returns. We will always consider what the best use of capital is when we have it available. It has been buybacks in the first half of the year. Historically, it's been developments and university partnerships. As and when we have that capital available, we'll make the best decision in the interest of shareholders on where we put it.

Next question then comes from Paul May. You highlight the ability to switch beds between nomination agreements and direct lets at higher rents. Can you explain that in more detail? You also note increased marketing. Can you give a sense of whether this will impact your OpEx and operating margins?

Yes, I'm happy to take that. So our direct let beds on average have a 10% premium to what we get from nominations. The nominations do benefit from income security. And as a result, universities do get a bit of a discount. But when we go back and price them on the open market, we're able to get a little bit more. The last few years has been really strong for the direct let market, which has further sort of enhanced the direct let returns.

For any property that is coming back from nominations to direct let, so we are able to take that to our -- depending on the channel that we want to go through, so if it's a property that we feel has got real potential for international students, we have a great network of over 20 agents that we work with across China, India, the Middle East, the U.S. So they will be given an opportunity to sell that at competitive rates or we will take it directly through our own channels, be it the website. We have a pretty significant virtual sales team as well.

And then our own property teams do a phenomenal job, as I mentioned earlier, and have driven almost sort of double what they had done last year as well. So whenever we get anything back, we look at all of the channels available to us, and we have sort of built up these channels further and further over the last sort of few years.

I think just to build on what Karan said in terms of the impact on margin, marketing costs were fairly flat in the first half of the year. We will make investments where we think it drives income and value. As we said, we need to manage our cost base with the income we're generating. And fundamentally, and our target is on how we stabilize the margin and then grow it in the future.

If it's right to invest more in marketing, we'll have to find savings elsewhere to enable us to achieve where we want to go on the margin.

We've then got a couple of questions from Aakanksha Anand, Citigroup. Sorry, average -- can you give a sense of average yields in and outside London and what's driving that?

So in terms of average valuation yields, what we've seen is the London market has trended towards around just under 5%. The best regional cities now at around 5.5% to 5.75%. And what you're then seeing is that regional markets and some of the assets we're selling are probably in the range of 6% to 7.5%. So there's a range across the country depending on sort of supply-demand dynamics and what we're seeing in the investment market.

Second question from Aakanksha is, in recent renewals and deliveries for university partnerships, what is the average uplift achieved versus indexation on those agreements?

So on university renewals that we are currently doing, we are still sort of looking at growing rents and indexing them by CPI. We, again, look at where the market is, a lot of the relationship that we have of long term and they understand the value of the service that we provide. It's never really just a price discussion with the universities. It is a combination of what are the additional services that you provide, how are you going to integrate your welfare services with our student support services. So on that whole basis, we're still able to command a pretty good rent on those properties.

What we also do is look at what the alternative to that particular business is going to be. Nominations for us is a great tool, but it is 1 of the 2 channels. If we feel that we can get a better return and a better rent from that property on to the direct let, we will take that back onto the direct let, which we have done over the last couple of years with a few properties.

Then I got a question from [indiscernible] Capital. Could you explain where you see buybacks as a good use of capital? Do you see this as EPS accretive net of the disposals to offset the impact in leverage, understanding that they do add a benefit to NTA?

Yes. So again, I'll sort of bring it back to the disposal program and where we're taking the portfolio. So we want to reposition the business, the strongest universities, and we will be selling a meaningful chunk of assets over the next 1 to 2 years to do that. That will release surplus capital. It is true that we will generally be selling slightly high-yielding assets, but we think that is exactly the right thing to do in terms of the quality of the portfolio and the future growth prospects of the business.

Where we have that surplus capital, we reinvest it. Clearly, the kind of returns we can derive from a share buyback depend on a number of factors, including the share price. We think share buybacks substantially offset the impact of some of those disposals we'll be making. But as I said, there will still be a transition as we move from where we are today to that stronger future portfolio, and that transition will take place over the next 1 to 2 years.

And then that's it. Joe?

Great. Well, thank you for questions, both in the room and on the webcast, and thank you all for joining us as well today. Clearly, there is plenty for us to do. But we are pleased with the lettings momentum across Unite and Hello, and we're well set for clearing.

Hopefully, you picked up our excitement about the opportunity and our commitment to deliver on this over the coming months. So thank you all for joining us and look forward to seeing you soon.

Good morning, everyone, and thank you for joining the call, where I'll be giving a short update covering the positive momentum in reservations since we last spoke, progress on disposals and capital allocation and valuation movement in the first half. Please do pop any questions into the webcast, and Mike and I will cover off at the end. So overall, we're performing well with reservations. We're seeing the strongest universities underpin this. It does continue to be a competitive leasing market, but we are seeing the value of our relationships with universities and the benefits of our leading operating platform.

It's fair to say that [indiscernible] sales cycles are the same, and we still have a few important weeks to run, but we are guiding to 94% to 96% occupancy and 1% to 2% rental growth. Reservations are currently at 86%, which is 1 point ahead of the same time last year, having been 1 point behind in our last update.

And it is clear that our platform is making an impact. We've got a real focus on sales and marketing across the business. And if any of you happen to be watching Love Island, you may have seen our Live. Your. Now. campaign. It's driving inquiry levels, which our teams are chasing down hard, and we're seeing good conversion rates across both our web and direct channels, and it's great to see our tech investment making a difference.

We've made targeted pricing adjustments, and this has allowed us to secure bookings earlier and reducing our reliance on sales in August and September. And we are outperforming the market and winning share from both HMO and PBSA. We expect to see slightly stronger [indiscernible] to be offset by lower growth in pricing, and we'll continue to focus on securing income through occupancy through the back end of the cycle.

We're on track to deliver 0% to 2% income growth for the '26, '27 academic year. Nominations are down by 1 point from the last update, and this is mainly at weaker universities, but we have been successful in selling these beds again, showing the power of our platform. We continue to have positive discussions with universities about nomination beds when A level results are announced, but we're not holding back where we see the opportunity to sell these beds on a direct-let basis.

We are disappointed about the demand from universities, but it is clear that they have remained cautious about making a financial commitment until they've got absolute certainty on their student numbers. But our occupancy guidance does not assume an increase in nominated beds, and we'll get there with direct-let sales.

Competitive pricing and incentives remain sensible, and we are gearing up for the peak weeks of the sales cycle ahead with better visibility than last year. U.K. and international undergraduate intake is still expected to be strong, up 1% to 3% on last year, but international postgraduates is expected to be soft again this year, driven by the policy environment, although this does feel like it is now stabilizing.

These again are both factored into our guidance. Moving on to Empiric. We're starting to see the benefits of our platform on the Empiric portfolio. Reservations are now at 71%, meaningfully ahead of last year. And this comes having taken over the business when we were significantly behind prior year.

Again, using our platform, we broadened sales channels. We've introduced a dedicated international team, and we've repriced in certain markets, and that has all made a difference. We have successfully reduced the reliance on postgraduates and are demonstrating demand from rebookers, both U.K. and international. We've increased our expectation for the '26, '27 academic year by a couple of percentage points, and we expect to deliver rental growth broadly in line with the Unite performance.

As with the Unite portfolio, we will trade price for occupancy where we see the opportunity to secure rooms later on in the cycle. On the integration side, we've made good progress, having recently closed Empiric head office and transferred all operational staff onto our platform, and we're on track to deliver synergies of GBP 17 million, GBP 3 million ahead of our original target.

So in summary, we are tracking ahead of last year on occupancy, but slightly behind on pricing, but overall, therefore, in line on income. The sales performance across the 2 brands on both direct-let and nomination supports our strategy to focus on the leading universities, first years and returners.

And we're seeing a marked performance difference between by university type and also supply-constrained markets. We got -- we have a critical few weeks to go, but we feel in a good place. Our trading performance in H1 is in line with expectations, and we're reconfirming our 41.5p to 43p EPS guidance for the year. This does reflect the one-off impact of students giving notice under Renters' Rights Act, which we outlined in the statement.

Turning to property activity. Our new development Hawthorne House in Stratford has now reached completion. We've done everything we can to get the accommodation and school ready for September, and we're working closely with the Building Safety Regulator in one of the first gateway 3 processes for the sector.

The building is fully let for September, and we were looking forward to welcoming students at the start of term. On disposals, it is clear that our focus on leading universities is central to our strategy. And given the changes that we are seeing in the sector, the portfolio repositioning remains a key focus for us to return to more predictable and earnings growth.

And we're making good progress towards our disposals target. We've seen a high level of interest across the spectrum of assets. Capital is still attractive to the sector with strong operational cash flows and assets priced significantly below replacement cost. We delivered GBP 130 million so far this year. We have a further GBP 500 million on the market with over a dozen live processes, including a portfolio of lower-growth assets, development land, non-PBSA assets and Empiric assets. A number of these are at more advanced stage, although generally smaller lot sizes, and we expect to make progress through H2.

We're not dependent on any single transaction to meet our GBP 300 million to GBP 400 million target for the year, which reflects the breadth of activity underway. And we'll continue to assess offers based on our conviction in the future returns implied by an offer price rather than by reference to historic valuations.

And following our announcement in April, we're continuing to make good progress in determining how to further accelerate disposals and faster reposition the portfolio, and we'll share more details with you at the interim results. On valuations, whilst transaction volumes are lower in H1, valuers have reflected increased capital costs and the more uncertain operating backdrop in the valuations. As with other sectors, yields have moved out and rental growth has been broadly flat over the first half. Encouragingly, valuers are starting to recognize the income visibility that nomination agreements provide and how this becomes more valuable to asset owners. This reverses the trend seen a couple of years ago where the nominations premium was eroded in a particularly strong direct-let market.

Values have moved most in London, where starting yields are the lowest and in the more provincial markets where operating dynamics are less certain. Flowing this through, we expect valuations at Unite share to be down between 6% and 6.5% at the half year, and there will also be an impact on the carrying value of development assets, which will be reflected in NTA.

We've reduced leverage in recent years, and we're well placed to manage changing asset values with our strong balance sheet and flexible sources of funding. Finally, on buybacks, we've completed GBP 165 million of buybacks so far in H1. This was done at an average of 505p and will partially offset some of the NTA dilution from the valuation decline.

Today, share buybacks remain the most attractive use of surplus capital for the business, and we see it as the most effective way to invest in high-quality accommodation well below book value. And we will make decisions about extensions to the buybacks as we make further progress with disposals.

So wrapping up, we've had a productive quarter. Reservations are progressing well. Empiric is starting to perform. Earnings and income guidance have been confirmed, high levels of disposal activity, and we are on track to deliver our target. Valuations are adjusting and our balance sheet is positioned to absorb this. With that, we'll now turn to questions. So please do submit them if you haven't already, and we will work through them over the next 10 or so minutes.

Okay, guys. We'll wait for some questions to roll in. It's Mike here with Joe. We've got a first question though on the call from Thomas Musson at Berenberg. You mentioned 71% Hello Student reservations, which is 10 percentage points ahead of this point last year. What's stopping you from expecting occupancy to recover all the way to at least last year's level of 89%, given that your new guidance is still at least 87%, which is back year-on-...

Yes. Look, we're really pleased with the progress that we've made over the last quarter, both on sales and integration. And I do want to call out the great work the teams have performed and particularly the Empiric and Hello Student teams in the way in which they've sort of bought into the Unite family and the Unite Group, and it really clear to see the 2 businesses working well together.

And yes, we've made some real wins, and I think that's from the fact we've introduced an international sales team, and that really is helping to drive conversion rates, a number of that -- those teams are Mandarin speakers. We've unblocked what were some clunky sales processes within the Hello Student way of selling. And we've also been cross-selling from the Unite portfolio and targeting domestic students. So we are feeling more confident. But as I say, this is our first time through this sales cycle. It is a different demographic, and we don't have that same level of confidence over our ability to sell volumes of bed through clearing just given that slightly different customer dynamic.

So we are remaining a fairly cautious approach at this stage, but we will work really hard to see and hopefully, we will be able to outperform that number that we've guided to today.

Great. Next question is from Ana Escalante at Morgan Stanley. Any update on buybacks and use of proceeds from disposals to be completed in the second half?

Maybe I can just expand on what Joe said earlier. Maybe it's helpful just to sort of reiterate what we've done on buybacks to date. So we have completed GBP 165 million of buybacks in the first half, as Joe said. That was really in 2 tranches. So the first GBP 100 million was a case of us really funding that from development that was no longer progressing. So where we redirected that capital into share buybacks.

The second tranche, the GBP 65 million we committed to was then funded out of the proceeds of the disposals we've made in the year-to-date. So I think as you look forward on share buybacks, our ability to commit more capital to them or any other use of capital will be a function of the disposal progress we make.

As we said today, we're confident we'll achieve the GBP 300 million to GBP 400 disposals in the year. That would free up additional surplus capital in the second half. And at the point that we have confidence over that, we would think about how we redeploy the proceeds. A portion will go to funding CapEx that's still to go in the development pipeline, but around half of those proceeds will be available for reinvestment.

We've then got one further question here from Ana at Morgan Stanley. Any further color on the progression of nomination agreements and whether this year is a one-off and you're confident of your previous target of 60% of reservations come from nominations over the medium term?

Yes. Nominations have always been a really important part of our sales channel and the way in which we look to fill the portfolio. And if we go back over time when we bought Liberty, we saw nominations drop to low 50s, and we built them back up towards the high 50s. I think, though, it is fair to say that we weren't expecting to see the drop this time around.

And the normal levels of renewal of those 1-year agreements just hasn't happened at the same level as we've talked about over the last couple of calls. And it is clear that universities are being more cautious, and I think they're being more cautious for 2 reasons. One is they are sort of less certain on the overall demand for beds, which they will have from their student intake, and that's both U.K. and international.

And they are more cautious because of the financial position that they find themselves in. And this has been most notable in the lower-ranked universities who we work with. But where we continue to have really good conversations with universities. It's clear that we're not losing meaningful share to our competition. We've got a pretty good list of further opportunities that could come through towards through the back end of the cycle and once A-level results have been announced.

And we are sort of having ongoing discussions about the renewal of longer-term agreements, which are maturing over the next 12 to 24 months. So we still see our ability to grow back to that 60% as a meaningful target. Much of that will come through the delivery of our 2 university joint ventures and our development pipeline.

And we have a strategic target, and we believe that it will be deliverable alongside the portfolio repositioning. I think the other thing I would call out is the real success we've had in pivoting those beds onto the direct-let basis. And it does show our ability that these beds are well placed in the cities, the pricing is at sensible levels, and we can turn them on to our direct-let platform really effectively well and effectively sell them.

So I think that it is a focus for us. We're comfortable that we'll get back to that 60%, and we'll work hard to ensure that we're engaging with the universities and do so on the repositioned portfolio.

We've then got the next question from Veronique Meertens at Van Lanschot Kempen. Are there any pricing initiatives in the form of cash back or vouchers, something that would not be showing in rent growth, but in cost.

I'm happy to take that one. Yes, Veronique, we will use incentives and the use of sort of cash back offers and things like that in our marketing, it's not really any different from what we've done in previous years. They tend to be very targeted, and we do flex them according to which markets maybe need more incentivization than others.

However, I think it's worth saying that the adjustments we've made around price, I think, are more significant than the adjustments we've made around incentives.

We've talked about the rate growth for the year being more like 1% to 2% now, and we are seeing that drive an improvement in the rate of sale, which has been really pleasing. To give you a bit more color on that, that is a slight shortening in tenancy length, which is seeing that rate growth of more like the 1% to 2% versus the slightly above 2% that we've previously anticipated.

So we think that use of price is really the thing that's made the difference. And yes, we will use incentives, but their use will be pretty targeted. I think that's it.

So thank you all for joining the call. And hopefully, you'll see that we continue to make decent progress with the reservations. We are very active in our repositioning of the portfolio, and we are fully geared up to work through the remainder of the sales cycle, and we'll look forward to speak to you in a few weeks' time when we announce our interim results. Thank you very much.

Good morning, everybody, and thank you all for joining the call. Since we last spoke, we've taken action across a number of areas and encouraged to see signs of early progress. And today, we will be updating on current trading, taking you through progress with disposals and flagging the appointment of an adviser to accelerate the repositioning of our portfolio and updating on our Q1 valuations for USAF and LSAV. So starting with trading. Overall, we are trading in line with the guidance we shared in February. We're currently 74% reserved for '26, '27 academic year against 76% at the same time last year. And these reservations are supportive of our rental growth guidance of the 2% to 3% range.

Direct-let sales are responding to our productivity. We're currently tracking about 1 to 2 points above the direct-let market at this stage. And the market is competitive, but we are benefiting from our mid-market price points and our productivity on pricing. We're keeping our powder dry on incentives at the moment, but we could see some more promotional activity later in the year, and we are having success at selling beds that have been handed back to us by universities.

Nominations are currently at 54%. We've continued to see lower-tier universities be more cautious in their approach and managing their financial exposure. It is fairly normal that we see ups and downs in nominations agreements at this stage, and we could see norms move further by plus or minus 1 to 2 points by the end of the cycle. On the positive side, high-tariff universities are wanting more beds and locking into longer-term agreements and top up for '26, '27. But as we called out in February, it won't be until July when we firm up numbers with universities with some further demand likely in August once they've also been released.

We are confident that we will win norms when universities are ready to commit. Hello Student, our brand that comprises the Empiric portfolio is trading in line with the update provided at the prelims. Sales are starting to improve following our early interventions, and we are seeing acceleration we need. We're up 11 points since the prelims. We expect to reach mid-80s at the end of the cycle. We also continue to make good progress with the integration and delivery of synergies. We've now secured GBP 3 million of the GBP 9 million savings targeted for this year.

Across Unite and Hello, our teams are fully focused on driving sales. Operational teams are incentivized, web bookings and international and virtual sales teams have all seen good pickup since we last spoke. We've seen good demand from Chinese students in particular. We're selling around 700 to 800 direct-let rooms a week at the moment and the next few weeks are really important to us. We will continue to see the value of our platform and our teams. And I can assure you that we are leaving no stone unturned. On costs, we are fully hedged on energy for this financial year and 70% for '27, and our interest costs are also fully hedged.

So overall, progress is in line with our expectations, and we are reaffirming guidance at the lower end of ranges for occupancy and rental growth and for our adjusted EPS to be at the 41.5p to 43p range. Moving on to disposals. As you know, we've always been active recyclers of assets. We set out a target of GBP 300 million to GBP 400 million in November, double our previous run rate and highlighted that this would be a multiyear program. We're making good progress against this target with GBP 130 million under offer or completed with the St Pancras Way disposal to USAF expected to close in May.

We have a further GBP 500 million of assets being marketed across a portfolio of lower growth assets, development land, nonstudent assets and from the Empiric portfolio. We recognize that selling assets in this market is not straightforward, but we are encouraged by the depth of investor demand and those looking at our portfolios of assets. We have over 70 investors currently in the data room for the larger portfolio. And given the quantum and range of assets being marketed, this means that we are well placed to deliver on this target. Delivering on these disposals would improve current occupancy by 3 points, improve nominations by 3 points and also improve our operating margins, showing the drag that the tail of the portfolio is having on our overall performance. We've also announced this morning that we've appointed advisers to accelerate the portfolio repositioning. As set out in November, this will enable us to create a higher-quality portfolio. We need to address the tail of the portfolio to align to further strongest universities where demand is and will be strongest and most resistant to further market changes.

Our platform and relationships mean that we will be the first choice for both students in all years of studies and universities for the nominations and partnerships, and it will allow us to move faster to our target of 80% high tariff alignment and 60% norms. We believe that higher-quality portfolio offers the best way for us to return to more predictable growing earnings, consistent with our long-term track record, and we will work hard and fast to move through the process and obviously provide updates on our disposal strategy and portfolio shape and size over the coming few months. We will also update on reservations and disposals alongside our AGM in mid-May and further trading update in July.

On the share buyback, we've made good progress with GBP 85 million of the GBP 100 million now deployed, and we expect to extend the share buyback program as we make progress with the disposals with proceeds being split roughly between -- roughly equally between existing capital commitments and share buybacks. On valuations, we have seen some softening of yields in Q1 with USAF at 9 basis points and LSAV at 13 basis points. This is largely being driven by outward movement in interest rates and sentiment in the sector, reflecting a tougher trading environment, and we've seen a widening yield differentiation based on the quality and operating performance of individual assets.

At this stage in the sales cycle, there is limited rental growth being baked into the valuations, and this will become clearer in Q2 and Q3 valuations as normal. We expect a similar approach to be reflected in the group's wholly owned valuations at H1. Before opening up for Q&A, hopefully, you will see that it's clear that we're not standing still, and we are working hard to deliver on a clear set of priorities, which are: one, to drive operation and sales performance across Unite Students and Hello; secondly, to accelerate the repositioning of the portfolio so that we're the first choice for students across all years of study, nominations and partnerships in the best university cities. And thirdly, to maintain a strong balance sheet, allocating surplus capital to further share buybacks.

Together, this will give us the greatest visibility of income and growth, consistent with our track record and enable us to deliver value to shareholders. On that note, we'll open up to Q&A. As stated, questions can be submitted online. Thank you to those already submitted. I think Mike will read out the questions, and then we'll allocate accordingly between us. So Mike, over to you.

Thanks, Joe. I'll start with Ana Escalante at Morgan Stanley, who's got a couple of questions. So the first one is on nomination agreements. Nomination agreements have fallen by 1 percentage point versus the end of February. What has changed since the full year results? Can you explain the flexibility that universities have in the reservations?

Yes. Thanks, Mike. Yes, it's interesting what we're seeing in the market at the moment. I was having really positive conversations with the high-quality university partners. So as I said -- as I mentioned, extending existing arrangements. We've been winning tenders versus other operators and seeing more beds from those operators. Where they're multiyear agreements, we've seen rental growth uplifts typical with what we've had historically. And I'd say a strong performance with those universities. On the flip side, those universities who are less confident on numbers are taking a more cautious approach.

A number of those universities have been more active in the single year deals, and that's where we've seen those universities choosing not to renew those agreements or where they have the provision to have some flexibility in numbers, hand back some additional beds as well. It is fairly normal that we would see this movement in nominations rooms at this stage, particularly amongst those 1-year agreements. Where we have multiyear agreements at fixed numbers of beds, they don't have the ability to hand back. So this is really about the fluctuation in the 12% of our portfolio, which has single year agreements. And that is where we're seeing the movement in numbers of beds. And we will continue to see that through the next couple of months as universities get clear on what their final numbers will be.

Great. Thanks, Joe. Second question then from Ana at Morgan Stanley. Can you provide any comments on your previous EPS guidance for 2026? And any views on 2027 based on available information today? Do you see grounds for earnings to decline further in 2027?

Thanks, Ana. If I start with EPS guidance for '26, as Joe said, we're reiterating the guidance for 41.5p to 43p of adjusted EPS for this year. So maybe dig into the component parts of that, we've obviously reiterated our income guidance for this academic year, and we continue to sell through. That's a key part of that 2026 earnings guidance. We're also delivering against our cost plan, so delivering the cost savings that we'd anticipated in the Unite business, and we're also making good progress in delivering those GBP 17 million of Empiric cost synergies, GBP 9 million of which will fall into this year and the full run rate will fall into '27.

And then in terms of capital investment activity, property activity, that's progressing in line with plan and the '26 earnings guidance assumes GBP 100 million of share buyback. In terms of the 2027 earnings guidance, I think it's fair to say it's a little bit too early. Clearly, the outturn on this academic year sales cycle will be a key influence. As Joe said in his script, our focus is on getting back to growing earnings. Where we come out on income will dictate some of the choices we have to make in 2027, and we'll be thinking very hard about how we manage the cost base and how we allocate our capital so that we can look to get back to that earnings growth as soon as possible. But as I said, we'll be able to provide a further steer on 2027 as we get through the year, but it's a little bit premature at this stage.

If I then turn to Tom Musson at Berenberg. Two questions from Tom. The first one here is on the direct-let bed reservations, can you give a sense of how the tenancy lengths are changing versus last year?

Yes. Thanks, Mike. I'll pick that one up. As I stated, we've been proactive on our rent setting. We are looking to drive occupancy and really holding optimizing price and tenancy length is one of the factors that plays into price, and we think about price more on an annual contract value rather than on price and the split of price and tenancy length. It really is determining where you're playing, which customer group that you're targeting. And U.K. undergraduate students typically want a shorter-dated tenancy, whereas internationals are more focused on longer-dated tenancies.

So we have seen a slight shortening of tenancies. This has acted as about a 1% headwind to our overall rental growth rates and is factored into our guidance of the 2% to 3% rental growth over the full year. So we will continue to manage to the overall annual contract values of rents and tenancy length is one of the factors that we play with to ensure that we are optimizing the overall income for the business.

Great. Thanks, Joe. And then second question from Tom. How much of the Q1 yield expansion do you think reflects factors specific to the U.K. student market? And how much is driven by macroeconomic events? Can you give any sense of further yield expansion to come?

Happy to take that one. So Tom, I think when we look at market data, it does appear that sort of U.K. real estate, we've seen a little bit of an increase in property yields in the first quarter, probably less than we've seen in our portfolio though. So it does feel that the student accommodation market has seen a slight widening in yields versus wider real estate. That's not really transaction driven. We haven't seen a huge amount of trade in the first quarter of the year. We think it's more valuers just being a little bit more cautious in sentiment, and some of that is due to the slightly slower occupational trends.

I think in terms of the forward look on yields, very hard to say. We've got assets in the market. We'll be making disposals over the course of this year, so will others. And I think that will dictate where we see yields moving over the course of the next 6 to 12 months.

So thanks, Tom. Now moving on to Marc Mozzi at Bank of America. We've got 3 questions from Marc. So the first one is, what is the current net initial yield of the GBP 300 million to GBP 400 million of noncore assets yet to be sold?

I'm happy to take that one, Joe. Thanks, Marc. So as we set out at the time of the prelims, we guided that we thought the yield on the GBP 300 million to GBP 400 million disposals will be about 5.5% to 6.5% as a blend. What that includes is a mix of assets. So you've got lower growth assets in there, which are those sort of strategic disposals to help position the portfolio more towards higher tariff universities. We think they will be slightly higher yielding, more like 6% to 7.5%.

However, we also have then within that GBP 300 million to GBP 400 million, the disposal of St Pancras Way, and we're also looking to sell some nonstrategic assets, including our build-to-rent assets in London and some of our development sites. So that brings the overall yield down slightly.

Second question from Marc. To what extent is the later booking pattern we're seeing a return to normal versus a sign of softer underlying demand, particularly in international and post-graduate segments?

Yes. I think the later booking cycle we've seen over the last couple of cycles, we do feel is more around customers being aware of the fact that some operators have been offering incentives and lowering prices towards the tail end of the cycle and therefore, have been holding out for lower rents at a later stage in the cycle, as I mentioned. I think we are also seeing this shift around fewer international postgraduates in the market who have typically booked at the back end of September, and we didn't see that same level of intensity or pace in last year's sales cycle. So I think it is a combination of more beds being available, students seeing that they can wait.

They don't need to rush into make those bookings, which ultimately, if we think about it, isn't actually the most healthy when students are having to book their beds so early in the next academic cycle. So rebookers are taking longer to do that. So I think it probably is a normalization of the cycle having had a couple of years when the student number growth was so significant that it was leading to real shortages of the beds, and there was an element of panic buying. So I think we've got a little bit of returning to normality to where we have been historically.

Thanks, Joe. We then got a final one from Marc on Hello Student. Hello Student reservations stand at 33% versus 48% last year at Q1. How confident are you that this gap closes? And what evidence should investors expect to see of progress over the summer?

Yes. So on Empiric, I think they did have the benefit of a large nominations agreement last year, a 1-year agreement, which has fallen away. That made up about 5 points of occupancy. They also had a systems implementation that went live in Q3 last year, and that led to a delay in their sales cycle. So they missed the first 4 weeks. So they were slightly on the back foot. At 33%, the direct-let sales, and that's effectively all direct-lets across their portfolio, it's pretty much in line with the market. It's only a few points behind where the market is.

And so given the pace of sale, the fact that we have seen 11 points of improvement versus 6 points in our own portfolio, I think, goes to show that there is real pace that is coming and that we would expect to see those reservations trending back towards that 85% as we move through the summer. Empiric have typically booked later and their cycle has run later than ours. And again, that is because of a higher post-graduate component to their portfolio. So we will provide updates, and we will be tracking towards that level. And if we feel that we're not getting to it, then we will flag that as we move through the sales cycle.

Thanks, Joe. Next question is from Max Nimmo at Deutsche Bank. On norms, it sounds like there could be a bit of a quality upgrade to income if you can sign more multiyear deals with higher-quality universities. Do you think that's fair? And then the second part of the question, how much of the 54% of norms today is under option from lower tariff universities who may not take up this space?

Yes. Thanks, Max. That's exactly right. We are seeing that move up the quality spectrum. And I think that's been most pleasing about where we are in nominations for this sales cycle. So it is the high-quality universities who are coming back to us. They are more confident about their numbers. And where they're doing that, they are comfortable to be taking longer-term agreements in place. So the movement of that quality register for those nominations is something that we are definitely seeing. So we've set out a target of 60% nominations agreements and the repositioning of the portfolio is a fundamental part of allowing us to do that.

And we believe in doing that, that we'll sort of continue to see a greater level of quality and income certainty that underpins those agreements. So we will provide further detail on that as it transpires at the end of this sales cycle. We're flagging that there is a risk of plus or minus 1 to 2 points on nominations at this stage and sort of that minus would be if the remaining flexibility and nominations are all taken up and the plus 2 would be if they're not taken up and we win further beds from additional universities across the spectrum as we go through the cycle. So that is the sort of the range of outcomes that we can see from the current level of 54%.

Thanks, Joe. The next one we've got there is from Rebecca Parker at Goldman Sachs. You've commented about planning to accelerate disposals, to what quantum could the disposal plan be raised to?

So when we're thinking about the quantum and timing of disposals, as I say, we've currently got a target of GBP 300 million to GBP 400 million of disposals, and we set that out in November as a multiyear program. I guess with that, announcing today an acceleration, it's a recognition that we can't take sort of 3 to 4 years to deliver against that disposal program. And we want to make meaningful progress more quickly and certainly by the end of 2027. So we are working up a strategy now, which will give us greater confidence on the quantum and timing and how we will take those assets to market, which we will share with you over the summer.

And ultimately, we want to create a portfolio that is aligned to the best, most resilient universities. And we believe that those universities will be the ones that are most resilient to the changes in demand that we are seeing and will have the most enduring demand. We are seeing those universities act with confidence now, and we expect that to continue. And that's why the targets we set out of 80% high tariff and 60% norms and really narrowing the focus of the portfolio to 18 to 20 cities is fundamental to that repositioning and enabling us to get back to that more consistent predictable earnings growth that we really need to get back to.

Thanks, Joe. Next question then is from Neil Green at JPMorgan, still on the theme of disposals. Can you provide any more details of the type of investors that are interested in the on-market portfolio? That's it from Neil.

Yes. Neil, it's -- as you'd expect, the 70%, it's quite a wide range of investors who are looking at it. But probably the bulk of those investors are what we would see is value investors. They're buying assets in that 6% to 7.5% range, which Mike talked about. I think they see an opportunity to drive income, potentially reposition the assets and probably seeing that as a period of time when they can drive value from an asset which isn't at full value at this stage. So -- but as I say, we are really encouraged by that depth and breadth of buyers who are looking at the portfolio, and we'll start to get a sense of where initial views on value will be over the coming few weeks and months.

Thanks, Joe. Next, we've got 2 questions from Aakanksha at Citigroup. The first, just to continue the theme of disposals. Against the backdrop of declining valuations and the GBP 500 million of disposals being marketed, what's the range of discount you might be willing to absorb to get the disposals to your target levels?

I'm happy to take that one, Joe. Thanks, Aakanksha. Yes, so we're in the market at the moment. We'll get feedback on pricing on those assets in the coming weeks and months. As I think we said previously, ultimately, we look at the returns we think we can generate from the assets at the prices at which they're likely to transact and then we compare that against our alternative use of capital. So that will inform our thinking on price. As we've said today, we think those lower growth assets will probably trade at yields of between 6% to 7.5%.

But ultimately, the North Star is how do we get to a portfolio that is more highly aligned to those strongest universities and where we see prospects for predictable long-term earnings growth, which is in line with our history. So that will inform our decision-making around pricing and how quickly we move through our disposal plan.

Second question then from Aakanksha is around promotional activity. So could you give some examples of promotional discounts for direct-let sales? Are there any differences between the United Empiric portfolio in terms of pricing?

Yes. So as I mentioned, we've been more focused on getting the underlying pricing appropriate. And where we've tested incentives has typically been at sort of the GBP 200 to GBP 400 cash back type offer or reduction in price, but we've seen that's had less of an impact in sales velocity and the overall take-up against those relative to where we sort of adjust the underlying pricing. So as we go through the sales cycle and we see competitors act differently, then we may need to adjust and we may need to respond to what we are seeing from our competition.

But overall, as I say, we are feeling that we are winning through the approach that we're taking both from a -- to bring customers into our customer funnel, the conversion rates that we're having are performing well, and that is driving the improvement in performance around direct-lets. We are effectively going through the process of bringing the Empiric sales processes more in line with ours. And in terms of an incentives program, we are following the same approach. And where we've seen some of that benefit of the acceleration is, I think, us using our platform, our teams and processes to really drive and ensure that we are optimizing and maximizing those conversion rates across their portfolio. And I think that's encouraging us to see that we can continue to drive that through the remainder of the sales cycle as well.

Thanks, Joe. We've got a next one from Sam King at Covalis. What level of occupancy of the valuers assumed in the Q1 valuations? And has this changed? Is there potential for assumptions to be revised down?

I'm happy to take that one, Joe. So Sam, no change in the occupancy assumptions that the valuers have made in their assumptions in Q1. I think it's fair to say, as Joe said, they are being slightly more cautious in reflecting rental growth, and we expect that to continue. So I think when they're thinking about income overall, they're probably being more cautious in passing through rate growth possibly because of that view of caution on where occupancy will be and the fact that it might be slightly below historical averages.

I think we would also suggest that some of the softness we've seen in yield this quarter is slightly driven by sentiment on the occupational side. And it's not really down to specific trades that we've seen in the market. And arguably, we think the valuers are using a little bit of yield to adjust for slightly softer occupancy in the near term.

And then we have a final question from Matt Saperia at Peel Hunt. Do you have any thoughts on how the impending Renters' Rights Act will change behavior among HMO landlords or pricing move in addition to a reduction in stock?

Yes. Thanks, Matt. It's certainly early days on that one. The Renters' Rights comes into play on the beginning of May of this year. So we don't think it will have a significant impact on this year's academic cycle as students were generally moving out by that stage. New tenancies that are signed for the '26, '27 academic year will start to be impacted. And those new tenancies, if you're a registered PBSA operator, you will be exempt from the Renters' Rights Act, whereas private landlords won't have that benefit.

The 2 key impacts that means is that landlords won't be able to sign tenancies or students won't be able to sign tenancies more than 6 months before the start of the sales cycle. So that does mean that what is often a very busy period of time for those landlords where second and third years are signing up through November, December, January, they will either have to go down a route of signing some sort of commitment to enter an agreement or they will have to wait.

So again, that will add a further barrier or headache for those landlords and potentially for students being able to lock into those agreements. And then the second impact will be that the students will be able to grant notice or give 2 months' notice to end their tenancy at any time. So that will give the landlords less certainty over the full year's cycle of when they will be able to generate income.

So we know what the kind of the changes will be, how that drives and how that impacts student and landlord behavior will flow out. I feel that this is a continuation of the pressure that's been on those landlords over the last few years with some of the changes to tax rates and licensing arrangements, and we will continue to see a steady reduction rather than a significant fall at one moment. So I think it will put further pressure on those -- on that sector, and we'll see that unfold over the next couple of years.

Thanks, Joe. That's all we can see by way of questions on the Q&A. We are aware that we may have had a bit of a challenge in some questions feeding through to the list. So what I would say is if you have any further questions that we haven't taken on the call, please contact Joe, myself and Saxon, and we'd be very happy to speak to you or answer them offline. And with that, I'll hand back to you, Joe.

Thanks, Mike, and thank you all for joining us this morning. We know that there is a lot for us to do, but we are encouraged by the early signs of progress. And hopefully, you recognize that we're focused on driving the performance of the business and getting the portfolio to a place where we can return to that more consistent, predictable and growing earnings. So thank you again all for your time, and look forward to catching up soon. Thank you.

Great. Good morning, everybody. Thank you all for coming along, and those of us joining today, I see you fighting over the snacks on the chairs. So please enjoy that. And for those joining us online, sadly, we won't be posting them to you today, but hopefully, you can come next time and enjoy them.

So, this morning, I'm going to just run through what we're seeing in the market and progress with our strategic priorities. Karan will then take you through the '26, '27 sales position before Mike talks through the financials and property. And then I'll wrap up and open up for Q&A as usual.

So, 2025 was a year of considerable change for us in our sector. And whilst our performance was strong across the majority of the portfolio, we have seen that pace of change accelerate, which has impacted our occupancy. More students are opting to live at home and international postgraduates have declined again since their peak in 2022, which meant that occupancy was weak in three of our cities, which impacted the overall performance. And whilst it's still early, we are currently tracking 3 percentage points behind last year, which is all in the nomination space, which Karan will come on to talk about. We have seen the demand shifts like this before, and we know that we can respond positively.

So we set out a plan in November to reposition the business, and I'm proud of the start that we've made across the three areas. First, we've been accelerating the repositioning of the portfolio. We've got a high-quality, well-located portfolio at the right price points, and we've already started selling assets as seen by the USAF disposal announced today, and we've launched a portfolio of GBP 300 million just last week as well.

Secondly, we will play to our strengths. We have unparalleled relationships with universities, and we have NPS scores at record levels. And we have an opportunity to deepen these relationships at a time when universities themselves are facing into challenges, and we're excited about further joint venture opportunities. And thirdly, we will leverage our platform. Our integrated platform gives us that ability to react, to take share from our competitors, including HMO and Empiric gives us the opportunity to do this. And we've already taken costs out and reduced CapEx spend at pace. And encouragingly, young people still see the value in a university experience, particularly at high-tariff universities and supply constraints are having a real and having a real and lasting impact.

The fundamentals of the HE sector remain strong and where there are near-term headwinds, we are addressing them and facing into them. Demand remains robust. We've seen a record number of applications from U.K. 18-year-olds and international graduates are also increasing, particularly from China, and growth is focused at high-tariff universities. We have seen a fall in postgraduates over the last three years, as I mentioned, but the U.S. and Canada still have restrictive visa policies and the U.K.'s international education strategy provides greater policy certainty and the prospect of growth in student numbers at top universities. And we are positioning our portfolio where this demand-supply imbalance is most favorable. And universities are still targeting growth and the growth ambitions remain core to their strategies. When I'm speaking to the vice chancellors at the likes of UCL, King's, Leeds, Liverpool and the rest, growing U.K. and international undergraduates is a priority for them, and we're seeing that come through in their numbers. They're committing to long-term campus investment. And you can see that at universities like Bristol and Glasgow and also through their investment into joint ventures with our partners at Newcastle and Manchester Met.

Universities recognize that they, like all industries, do need to adapt to AI, but educating young minds will be more important than ever. And over the next 20 years, it is estimated that there will be a 10% increase in jobs needing a degree. And so we do see that there will still be more opportunities to grow nominations in joint ventures with high-tariff universities. And we are positioning the business to face into the near-term challenges as young people are being more rational in their choices, and they're prioritizing on value for money and the investment they're making, particularly given the cost of living pressures and the graduate outcomes, meaning that more students are opting to live at home and students are again booking later to try and secure the best deal. And this is driving the continued focus on to high-tariff universities where student sees the value of a residential degree. And this continues to see us concentrate into more cities and the opportunities to capture share from HMO and grow our overall addressable market.

On the supply side, the viability challenge is real across PBSA, build-to-rent and new housing and new starts have largely ground to a halt. The Renters' Rights bill becomes effective in May '26, and we've already seen around a 10% reduction in HMO over the last few years, and we'd expect the renters rights to continue to play into this.

And so what does this all mean for us? High tariff is growing at the expense of low tariff, so we are growing our exposure there. Universities will commit to high-quality PBSA, either through nominations or joint ventures, and we are well placed to play into this. And whilst we outperformed the market in '25, '26, it's clear that, again, we will need to take share from both HMO and PBSA. And where we need to reposition the portfolio, we will be proactive and pragmatic. And we believe that this will drive a return to growth over the medium term.

In November, we set out our revised strategy to respond to these shifts in the market. And as I say, we are making good progress three months into this plan. We are 68% sold for the next academic year, as I mentioned, 3 points behind last year. Universities are being more cautious on renewing nominations, especially at low tariff universities. And whilst the applications data is stronger than we anticipated, and we're having good conversations with universities since that data was released at the end of January, as we saw last year, this does not always flow through to bookings. So we've been more cautious on our outlook and guiding to the lower end of our occupancy and rental growth range.

Taking action on costs, our overhead rationalization completed in December, delivering a 20% reduction in our central staff costs, and we're close to completing our technology platform, which will unlock GBP 7 million of savings by the end of the year. And the integration of the Empiric acquisition is well underway. It is really exciting to the opportunity for us to take share from HMO across both Unite and the Empiric portfolios. And we're also increasing our synergy target today to GBP 17 million. We're also increasing -- making progress increasing our alignment to high tariff and the best teaching universities, already reaching 67%, and we will achieve our 80% target through the pipeline, joint ventures and disposals. We are on site with both of our joint ventures and the financial constraints on universities are increasing partnership opportunities at sensible returns and we're making good progress with our capital allocation, the USAF disposal showing our proactivity, and we've been decisive in our approach to developments and using the proceeds from those developments to launch our GBP 100 million share buyback program earlier this year. And we do recognize it will take some time to reposition the portfolio, but delivering these priorities will underpin our return to growth.

As we've got into the Empiric business, we really are excited by the extent of the opportunity, giving us a brand and a platform to compete with HMO, which is home to over 1 million students, and this will increase the size of our addressable market. I've been out visiting the properties. I've been to Cardiff, Birmingham and Bristol, and I've been impressed with the quality of the portfolio and the fit with the Unite portfolio as well as the quality of the people in those cities. There are loads of opportunities for us to use our sales platform to drive performance. And yes, the sales position is disappointing, and that reflects some distraction from the acquisition as well as the market challenge and the fact they didn't pivot away from their core market of Chinese post graduates. So the '25-'26 income will impact our '26 earnings by 1p to 1.5p, which Mike will cover. And there is more work to do on our '26-'27 sales, and we are on it. We will partially offset some of the shortfall by the increased synergies and driving our sales performance through both '26 and '27 to deliver earnings accretion from Empiric.

In summary, this slide highlights our 2025 performance. We've delivered EPS of 47.5p underpinned by the good performance in the majority of our cities. but at the lower end of our guidance due to the 95% occupancy overall. And the TAR of 2.1% is below our usual standards, driven primarily by yield expansion and also a slowdown in development activity.

So I'll now hand you over to Karan, who will take you through the '26 sales in some more detail.

Thanks, Joe. As Joe highlighted earlier, on occupancy, we are currently at 68% versus 71% same time last year. Nominations are back 4% year-on-year, and I'll share a bit more detail on nominations on the next slide. On direct let, bookings are actually slightly ahead of last year, having adjusted prices and tenancy length to attract more undergraduates to compensate for the softness in the international postgraduate market. We're also making good progress in stabilizing our recently opened and refurbished properties, where bookings are up 25% year-on-year. This has been achieved on the back of strong student feedback, improved marketing, demand for nominations as well as adjustments to tenancy length.

Rental growth, which is on a RevPAR basis, is currently at the lower end of our 2% to 3% guidance at 2.4%. Our inflation-linked multiyear nominations continue to underpin this rental growth with some of it being offset by adjustments made to secure single year nominations as well as more undergraduate direct-led customers. Like last year, we are seeing a later demand cycle as students wait to get the best scale possible. So we are preparing for a big push in the latter half of the cycle again.

A bit more on nominations. As you know, with nearly 60% of our beds on nominations, of which 85% are on multiyear linked inflation-linked contracts with an average tenure of six years, they're a big part of what makes Unite successful. For the current sales cycle, which is still quite early, we are behind what we achieved last year.

To add a bit of color on that, when we started discussions with our university partners towards the end of last year, we found that they were a bit more cautious in resigning to the same volumes that they took from us previously. Quite simply, to manage their financial risk, they needed clarity on their own student numbers before they could make firm commitments to us. The majority of these handbacks, as you can see, were from lower and medium tariff universities, which have been losing share to the higher tariff.

Encouragingly, though, since the release of the UCAS application data, we have seen an uptick in the request from universities to take more rooms now that they know their application rates. The headline UCAS data shows continued positive trend in student number growth. Overall applications from 18-year-olds were -- was up nearly 5% as application rates held steady at 41%. Like last year, higher tariff universities continue to win share, growing applications at 6%. They now account for nearly 50% of all student applications.

Additionally, higher tariffs have seen an increase in applications from students who intend to live away from home, so effectively seeking accommodation. This highlights that students and parents continue to see value in the full residential experience at these universities, and it validates our portfolio strategy to align ourselves to these institutions. So our focus right now is very much to leverage our relationships to convert as many of these discussions into firm bed commitments and secure an additional 1 to 2 points of occupancy on our current position. That said, the low visibility we have on nominations at this stage and the continued late nature of the direct let cycle is leading us to guide to the lower end of our 93% to 96% occupancy target.

Stepping back, we are seeing three major themes come through our discussions with universities. Firstly, there is still strong demand from all universities, whether you are high tariff or low tariff for well-located, high-quality accommodation at the right price points. The cost of living pressure on parents and students and the growing number of stay-at-home students means that universities are very keen to secure more affordable options. And this plays to our portfolio, which is 90% cluster flats. And in most cities, we already have the price points and the tenancy lengths that these universities are looking for compared to so much of what's been built recently, which is at much higher price points and full year occupancies.

Secondly, it is essential for universities that the partners that they work with share the same values they do on student experience with a strong welfare component that complements their own. Here again, the investments that we made in our 24/7 operating model in resident ambassadors who build great local communities in our student support framework, all of that has meant that we are at the front of the queue when the universities are looking for accommodation partners, not just another supplier of beds.

Finally, there is strong belief within the more selective universities that they will continue to be the net winners. And for them, to continue to grow students, student numbers sustainably, they need a pipeline of high-quality accommodation for the long term. So we are actively working on renewing several of our longer-term deals with universities. The alignment of our strategy with these trends is what gives us the confidence that we will remain the partner of choice for the best universities in the U.K.

So, what happens next? I thought it might be worth revisiting the structure of a typical sales cycle. Firstly, we're just four months into the current cycle. So there's a fair bit of runway ahead of us. So far, our focus has been very much on securing rebookers and undergrad returners. We will start our new customer acquisition campaign from end March going into April and May. This is really when undergrads start to act on their offer letter from universities. On nominations, universities tend to firm up their commitments with us in June once the acceptances come back from students. Our goal is, therefore, to have 87% to 90% of our inventory sold by the time we get to clearing in August. Now clearing is always massive for the undergraduate segment, between 65,000 to 70,000 students use clearing, either to find a new course or to switch their universities or both. Last year, we did nearly 6% of our sales during clearing. We expect this trend of a larger clearing to continue as we know, students are first waiting to secure the university place and then book their accommodation on the best possible offer out there.

So far, we are seeing the market stay disciplined on incentives. They tend to be usually between 2% and 4% of the value of the annual contract, but this could increase towards the end. So we are keeping a close eye on it, and we will react accordingly.

The post-graduate cycle actually does work a little bit differently. Currently, students are in the research phase, and they tend to book later in the cycle with peaks really coming through July onwards, especially for international postgraduates who also need to secure their visas. While the Unite Students portfolio was historically mostly undergraduate, now with Hello Student, we do have a new offer to take to postgraduates, and they will be a big part of our focus later in the cycle.

Talking about Hello Student, I wanted to share a little bit more on how we are integrating Hello into the Unite operating platform. As Joe said, Hello Student provides students with a very different proposition to what we do at Unite. They have a high-quality portfolio aligned to high tariff universities where they deliver an excellent experience. And we will be keeping them as a separate brand to address the returners need for a more independent living experience. That said, their sales performance was below our expectations, but we are confident that as part of our platform, we can drive significant commercial improvements.

One of the big areas where we will add value is through the scale of our international sales network. We work with 3x as many agents as they do across multiple markets. We have a dedicated sales team, many of whom are native Chinese speakers and also have a dedicated local office in China, all tools that the Hello team didn't have access to before. Additionally, we are already using our data and insights capabilities to help them make the right revenue management decisions, so where to adjust prices and tenancy lens and where to price recent refurbs so they can rebuild the base.

We're also putting in place a cross-selling program, both to retain existing returning students across both portfolios, but also try and secure some norms for some of our Hello Student properties. Some of these will have a near-term impact, but the full benefit really comes from the next sales cycle when we will also have fellow students on our technology stack.

And talking about our best-in-class operating platform, a final bit for me. I know a lot of focus right now is on our sales performance, but we can only deliver that if we deliver a great experience to our students and HE partners. And here, we've had another stellar year. Our student NPS is at a record high, and we are now rated gold by GSLI. Our higher engagement NPS is also at a record high, a reflection of how aligned we are with our university partners. And we're in the final stages of our technology upgrade program. We've already upgraded our finance, service and people platforms and the last piece of the jigsaw, which is our new booking engine and our new property management system is due to go live in the second half of this year. Once the transformation is complete, we will deliver nearly GBP 7 million of operating cost savings per annum. This, together with how students and universities feel about us, gives me the confidence that we will remain the best operating platform in the sector. And on that note, I'm going to hand over to Mike.

Thanks, Karan. I'll now take us through a review of financial performance in 2025 as well as the outlook for income and earnings in the year ahead.

We delivered like-for-like income growth of 4.9% in 2025, thanks to strong rate growth, which more than offset the reduction in occupancy. Operating costs increased by 9% on a like-for-like basis, primarily driven by higher staffing costs at property level, resulting from increases in the rural living wage and higher employers' national insurance. We also saw cost increases linked to higher council tax liabilities from vacant rooms as well as building insurance.

Property activity over the past two years added a net GBP 15 million net operating income as the impact of development completions and acquisitions more than offset income loss through disposals. The EBIT margin reduced to 65.9% as a result of lower occupancy and inflationary cost increases.

Adjusted earnings increased by 9% in the year, reflecting like-for-like growth in net operating income and investment activity. Overheads net of recurring management fees were broadly flat in the year. Adjusted earnings also included a nonrecurring fee of 0.9p on formation of our Newcastle University joint venture. Finance costs increased as a result of higher borrowings and a 30 basis point increase in the average cost of debt to 3.9%. Capitalized interest was also higher, consistent with the pickup in development activity over the period. On a per share basis, adjusted EPS increased by 2% to 47.5p, reflecting the increase in share count from the equity issue in mid-2024.

Net tangible assets per share reduced by 2% in the year to 955p. This reflected a 0.5% like-for-like revaluation deficit in the rental portfolio, where rental growth substantially offset the impact of an 11 basis point increase in the portfolio yield, which now sits at 5.2%. Our development portfolio also recorded a revaluation deficit linked to our decision to defer or exit projects. This included our TP Paddington scheme, for which we incurred a 2p write-down, having taken the decision to not proceed with the scheme on viability grounds. Fire safety CapEx, net of recoveries through our claims, saw a 3p reduction in NTA. This was in line with our expectations, and we expect a similar impact in 2026. Total accounting returns were 2.1% for the year, reflecting the change in NTA and dividends paid in the period.

We now move on to discuss the outlook for income, costs and earnings for 2026. As Karan discussed, we've seen a slower start to this year's sales cycle. This has been most impactful for nomination agreements where we expect a reduction of around 1,000 to 2,000 beds. We continue to target additional nomination agreements and have various conversations underway with university partners. Where required, we will pivot these beds to our direct let sales channel. Rental growth for our bookings in the year-to-date is 2.4%. As expected, growth has been stronger for nomination agreements and lower for direct let beds, particularly in those markets where we've reduced price to drive increased occupancy and income.

Based on current trends, we expect performance for the next academic year to be at the lower end of the guidance ranges provided at our investor event in November for occupancy of 93% to 96% and rental growth of 2% to 3%. Together, this translates to 0% to 2% expected growth in like-for-like income for the academic year, which is at the lower end of our initial guidance for 0% to 4% growth. There remains six to seven months to go in the sales cycle and significant time to influence performance. While undergraduate student numbers look encouraging, we've learned the lessons of last year and are calling the risks as we see them today. We will review guidance over the remainder of the sales cycle as we firm up university demand for nomination agreements and make progress with our direct let sales, which are more heavily weighted to the end of the sales cycle.

Cost discipline is one of our strategic priorities, and we're taking steps to rightsize our cost base to reflect a more competitive operating environment. We've identified GBP 30 million of annual cost efficiencies across the Unite and Empiric businesses, which will be executed by the end of 2026. Before the year-end, we reduced our central team costs by approximately 20%, responding to lower income and making savings where we'd invested in anticipation of stronger future growth. In addition, we're starting to realize the benefit of our investment in new technology platforms with GBP 2 million of our GBP 7 million of annual savings expected to be realized in 2026. Together, these changes will help to offset the impact of inflation, meaning we expect to hold the Unite cost base flat in 2026.

For Empiric, we're now one month into our ownership and have spent the time reviewing the synergy assumptions made at the time of our offer. Our original target assumed GBP 13.7 million of annual cost savings on a risk-adjusted basis through removal of duplicate activity and roles and the benefits of our economies of scale. We've now confirmed those cost savings, giving us the confidence to increase our annual synergy target to GBP 17 million. We expect to recognize GBP 9 million of those savings in 2026 and achieve the full run rate in 2027.

We have a strong balance sheet, and we will ensure we maintain leverage appropriate for the operational and capital intensity of our business. Net debt EBITDA is within our target range of 6x to 7x following completion of the Empiric acquisition, and we will continue to manage leverage through our disposal program so that we remain within our targets. This translates to a loan-to-value ratio of around 30% to 35% on a built-out basis. We expect a further gradual increase in our cost of debt as we refinance at higher marginal borrowing costs. We are forecasting a 40 basis point increase in the cost of debt to 4.3% in 2026 and then further increases of around 20 basis points per annum thereafter. Liquidity remains strong for new debt, and we've seen the cost of new borrowing reduced by around 25 basis points over the past year through lower rates and tighter spreads.

Joint venture capital is a key part of our capital structure and an attractive source of funding for the group. Just under half of our operational beds are held through funds, which generate recurring management fees equivalent to around 2/3 of our overheads. We will look for opportunities to leverage new third-party capital and are pleased to have agreed the disposal of St. Pancras Way to USAF. The GBP 186 million disposal will be funded through GBP 115 million of existing cash in USAF and an equity issue in USAF underwritten by Unite. The transaction helps increase USAF's exposure to London, the U.K.'s largest and most liquid PBSA market through acquisition of a prime Central London asset. For Unite, the sale allows us to remain invested in a high-quality property and earn additional management fees. It also recycles capital to fund the cost of delivering our university partnerships and committed developments. The transaction will see our stake in USAF increase to a maximum of 32%, which we then expect to reduce over time.

Our earnings guidance for 2026 reflects the outlook for income, costs and funding described on the previous pages. In November, we highlighted a 7% to 10% year-on-year reduction in EPS for Unite from a combination of factors. This included lower occupancy for existing properties and new openings, the loss of nonrecurring JV fees linked to our university partnerships, the initial earnings drag from disposals and the impact of higher funding costs. Since we issued that guidance, we've committed to an initial GBP 100 million share buyback, which will deliver modest earnings upside in 2026. However, we've also seen the outlook weakened for '26, '27 academic year income, meaning we expect earnings for the Unite business to be at the lower end of our previous guidance.

Our 41.5p to 43p adjusted EPS guidance also includes Empiric for 11 months of the financial year. As we said previously, Empiric's income was below our expectations for '25/'26 academic year, which will particularly impact earnings in the first half of '26. This impact is partly offset by increased cost synergies. However, we still expect a 1p to 1.5p reduction in EPS in the year. Thereafter, we're continuing to target earnings accretion from Empiric through an improvement in income performance and the full benefit of cost synergies from 2027. We intend to hold our dividend flat in 2026, which would mean an increase in our dividend payout ratio just under 90%. We expect this to normalize back to our existing payout ratio of 80% over time.

I'll now take you through a review of our investment activity in the property portfolio. In November, we set out our revised capital allocation framework based around 4 key priorities. And I'm pleased to say we've made good progress against each in the past three months. We formed our first two university partnerships in Newcastle and Manchester and started construction of new on-campus beds. For our off-campus developments, we reflected a more challenging leasing environment, which has seen us exit or defer future schemes. We're also committed to accelerating disposals and have today announced the sale of St. Pancras Way to USAF. This capital allocation supported our decision to launch a GBP 100 million share buyback in January.

As Joe set out earlier, we see a clear trend towards the strongest universities outperforming and growing student numbers. These are also the institutions where students see most value in the residential experience, and we see the most enduring demand for our product. Our target is to increase our alignment to high-tariff universities to 80% of our portfolio over the medium term. Our investment activity in the past year has supported this goal by exiting lower-growth markets, developing in our most supply-constrained cities and acquiring Empiric's high-quality portfolio, all of which have increased our high tariff alignment to 67%. Our future investment activity will see us focus our portfolio on fewer cities and the strongest university partners. This will be achieved through the delivery of our university partnerships and developments and by accelerating our exit from lower-growth assets and markets.

We've been delighted with our progress with university partnerships over the past year. We're now on site in Newcastle and Manchester for the delivery of 4,300 new beds. Universities recognize the value we bring through our design, planning and development expertise, which has helped to unlock these substantial projects in a difficult environment for new development. There has been significant appetite to lend to our university partnerships with Rothesay and PIMCO providing debt at borrowing costs below our initial underwriting.

As Karan mentioned, the strongest universities want more high-quality affordable accommodation on their campuses. As a trusted partner with a growing track record of on-campus deals, we have a significant opportunity to add future joint ventures. We have half a dozen live opportunities with high tariff universities, and our target is to secure one of these deals per year. We're targeting low to mid-teens unlevered IRRs for future projects with demand underpinned by university partners who have an aligned financial interest in the schemes.

I'll now turn to our off-campus developments. We delivered two new developments in 2025 in Bristol and Edinburgh totaling 1,000 beds, and we have a further two schemes under construction in London and Glasgow for delivery in the next two years. The cost to complete our committed schemes are around GBP 100 million. Our 2025 deliveries were 65% less in the year of opening. And as Karan said, these properties are leasing up well for the '26, '27 sales cycle. Our focus is on stabilizing the 2025 openings and leasing upcoming deliveries. Together, this would add GBP 27 million to net operating income from the end of 2027.

At Hawthorne House in Stratford in London, we will complete construction in June for the delivery of 719 new beds in an academy school let to the Department for Education. The project is our first development delivery subject to approvals by the building safety regulator. We recently secured the second of three gateway approvals and are fully engaged with the BSR to derisk opening in time to welcome students for the start of the '26-'27 academic year.

Our uncommitted pipeline also includes sites for an additional 2,400 beds where we own the land, for which the bulk of the value is in consented schemes in London. We will be highly disciplined over new development starts and recently took the decision to exit our TP Paddington project due to it no longer being viable. We've also deferred the development of our Freestone Island site in Bristol. We're currently exploring all options to realize value from these uncommitted projects, including outright sale as well as joint ventures where a partner would fund future CapEx.

In the wider market, we see other developers facing the same challenges around development viability. New supply of purpose-built student housing increased in 2025, but remains around half of pre-pandemic levels. Net of beds leaving the market due to obsolescence, new supply remained modest at around 1.5% of stock. High build costs and longer development programs due to the Building Safety Act gateways mean weekly rents now need to be at least GBP 230 for projects to be viable. This is above the rents in 80% of our markets and runs contrary to what Karan said about universities focusing on more affordable product. Where new supply is coming forward, it tends to be focused on more premium studio product and the small number of prime regional cities, which can support rents at these levels.

We expect new supply in 2026 at similar levels to 2025 with markets such as Birmingham, Leeds and Glasgow set to absorb the highest levels of deliveries. Looking beyond 2026, we expect to see a material reduction in new supply as indicated by fewer new planning submissions for PBSA schemes over the past year. We also see the same viability challenges impacting development of build-to-rent, which has become a source of competition at the premium end of the student market.

We saw good levels of investment activity in the student housing market during 2025 with just over GBP 4 billion of assets traded. Interestingly, we've seen a change in the makeup of transactions, which have shifted from funding of new development towards purchases of standing stock. This reflects the viability challenge for new development in the current market. Institutional investors remain active with the likes of AustralianSuper, QuadReal, L&G and KKR, all deploying capital in 2025. After a year of softer occupancy, leasing performance for the '26, '27 academic year will be key to pricing for upcoming transactions. We're targeting GBP 300 million to GBP 400 million of disposals in 2026 from a combination of lower growth or mature assets that have made a good start through the sale of St. Pancras Way. We will be bringing further assets to market in the coming months and have identified around GBP 100 million of future disposals from the empiric portfolio.

Positively, we're seeing good interest from value-add investors for portfolios at affordable rents valued significantly below replacement cost. We expect further disposals to follow the conclusion of the '26-'27 sales cycle in the autumn. This reflects the importance of current leasing performance as well as the time required to complete technical due diligence linked to fire safety.

We are fully focused on deploying capital where it delivers the strongest risk-adjusted returns. This was demonstrated in January through the launch of a GBP 100 million share buyback program to return surplus capital to shareholders. This was funded through reduced off-campus development. Looking ahead, we expect to generate around GBP 100 million to GBP 200 million per annum of surplus capital as we execute on our disposal plan and development CapEx reduces over time.

Share buybacks and university partnerships remain the best uses of our capital, and we will decide how and where we invest based on the opportunities we have available to us. New investment must demonstrate clear accretion to both earnings and net tangible assets, and we will not compromise on maintaining a robust balance sheet. This means future investment will need to be funded out of disposal proceeds.

And with that, I'll hand you back to Joe.

Thanks, Mike. So, we set out a clear plan in November, and we've made a good start. We know that we've got a lot to do, and it will take some time, but we are really clear on our near-term priorities. We will be relentless in our focus on sales from both nominations and direct let across both Unite and Hello Student. We will deliver further cost efficiencies from the delivery of our tech platform, complete the integration of Empiric by the end of the year, securing additional synergies and drive earnings accretion from our sales platform.

We've announced the sale of an asset to USAF and launched a portfolio that supports the portfolio repositioning, and we will be pragmatic and agile in the delivery of that. And we will be disciplined in our approach to allocating capital to new development, prioritizing nominations and joint ventures, and we will consider further share buybacks as we make progress with disposals.

We remain positive on the sector and believe that the fundamentals remain strong. U.K. higher education is an amazing asset to this country. It is globally recognized. There is a more stable policy environment and the strongest universities are growing and targeting further growth. We're confident in our platform and our ability to integrate and drive value from the Empiric acquisition and our university relationships, and we are underway with our portfolio repositioning and seeing new supply slowing.

We are pleased with the progress that we're making, and we believe that we are well positioned for the future and building momentum in our performance.

On that, I'm going to open up for some Q&A. So I suggest we start in the room, and then we can go online. I got a couple of mics at the back.

Callum Marley from Kolytics. Two questions. First one on Empiric. So, Empiric occupancy came in weaker than expected. And Joe, I think you mentioned that they failed to pivot away from their core postgraduate market. Was this priced into your original offer? And I guess, was this a foreseeable miss?

So we did reduce our price because we saw that there was weakness in their sales, but they still came in below that. So that was a disappointment in terms of where they've ended up. And I think that was in part, as I say, because of that lack of failure to effectively reposition and also just from some of the market changes that we saw across our own portfolio.

Okay. Then the second one, why should investors have confidence that today's guidance represents a floor rather than another step down?

Look, I think that we set out in November that the -- effectively the fundamentals of our business that we believe that we should be focused in on those high-tariff universities that we have seen changes in the marketplace coming from the move to more students staying at home and the growth or the fall in international postgraduates and that repositioning the portfolio will take some time.

We've also been encouraged by the applications data that has come in for the next academic year, both from U.K. undergraduates and from international undergraduates. And that gives us confidence that we will continue to see that high tariff -- that growth of high tariff universities, but it will take us some time to reposition the portfolio.

It's Paul May from Barclays. Just following on from that last one. I think you mentioned a few times in the presentation about making good progress since November, but yet you announced another profit warning, which is your third in four months. What confidence can you give us that you have full control and understanding of the market? You highlight demand should be stronger year-on-year and yet you're guiding to the bottom end of operational expectations. There was stronger demand last year and yet the market suffered from operational challenges. How do we know that this is not the start of a multiyear rebasing in occupancy and rate growth given the supply-demand dynamic appears to have broken.

Yes. Universities are taking a more cautious approach, and we've seen that. And the current occupancy position is driven primarily by that shortfall in nominations agreements. I think we are encouraged by the quality and number of conversations we've had since the release of that applications data. But that's why we are reducing our occupancy guidance to the lower end of our range. We set out in November 93% to 96%, and we are saying that given that current position that we are saying that we will be towards that lower end of the range. The reduction in the earnings guidance is primarily because of the Empiric acquisition, the 1p to 1.5p, and that's because of their sales performance before the business was in our control.

We fundamentally, and hopefully, we set out our belief of why we see the longer-term performance of the sector and aligning to the high-tariff universities where we have seen strong growth in numbers. We've seen a return in growth or growing numbers of undergraduate students as well. But fundamentally, that's why we believe that we will be able to return to that core occupancy back to where we've historically been.

So I think in November, you also mentioned an expectation to bounce back to 97% plus occupancy and inflation plus rental growth from academic year '27, '28. I assume this is no longer expected.

Yes. I think the delivery of that to 97% was when we repositioned the portfolio. I'm not sure that we sort of believe that will all be done by '27, '28. I think that we do need to go through that portfolio repositioning. And we've highlighted GBP 300 million to GBP 400 million of sales this year. We've launched the portfolio.

As I say, we will be pragmatic in the delivery of that, and we will have to go again into '27 as well. So I think the delivery of that is around the alignment point and that we will need to effectively get back to that focus or greater focus on high tariff to enable us to get to that levels of occupancy.

A very quick one. then share count you're using for EPS guidance just given the issuances and other things.

Yes. What I can say, Paul, is there's a few moving parts in the share count, clearly. So, the Empiric acquisition completed at the end of January. So, essentially, you have 11 months of own shares. The other variable is clearly the share buyback. We've talked about deploying GBP 100 million over the course of essentially the first half of the year. So you should probably assume around nine months of those shares being out of the share count. So clearly I can't give you a precise number, but hopefully, that gives you the key moving parts.

Sorry, last one on Pancras Way. Obviously, sold to a related party, one could argue. Why did you decide to sell to USAF? Was this a competitive process? If so, what was the price of the underbidder? And how much was the asset written down in '25 versus the portfolio?

Yes. So it's probably fair to say for context. So USAF is a fund in which we established it over 20 years ago. We remain a big investor. We've got a 30% stake in the fund. And clearly, these are investors who want to -- they see value in the student accommodation sector and they want to be invested there. We've been talking to USAF over the course of the last two years because they've made a number of disposals, which have freed up capital. So the fund has had capital. We've historically sold into the fund and generally, that's helped us recycle capital to fund things like our development pipeline.

We knew USAF had a requirement to grow in London. It's about 15% of their portfolio, and they'd like to upweight. And we discussed the number of assets with them. That was on a bilateral basis, but it's arm's length. So the way decision-making works in USAF is for them to approve a transaction, there's a vote which is outside of -- Unite is excluded from that vote essentially.

In terms of the valuation of that asset, we saw the yields move out by about 15 basis points over the course of last year, which net of the rental growth meant it was modestly up in value terms, but that's pretty consistent with what we saw in the broad market. But it's fair to say this was an arm's length negotiated transaction. We're pleased to sell it to USAF, and I think USA are pleased to have acquired it from us.

Just wondering if you can talk to the markets that you had to execute pricing adjustments in and whether you expect any other markets, I guess, with oncoming supply to be impacted there.

I can take that. So I think as we've set out in the Capital Markets Day, there were three cities where we had the most challenged performance, Nottingham, Leicester and Sheffield. So in those three cities, we did make pricing adjustments. And we've done a combination of adjusting the headline price, but also adjusting tenancy length to marry to the needs of the universities. So where we may have historically have had 51 weeks, we've gone to some of those 44 weeks as well.

In a lot of the other cities, we've done tactical price changes. I don't think we've done strategic citywide price changes. So individual properties. A good example of that is the 2 new properties that we launched last year, Avon Point in Bristol and Burnet in Edinburgh. We've adjusted some of the pricing and tenancy lens there as well to rebuild the base and secure the rebookers as well.

Apart from that, it's different in different cities, but those are the key ones where we've made adjustments so far. For the rest of the cycle, obviously, we will see how the performance varies and then depending on where we see demand coming or softening, we will make more adjustments.

Also, just with the direct let, I guess, underperforming nomination agreements, how, I guess, under-rented are those nomination agreements? And does that come up in your discussions with universities that nominations are achieving a higher rental growth than the market?

Yes. Rebecca, it varies by agreement clearly. But sort of broadly speaking, they tend to be sort of around 10% under-rented on an annual contract basis versus direct let. However, what we get with those agreements is clearly visibility and security of income. So there are some benefits.

One of the other things we think about the nomination agreements beyond the income security are the savings we make in cost of acquisition as well. So they can be something in the order of 3% to 5% of booking for a direct let sale. So we tend to think about these things in the round. Yes, we hope to capture reversion, but we're also looking to grow that nominations space, as Joe discussed.

Yes. And then just on Empiric's letting performance, you expect it to be in line with the direct portfolio. Just wondering if you can give some, I guess, some numbers around that. And then also just given the current slower leasing cycle, just wondering if you can talk to, I guess, because they have that higher weighting towards tariff universities, what's really going on here? Yes.

Yes. So if you look at the Unite guidance for this year, we've talked about being at the lower end of the 93% to 96% and nomination agreements being probably around the mid-50s as the share of beds. What you can imply from that is our direct let occupancy would be in the mid- to high 80s, and we think Empiric's portfolio will be in a similar place.

And I think your second question, Rebecca was on high tariff and how that's performing for them. Fundamentally, those institutions have performed well and their properties are located in strong micro locations. I think the impact on performance has been around that post-graduate intake. So we often talk about high tariff in regards to the undergraduate data, which is trending very positively. However, what we have seen is softness in post-graduate demand and particularly a reduction in bookings from China for Empiric.

It's Tom Musson at Berenberg. Just a question on the portfolio valuation. Am I right in thinking that in this period, the valuers will have made a specific deduction to the value in some places due to lower occupancy? Or is the portfolio still valued based on assumption of full occupancy?

Yes. So, yes, Tom, you're right. When we have buildings that are under-occupied versus, say, a standard 97% occupancy assumption and valuation, what the valuers will do is make a pound per pound reduction for the shortfall in that income for the next 12 months. However, what they will also reflect and they have reflected in the Q4 valuations, in some cases, are reductions in expected rents because of the lower occupancy performance. So what you will have seen in the Q4 valuations is they've taken account of the sales outlook that we've reflected in our guidance for the '26, '27 academic year.

In pound million terms, are you able to sort of say how much that is?

The pound per pound reduction in the income, Tom. It would essentially be that gap. So if we're saying we were 95.2% occupied for the academic year, it would essentially be the 1.8% occupancy reduction relative to the value.

All right. And then just quickly on software implementation costs. You mentioned the upgrade program will complete next year. How much more cost should we assume for '26? Anything else beyond that?

We have about GBP 10 million to go, Tom.

Ana Escalante from Morgan Stanley. One question on the nomination agreements because in January, you reported 56%, if I'm not mistaken, of reservations coming from nominations, and that has gone down to 55% now. So I was wondering why -- or what's the reason behind that reduction? And if that 55% that you are reporting today is totally secured for academic year '26, '27?

Yes, I can take that question. So the reason for why it's sort of gone down since the January update is we were still in the middle of the conversation with universities on what volume they were going to take. And what we have seen is that we've lost very few accounts in full. What we have seen is where universities may have taken 1,500 beds, they've sort of said we're going to take 1,300, and we're going to guarantee you 1,300, but we need to see where the applications are going to be before we can commit to the next 200.

So they've sort of taken the top off a little bit, and that's kind of what has led to the number going down from 56 to 55. So it's a lot of small little adjustments rather than one or two big accounts that we have sort of lost as well.

Sorry, I missed the second part of your question.

Yes. Of that 55% that you've currently reported, how much do you think is 100% secured.

Yes. So we're pretty confident on the 55% that's in there right now. So they represent either contracts that we have already signed. Most of them are multiyear agreements. So they are pretty secure. We also have a pipeline of further conversations, which are what we are hoping will get us the 1 to 2 points of additional occupancy on that 55% right now.

And then the discussions that you're having with universities are mostly around what they're saying, right, that they don't want to commit on certain number of beds? Or are they, to some extent, some price sensitive and therefore, they are demanding for some price adjustments?

It is very much the former, which is do we have confidence that we will have the student numbers securing -- seeking accommodation. I think overall, they are actually very happy with our relative price points. They are happy with the rate of rental growth that we've got in there. And historically, we've been quite prudent with what we've sort of pushed through as rental growth as well. I think they've been quite appreciative of the fact that we've adjusted tenancy lengths to reflect where they might need a 41-week or a 44-week rather than last year, we might have sold that as a 51 week.

So we have a lot of positive commentary from them around our flexibility and not really a lot of issues around the headline price right now. I think ultimately, what they want to just get confidence on is the application that they're seeing, which is more positive than initially may have thought is actually that turning into acceptances, which really does happen through May and June.

It's Max Nimmo from Deutsche Numis. Just on the integration with Empiric, I think you were talking about kind of technologically bringing that together for the next sales cycle. Just how confident are you on that in order to get that kind of sales rate back up? Is it sort of a plug and play? And kind of related to that, you mentioned also about the build-to-rent risk as well in the market, particularly in some markets where there's quite a lot of new supply, and we're hearing of build-to-rent assets with 40% to 50% of students in them. Just how you see that risk versus the kind of the rent reform bill and things like that.

Yes. So, Max, on the first point, I wish it was plug and play, but I think from -- I think anybody -- any of us who ever been in a technology upgrade knows that it takes the complications and the surprise as you get through your deployment.

I think the advantage for the Empiric team coming over to the Unite platforms is that we are actually going through that process within the Unite properties first. So we've already transitioned to our new service platform. We've implemented Fusion in finance. So a lot of the core platforms that they'll be coming on to, we have already tested, embedded within the Unite system. So we know how to move them across platforms.

The big unknown for us right now is our property management and booking engine because we're in the final stages of its design and testing and the testing really starts in earnest in April. So that's probably the unknown where if that goes well for the United systems, United Properties, then actually the process to bring an Empiric on would be just another group of properties. But again, I think it -- I need probably the next three to six months to see how the testing goes before I can give you the confidence whether it will be a plug and play. But the intent is very much to have it ready in time for the sales cycle for the next year.

I think on your second question with build-to-rent risk, we have seen build-to-rent emerge as a competitor, especially for international students and especially for returners who are looking for that more independent living experience. That's part of the reason why we were quite excited by the Empiric portfolio, which offers a very different proposition. There will be more risk within build-to-rent because they will be -- they will not have the benefits of the assured tenancies that we will still have within the student portfolio. So we think there is more volume that we can shift from the HMO market where if you're a landlord, it's yet another challenge that you have to deal with. So we're hoping the supply side does become a little bit better for that second and third year in the returning market, which will benefit Empiric as well.

Not sure we'll allow a second go, Paul.

Apologies. Just had one which came up, I think, at the Capital Markets Day, which you mentioned about a reduction in utilization of space through the year. Just wondered if you're seeing that in the continuation in the direct let in terms of shorter lease cycle.

We are seeing a slight shortening in lease duration, Paul, and that's reflected in the price guidance we give. So when we said being at the lower end of 2% to 3%, that's annual contract value. So that's the combination of weekly rate and the length of tenancy. We saw that length of tenancy tick up for a number of years, and we saw it slightly reduced last year, and we're seeing a similar sort of attrition in that this year. So it's reflected in the guidance, but it's fair to say that probably that affordability trend means that we're seeing those contracts get slightly shorter.

And part of that is driven by the shift of international postgrad towards undergraduates and generally, the undergraduates want a shorter tenancy length than the postgrads.

I think you mentioned some leasing per term. Have you seen an increase in that as well?

Not really.

Not massively, Paul. But we are actually quite good at backfilling our rooms where we do have either vacancies or somebody needs to leave early because of any issues. We've done fairly well. We have seen some jam starts come through as well as universities have started to add courses in that particular period as well. It's something that we're actually fairly good at. It's never been a huge part of our business, that in summer income. But as we have shorter tenancies, we've actually bulked up that business development muscle.

And it's fair to say, Paul, when you end up selling a first semester, let's say, it's generally because you might have vacancy. So we haven't really started doing that yet. It's focused on annual contract values. As you get towards the end of the cycle, you may pivot towards selling some of those shorter tenancies as well.

And very last one. I mean, we've obviously seen quite a share price decline over the last basically a year or six months, another decline today. Just wondering, should we expect to see direct purchases of shares going up seeing your confidence in the future has increased or deferring a part of your salary into share options given that confidence?

Yes. I think we've already increased our shares that we've been buying, and there is also a bonus deferral element to our remuneration. So yes, it's something that we actually consider. I think that along with the share buyback program that we've announced is sort of hopefully demonstrating the commitment and confidence that we've got in the value of the business going forward.

Mike, I think we've got a few coming online. Do you want to pick up any that we haven't sort of covered?

Yes. So I'll start with a couple from Marc Mozzi at Bank of America. First one, are university partnerships included in your earnings guidance?

Yes, they are. It's fair to say though that we're in the development stage. So it's just a case of the CapEx coming through and those beds will become operational in future years.

Marc then had a separate one on what is the initial yield we should expect for your disposals?

It will be a blend of different types of disposals. We've clearly made the disposal to USAF we've announced today. We do think that the yield on disposals will probably be in the order of 5.5% to 6%, albeit some will be high yielding, some will be low yielding.

I'll then turn to Denese Newton at Stifel. What is the likely impact of your price matching offer where early bookers will still get the best price?

Yes, I can take that. So any time that we are considering a price reduction from what we have already launched, we do look at what's the actual net impact of that from -- in terms of incremental revenue it can drive net of what we have to give back to students, be it on the incentive or the headline price as well. In most cases, it's not massively significant. So if you're offering a GBP 250 incentive and there's 100 existing students, that's GBP 25,000 that we'll be doing.

So, so far, it's not material, but it is an active consideration when we look at price reductions because we want to make sure that we are making net-net more cash rather than just trying to drive pure occupancy in itself.

Got one from Andres Toome at Green Street. How do you perceive the risk of missing income for 2026 new openings? Are you able to fully let new schemes open in 2025?

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I can take that. So we've got one scheme coming up in London, which is Hawthorn House. 51% of that building is already nominated with the London university, which is a great sort of base to come from. We've also had interest in that asset from another high tariff university in London, which if we're able to secure, which we'll know in the next few weeks, I think that will then put that property on the track of full occupancy. It's a great asset in Stratford, really well-priced rents as well. So -- and sort of taken the lessons from last year around what we need to do to drive initial occupancy, initial pricing incentives, et cetera. So right now, we are confident that we can -- on the back of the nominations that we should be in a good position.

We've then got a couple of questions that I'll combine on build-to-rent. How is your build-to-rent strategy progressing? Have you thought about repurposing PBSA into BTR where you may be facing lower occupancy?

Yes. So we've got the one asset build-to-rent in Stratford. I think just given the current capital position of the business, we won't be looking to grow and add to that portfolio. Indeed, we'll probably add that one to our overall disposal program either in '26 or '27. I think in terms of repurposing student accommodation to build-to-rent, that does come with some real complexities around affordable housing and change of use.

So I think where we have more flexible consents, we may look to open up lettings and actually, the Empiric portfolio plays into that, but it's not something that just given the overall demand and the outlook that we're spending too much time on at this moment.

I think got one from Roy Kulter at ABN AMRO. Historically, you've guided to a total accounting return target of 8% to 10%, excluding you movements. given the current environment, do you still expect to hit that figure?

So I think we've laid out the sort of the key elements really that sort of go in to give you the total accounting return. Generally, in any given year, about half of that 8% to 10% comes from recurring earnings. You can clearly see the guidance for this year, which is for a slight reduction in earnings, but you would still expect about 4.5% of return on the NAV from that recurring earnings growth. Thereafter, the valuation impact will be a function of the rental growth we achieve. We've given you a sense of how we're trending and clearly, the property yield movements that may or may not happen, but we don't guide on those. I think that's it.

Great. I don't know if we've got any calls on the -- questions on the calls.

Great. Well, thank you all for coming and joining us this morning. Thank you for all your questions, and look forward to seeing you all.

Good morning, everybody, and thank you for taking the time to join the call. I'm joined here this morning by our CFO, Mike Burt; and COO, Karan Khanna. Hopefully, you've had time to read our announcement that was out this morning. And as an intro to this call, I just want to provide a bit more color on the following 3 areas: our reservations progress, our capital allocation framework and the launch of the share buyback program and the Q4 valuations. We'll then open up for Q&A.

Before we get going, I think it is worth just stating that we're only 6 weeks on since the investor event, and we are still early in the sales cycle. However, we are reiterating the guidance we set out at our investor event in November, and we will come back at our prelims in February, as usual, to provide detailed earnings guidance for 2026, and this will include the impact of Empiric.

So looking at reservations progress, reservations for the next academic year are currently at 64%. Whilst this is below the 67% at the same time last year, as I say, it is still very early in the sales cycle, and we remain on track to achieve the 93% to 96% occupancy and 2% to 3% rental growth that we provided 6 weeks ago. UCAS applications data will be out at the end of this month, and it is expected again to be positive based on demographic growth and continuing the trend that we saw at the October deadline, which saw applications up 7%.

High and mid-tariff universities are actively targeting more U.K. students, and so we expect there to be more students in our markets than there was last year. Direct-let sales have continued in line with last year and represent 8% of total beds sold, and we are continuing to be proactive with our sales and marketing approach, as Karan outlined in November. Encouragingly, we are ahead of last year in some of the weaker markets, although, as I say, there remains some way to go in the sales cycle.

Universities have taken a more cautious approach at this stage of the cycle, and that is what they're telling us until they get a better view on their numbers, and so delaying or pausing renewals and take-up of beds under nominations agreements, and this currently sits at 56%. And we're seeing the impact of the financial pressures on universities. They are less willing to take on financial risk through those nominations before the UCAS application window is closed at the end of January. They just don't want to be left with void rooms that they have to pay for.

And based on our discussions with the universities, and it is fairly typical for this stage of the cycle, we expect to see further demand for beds over the next few months, as they firm up on their numbers. And as I mentioned, we will provide updates as usual in late February, and then, again in early April, and we will be more proactive with our guidance ranges than we were last year.

Moving on to capital allocation. We set out the revised capital allocation framework in November, and this will see us transition to being a net seller as our disposals accelerate and our development activity becomes more selective. Where we have surplus capital, this will be deployed into university partnerships and share buybacks. Consistent with that approach, we are today launching a share buyback program of up to GBP 100 million. This reflects our confidence in Unite's long-term return prospects and our focus on shareholder value.

This will be funded by the capital from deferred development activity while maintaining the strength of our balance sheet. And in order to maximize returns, we have taken the decision to defer the delivery of our Freestone Island scheme in Bristol and have also decided not to proceed with the TP Paddington scheme that now has planning. And as we set out 6 weeks ago, we are targeting GBP 300 million to GBP 400 million of disposals in '26, and we are now starting to execute against that plan.

This revolves around 3 strands. First, we're exploring the sale of assets to our JVs. Secondly, we are preparing a portfolio to bring to market in the next few weeks. And thirdly, we are engaging with buyers for potential single asset sales.

As I'm sure you're aware, there are several portfolios on the market at the moment more broadly, but assets are trading. And as you know, we have a good track record of selling assets, and we will continue to push against this target throughout the year. We expect to generate further surplus capital as we make progress with these disposals, and we will look to invest where we see the strongest risk-adjusted returns.

On valuations, as we flagged a few weeks ago, valuations for the quarter reflect lower-than-anticipated rental growth and a slight softening of yields. USAF has seen a 4 basis points yield increase and a decline of 0.6% in the quarter, up 0.8% in the year. LSAV has seen slightly stronger rental growth, albeit offset by 16 basis points of yield compression, leading to a decline of 1.3% in the quarter, up 0.6% in the year. Based on our conversation with the valuers, we expect the group's property yields to be broadly in line with the increase seen across the USAF portfolio.

So just to finish and before I open up to Q&A, last November, we set out a clear set of strategic priorities, which were focused around our operational excellence and capital allocation. And I remain excited about the opportunities ahead of us, as we start to execute against the repositioning of our portfolio through that accelerated disposal program, which will enable us to return to 97% occupancy with above inflation rental growth, and we will continue to implement a lean cost structure.

We will deliver the Empiric business plan and continue to focus on securing one new university joint venture each year. And as we demonstrated today, preparing to deploy surplus capital to share buybacks. And I believe that delivering against these priorities will lead to a meaningful impact on our performance.

So now, I'm happy to open up to Q&A. So perhaps Laura, our operator, can first go to the conference call to take any questions.

[Operator Instructions] We'll now take our first question from Callum Marley of Kolytics.

Just one. On the yield expansion seen in the London assets, I think 16 basis points in the quarter, do you believe these are now fairly priced? Or is further outward pressure on yields likely in 2022?

Callum, yes, I think it's fair to say on the yield movements we saw in Q4, not a lot traded. And really, it's a sort of a sense of sentiment from valuers in terms of we've seen clearly slightly weaker occupancy for the '25-'26 academic year, and they've moved out yields in London and in other markets as a result.

London remains one of our strongest markets operationally. And generally, what we see when we speak to investors is there is a significant amount of capital still targeting London. Portfolios in the market, which include London assets generally have most traction as well. So clearly, the values will need to reflect whatever transacts in the market over the next 12 months. But generally, we still see a good bit on London.

And then maybe just one quick extra one. How do you expect LTV to trend going into next year based on the valuations and share buybacks?

Yes. We can't give you a steer on valuations for next year, Callum. But in terms of net debt, the capital allocation framework sets out that we would be selling those GBP 300 million to GBP 400 million of assets in next year. Our sort of capital investment in terms of the university partnerships and developments is about GBP 150 million to GBP 200 million per annum. And then, as we've said, where we have surplus capital, we'll be reinvesting that. So I think it's fair to assume that net debt will be broadly stable, and that hopefully gives you a steer in terms of how the LTV might trend.

And we'll now take our next question from Andres Toome of Green Street.

Just firstly, just wondering that 300 basis points difference in university nomination agreements, how many actual university agreements does that equate to?

Yes. So we have agreements with over 60 universities. And within those agreements, the -- generally, we were speaking to universities about the take-up that they will have each year. We have about 12% of our beds are renewing under single year or maturing longer-term agreements. So it's probably around a dozen universities where we've seen universities amending or deferring the confirmation of their overall numbers.

On the flip side, we've also seen a few new universities come to us for beds. And so it's fairly normal at this time of year that we're having lots of conversations with all of our university partners just to firm up those numbers. But as I said, that they are just taking a slightly more cautious approach this year, which we feel is being driven by those financial pressures that they are feeling and wanting to ensure that they are not left with a financial liability based on having overbooked too many rooms.

And then my second question is around supply. And of course, you are adjusting your pipeline ambitions. But how are you seeing new construction starts in the broader market evolving after a softer leasing year? Is the behavior of other market participants similar to yours?

Andres, I think we're seeing, akin to our behavior, people are finding it more difficult to make schemes work and stack up. I think we're still expecting to see a similar level of supply in 2026, as we did in 2025. However, our sense is you will start to see a reduction in that level of deliveries from 2027 onwards. Clearly, when you look at our pipeline, where we're committed in the medium term, is those on-campus university partnerships where the schemes are unlocked through the relationships with universities. We do think viability off-campus is a lot harder though, and that will see supply reduce.

And then any sort of indication of what's the lending market for PBSA like at the moment? Have spreads moved at all? Or any sort of indication on that would be helpful.

Yes. So we've been in the market more on the private credit side in recent months with our university partnerships, but it's still a sort of pretty good barometer of credit appetite for PBSA, and lender appetite is still there and is still very healthy. So we haven't really seen any change in lender behavior, Andres. And I think it's fair to say spreads are -- have been pretty stable over the last sort of 3 to 6 months. And probably on a sort of 12-month view, they probably come in about 25 basis points.

And we'll now take our next question from Tom Musson of Berenberg.

I appreciate the updated 2026 guidance is going to come with the results later in February. But can you just clarify whether the 7% to 10% reduction in EPS that you did outline at the Capital Markets event reflected the year-end restructuring and the additional cost-saving opportunities that you're discussing today or whether that's incremental?

And then a second one, just a short one on the buyback, if we assume that GBP 100 million ends up being the number, over what sort of time horizon would you expect to be able to execute on that?

Tom, so in terms of the cost savings -- so the guidance we gave on earnings at the November Capital Markets Day, that included our guidance for costs to be flat in 2026 overall versus 2025. And within that, that assumes the savings in our central staff costs that we're flagging in the statement today.

Then, on your second point in terms of the time to deliver the buyback, we expect it to take between 3 to 6 months.

We have no further questions in the conference call. I'll now hand over for webcast questions.

Great. Thanks, Laura. I think we've got one question on the webcast.

We've got one question from Veronique Meertens at Kempen. You mentioned that you're in discussions with universities, but there's some hesitance around uncertainty on application numbers at this stage. Is there also a discussion about rent levels with universities regarding these nomination agreements that you can comment on?

Yes. The discussions with universities do revolve around both the volume of beds and also price. With the multiyear agreements, that is a fairly procedural discussion with the in-built annual inflators being reflected, and that is supporting rental growth of around 3% to 4% on those agreements where we have them. For single-year deals, there tends to be more of a commercial negotiation around pricing and what is being seen in the market. But we're not seeing any significant pressure from universities to reduce prices, and they are comfortable with the sorts of rental growth that we're seeing elsewhere.

Probably the one pressure that we are seeing, and particularly given universities' greater focus on U.K. undergraduates, is for some of those newer contracts to be shorter tenancy length, so going from 51 weeks to 44 weeks in some of our strongest markets. So a little bit on tenancy length as universities want to focus more on U.K. students, but that is on a relatively small proportion of those additional beds.

We've got one more question on the webcast. This is from [ Joe Mortlock ] at [ Millway Partnership ]. Why do you consider a share buyback the most efficient use of capital at this time?

Thanks for the question, Joe. So as we set out at our investor event at the end of last year, we said that we would deploy surplus capital into our university joint ventures and share buybacks. With the university joint ventures, that's going to be led by opportunities. We would like to add another one of those university joint ventures during this year, but we're not at the point of being able to announce anything at this stage. And having made some surplus capital available through that deferral of development and the headroom in our leverage ratios, share buybacks today are the best use of capital on a risk-adjusted basis.

Great. Well, thank you all. I think that picks up all of the questions on the webcast, and therefore, concludes the call. So thank you all for joining, and we look forward to catching up soon.

Thank you all for coming along today. And as I say, for being so prompt. It's great to have so many of you in the room, and I know that there's plenty of people joining us on the line as well. So thank you all for taking the time. I know it's a busy day after events of yesterday as well. So thank you for such a strong turnout today.

I just want to start by reminding us that U.K. higher education is one of our leading sectors in the U.K. It's recognized globally as one of the best places to come and study from across the world, and we believe that it will remain so. Demand for university education is enduring and the jobs market still needs highly trained young minds. And Unite is a great business. We're a purpose-led organization with a 30-year track record. We've built relationships and partnerships with leading universities. Our operating platform enables us to deliver great service at sensible prices. And we're lucky enough to be able to look after students at a really important part of their lives and help them get the most out of their time at university. We've got a great team who are committed and invested to work through the challenges that we have in front of us.

We're disappointed by the '25-'26 sales cycle and the impact that it's had on FY '26 numbers with a guidance for a reduction in earnings next year, but we've reflected on what we can do differently, and we'll set out a plan today of how we can return to growth. And it has been a tough few weeks, but over the years, we faced challenges before, and we've built resilience. Through the global financial crisis or the introduction of fees in 2012 and even through COVID, we face those challenges, and we've emerged stronger. We've done that by staying agile, focusing on what's in our control and taking clear decisive action. And today is no different. As an operational business, we can pivot and adapt and we'll take proactive actions on our sales, our costs, disposals and capital allocation, which we'll talk through today to position ourselves for success, and this will get us back to growth.

Before we get going, I just want you to hear from a couple of others in the sector about the condition of high education and how we are playing into it. So the short video I'll show you has got Professor Malcolm Press, who is Chair of Universities U.K., the leading membership group for University. U.K. -- for U.K. universities and also he's Vice Chancellor for Manchester University and also Nick Hillman, who's the Director of the Higher Education Policy Institute.

[Presentation]

Great. Hope you found that interesting. Very helpful to have partners like Malcolm seeing the value that we can bring and help the growth of their organization. So I'll just take you through the outline for the day, I'll start with an overview of the sector. We'll then move on to a look back to the lettings performance in '25-'26 and Karen will share his thoughts and approach for the '26-'27 sales cycle, which kicked off just 3 or 4 weeks ago. And then Mike will talk us through what this means for our financial performance and our capital allocation framework. And I'll come back to you at the end to pick up with where we are on empiric and pull the rest of the presentation together before opening up for some Q&A.

The structural drivers on which we've built our business remain intact. As you've heard, there are world-class universities in the U.K. and enduring demand from both U.K. and international students. And that's been driven by the demographic growth, which keeps going for the next 5 years and growing wealth globally. There is still a shortage of housing across the U.K. Whilst there are pockets of new supply in our sector, HMO regulation and development viability mean that this will continue to limit new supply.

A number of headwinds that we have been tracking have come faster and stronger this year than we had expected. And this means that the overall take-up of PBSA is down, and our occupancies end up 2 points down at 95% and we know that we could have been more proactive in some places. However, the vast majority of our cities have performed very well, we're at 97% occupancy in 19 of our 22 cities on average. And really, the shortfall has come down to a significant underperformance in 3 cities and a weaker lease-up on new buildings and major refurbishments, particularly where there's been new supply in those cities.

And what sits behind that is the fact that there are fewer domestic students have booked with us this year, and that is particularly at low and mid-tariff universities, and whilst the international recovery has not been as fast as we had expected, actually, our international sales are flat year-over-year. So we've learned from all of this, and we are going to take a different approach for this year's sales cycle. As I say, Karan will talk us through that shortly.

We know that we need to be proactive, and we know that we need to change to say we've been here before, and we are confident that we can do it again. We've got the best operating platform in the sector, and we can flex our offer. We will push harder into nominations agreements and rebookers, and we will use price in lower occupancy cities to grow total income. We will be ruthless on costs. We have already started the restructuring program underway, and we will use our new technology platform to drive and reduce costs further through '26 and '27. We will accelerate disposals and we also use our funds and third-party capital, and we have optionality over much of our development pipeline, and this will be reviewed given our current cost of capital.

Whilst our earnings will go backwards next year, we will plan to get back to growth for 2027 and beyond by repositioning our portfolio to make sure we are aligned to the strongest universities, getting back to 97% occupancy on our target portfolio and driving above inflation rental growth. We will use Empiric as a springboard to grow our share over the returners market, and we are delighted to have got the CMA clearance earlier today. We will focus our capital on university joint ventures and nominations, and we will be disciplined with our capital as we realize disposals, considering share buybacks, whilst maintaining the strength of our balance sheet.

We're confident that we can return to growth. We've got a best-in-class platform and a highly capable team who can deliver the change that we need. There are lots of questions about the HE sector right now. And as you heard from Malcolm and Nick, we believe that many of these are being overdone. The U.K. has a world-class globally accessible higher education sector. It is renowned the world over with the 17 of the top 100 universities, educating over 2 million young minds every year with world-class research and spinouts that drive growth. And high education makes a huge contribution to the U.K. economy and is now the fourth or fifth largest export that we have. It generates soft power as well. There are 58 serving world leaders who are educated here in the U.K. And whilst the U.S., Canada and Australia are all making it harder for international students, there is emerging competition from other nations particularly in Asia. In the budget yesterday, it was confirmed that a levy of GBP 925 will be charged on international students, and this will be used to fund the reintroduction of maintenance grants the students from lowest income households. And given the global competition that I just talked about, universities in the main will seek to absorb these costs.

Young people still want to go to university. 41% of 18-year-olds applied to go to University this year at or around record levels. 84% of parents and grandparents want their children to go to university and the residential element is a core part of the experience of going to university for so many. Overall, the degree is estimated to be worth between GBP 200,000 to GBP 300,000 as after tax and student loan repayments relative to what a graduate would have earned if they had not gone to university. And these premiums are weighted towards the higher universities. And actually, the average masks the fact that 20% of students don't generate a premium at all, and this is generally at those weaker universities.

Graduate employment is soft at the moment, but this is in the context of a soft employment market overall. And yes, AI cannot be ignored, but AI will not replace all jobs. However, it is true that people who know how to use AI will replace people who do not. And universities are responding and changing the way that they educate, and in a world where more skills are required, a high-quality university degree will be more valuable than ever.

The government is supportive of higher education. They see it as a fundamental pillar of the industrial strategy, as Malcolm Press said, and in the recent white paper, it is clear that they are looking for change from the sector. They are getting tougher on universities. They're tougher on their approach to quality, value for money, finances and immigration, but they're not looking to reduce the numbers of international students, but they want to ensure that they are of the right quality to come and study here and linking them particularly to better universities. They will continue to support teaching universities that do a great job educating delivering skills and employment outcomes for young people. And this is what's encouraging for the first time since 2017 to allow tuition fees to grow with inflation, which clearly helps university finances, which have been under pressure for some time.

And whilst universities may have been slow to respond to financial concerns, they're definitely doing so now. And they will continue to focus on efficiencies. We could well see more mergers like the one we saw with [indiscernible] earlier this year. But it is clear that universities need capital and this presents a huge opportunity for us, particularly as they see the value of high-quality affordable accommodation.

So what does this all mean for us? I'd pull out 3 key factors here. One is that the strongest universities are outperforming, and they will continue to do so. The second is that U.K. and international students will keep going to university here and they are being more discerning about seeking value for money from the investment they're making in their education. And thirdly, universities are getting their finances in order, but they are unlikely to be investing new capital into accommodation, and that's why we center so much of our strategy around it.

So in a market where the gap between the winners and losers is growing faster than ever, we need to reorientate our growth. This means that we will further reposition our portfolio, we will remain focused on university relationships and joint ventures, and we will grow our share of second and third year students who live with us. We've always believed that strong universities and a tighter real estate market drive the best long-term performance, and the last 12 months have reaffirmed this view. We've disposed of nearly 15,000 beds over the last 5 years, exiting 5 cities, and you'll see from the chart on the top right that these have been from some of those weaker cities. But we need to go again, we need to reposition our portfolio further and aligning to those universities and cities that will underpin growth. And we are targeting a portfolio that will now be in 18 to 20 cities and 80% aligned to high tariff and the best teaching universities.

We need to continue driving operational excellence from our platform, and that means adapting our sales approach, more nominations and using empiric to access second and third year students. And we will rightsize our overhead and drive further technology-driven savings. And we will leverage our relationships with the university partnerships, building on successes that we've had at Newcastle, Durham and Manchester.

So with that focus on operational excellence, optimal capital allocation and repositioning our portfolio, we see that as the way to return to growth. We set out our medium-term targets here, driving high-quality growing income, targeting 97% occupancy in our core cities with above average inflation rental growth. We will take nomination agreements back to 60% of our portfolio post the Empiric transaction and disposals and through the joint ventures. We will deliver our business plan for Empiric, and that will see earnings accretion in 2027, and we will increase our alignment of of our portfolio to high tariff universities, delivering 1 new joint venture each year and with our surplus capital from disposals balancing reinvestment into new joint ventures, we will consider share buybacks whilst maintaining our core balance sheet metrics.

So I'm now going to take you through a bit more detail. Looking back on the '25-'26 sales cycle, and then what we'll do differently in '26-'27. So looking back over what happened, we delivered 95.2% occupancy, 4% rental growth against our target of 97%, a shortfall of around 1,200 beds to that target. High tariff universities have performed well, recruitment up 8% at those universities, and they have taken share from lower mid-tariff universities, as I mentioned. And we've seen softer demand at lower-ranked universities, which has led to a 2% fall. Students still see the value of a residential degree, but as I said, are getting more discerning about the university and accommodation choices.

We've seen increased bookings from universities with nominations up 2% year-on-year to 59%, with international sales stable at 28%. New supply had a bigger impact on occupancy than in previous years in a few cities, and we saw that particularly where we opened new buildings or refurbs and the stronger cities continue to deliver with 4.3% rental growth in those cities with 97% occupancy.

And I'll now take you through the key elements of these in a little bit more detail. So that trend of higher tariff university is taking share has really accelerated since 2022 and have to admit has been faster than we had expected. Facing financial pressures, those high-quality universities have recruited hard for U.K. domestic students taking share from weaker ones, and students understandably have traded up where they can. We have grown our occupancy this year at those universities of what was already a strong base, but we've seen falls at medium and low tariff universities. We have just over 90% of our portfolio aligned to medium and high tariff universities, but as I said, we need to do more. Historically, we are focused on high mid tariff, but it is becoming clear that some mid ranks are also getting caught out by these trends. So we need to be even more forensic on which universities we are going to support and align ourselves to.

Hopefully, the Empiric acquisition increases our high-traffic exposure by 3 percentage points. Our nominations have provided us with a strong underpin of our performance once again. We've grown the number of beds, working closely with our university partners and we feel this demonstrates the real strength of those relationships and the quality of our offer, mid-market price points. Following the acquisition of Liberty Living back in 2019, our nominations dropped to 51%, but we have since grown them back to the highest ever level this year.

And following the acquisition of Empiric, norms will again drop to around 53%, but we will build that back to 60% over the medium term, primarily through those university partnerships. As I mentioned, overall international sales are stable with 28% of the portfolio led to international students. Encouragingly, we have seen a recovery in international students this year, up 7% year-to-date after last year's fall, which was caused by the much talked about visa changes and the perceived welcome that students receive when they arrive. And some of this data was captured in today's migration data that was released showing that drop in migration on student visa as up to June '25.

We have, however, continued to see a shift from international post graduates, to international undergraduate demand, and this was the principal cause behind the decline in our late cycle sales. We also lost a share of post-graduate demand to some of our competitors who are discounting heavily in this space, and we could have done more there.

Higher education remains a major export for the U.K., and the government is balancing the continued support for international students going to those high-quality institutions while stopping perceived abuses of the student visa system. So overall, we expect international students to stabilize at or around current levels, really driven by that growing middle classes in the developing economies. The U.K. is attractive given the much tougher stance being taken by U.S., Canada and Australia, where student visa numbers are down 20%, 50% and 15%, respectively. And we do expect the better universities be attracting more of those international students.

So this chart gives a really helpful overview of our performance by city and sets out a lot more granularity than we have traditionally given. And you'll see that our vast majority of our estate is performing with an average of 97% across those top 19 cities. That's really been across nominations, rebookers and international. And this is what gives me confidence that repositioning of our portfolio will drive a recovery in our performance.

Sheffield, Leicester and Nottingham have performed very poorly. The void beds in these cities totals about 1,200 beds or 2% of our occupancy and makes up the bulk of the shortfall. And that has been driven by poor recruitment at low and mid-tier universities in those cities, and Sheffield and Leicester have already been or been fully supplied for a few years and nothing has seen about 2,500 new beds delivered this year, feeding into that reduction in occupancy.

We've also seen unexpected weakness in Edinburgh and Glasgow, well below historic levels. Edinburgh University did not recruit as hard and clearing as a number of other top universities, but we also did not help ourselves in Edinburgh, we delivered a building that was too close to term start date, and we overpriced a major refurbishment in the city. In Glasgow, we saw weaker recruitment at the lower tier city center universities with more students committing to those universities as well. And there was also some additional supply in both of these markets.

So boiling down what's actually happened and the driver of the shortfall in our occupancy is a deterioration in the bottom 3 cities where we have higher exposure to weaker universities and secondly, some supply disruption, and that led to lower occupancy and new openings and our major refurbishment projects. So by repositioning the portfolio and driving our performance in these cities and better managing openings will see us recover occupancy.

Overall, supply remains about 50% down compared to peak levels, and this has been driven mainly by viability challenges, but we have seen much of that new supply being concentrated into fewer cities. And the biggest impact has been felt in those fully supplied cities and/or where demand has not grown. And this, therefore, has impacted our occupancy in Nottingham, Leeds, Glasgow and to a lesser extent, Liverpool. However, other cities like Bristol, Manchester and London have been able to absorb this new supply.

And students are being more selective they're not booking into new and refurbished buildings, where there is other choice, their wary about buildings not being finished on time. And we have seen our new and refurbished buildings taking longer to stabilize with 600 voids across 8 buildings in this category. The outlook for new supply remains muted, and that's down to viability and building safety regulations, and that is making new starts increasingly rare. And where it is being delivered, we will be more focused on how we market and open our own stock, supported more to a greater extent, our nominations agreements, and we will also respond to other supply from other competitors and recognizing the disruption that it can have.

Students are increasingly focused on value for money. We're seeing students and parents looking for value, not necessarily affordability from their investment into university. That means more focus on courses, outcomes and employability. Students are going to university and choosing courses to get a better job these days, not just studying something that is interesting. And with the graduate premium widening, this is feeding into their choices. However, students do still see the value in the residential experience, and there has been an overall growth in student-seeking accommodation this year, up just under 2%. But this has been concentrated in high tariff with the weakest demand at low tariff.

But it is important to note that this does differ significantly by university, and we need to get under the skin of that in determining where we will locate our buildings, but it has driven the underperformance in cities where we have a higher exposure to low tariff universities and/or the high tariff university as not being able to grow its own demand.

And this theme is backed up by our demand at different price points. We offer a range of price warrants across our cities and continue to provide value for money affordable accommodation. But interestingly, we've seen our strongest demand at our mid-price points and in London and the lowest demand in lowest priced rooms. And our prices overall still screen well relative to the competition, including the HMO sector and the university beds and occupancy is being driven by university quality more than price.

We still see an encouraging outlook for rental growth in most cities, but we have seen a widening range across our portfolio. As you'd expect, the top 3 cities have delivered rental growth at 4.3% and but that's been down to about 1% in the bottom 3 cities. This was underpinned by the strongest rental growth on nomination agreements. This year, we expect both of those trends to continue into '26, '27. And Mike will talk you through this shortly.

Our nominations continue to provide good income visibility and rental growth outlook for us with an average unexpired term of just under 6 years and index linkage supporting rent growth of 3% to 4% going forward. 12% of our beds expire this year. These are mainly single-year deals. We've got a really good track record of renewing 1-year deals with about 85% to 90% of these renewing EG. And given their price point at around a 10% discount to open market rents, this helps to explain why universities are keen to renew. And rental growth has outperformed this year. That's actually reversing the trend that we've seen over the last 3 cycles, where direct let growth has been much stronger.

So enough for me. Karan, over to you.

Thanks, Joe. So building on what Joe just shared, I wanted to add a bit more color on our strategy for the opening sales cycle. These plans reflect the market trends that Joe talked about, but also the lessons that we've learned from last year. At the heart of our strategy are our norms. At Unite, we see nominations as the bedrock of our business, and it's a -- and we've always valued the income certainty they provide us. They give us real competitive advantage, which is extremely difficult for others to replicate at scale.

As Joe shared, since the Liberty acquisition, we have steadily increased the percentage of rooms on the nominations of 59% and converted more and more of those agreements to multiyear deals with inflation-linked rental reviews baked in. This year, we are being very proactive and have already started advanced discussions with our existing university partners as well as with past partners and potential new accounts to further grow our share, where we need to. We have been aligning start dates and tenancy lens as well to ensure that we are best placed to deliver to their needs.

Second, returners are becoming more important to us as we look to grow share. And to better meet their needs, we are revamping our offer. From the ability to choose the best rooms at the start of the cycle to an early bird loyalty discount with a best price guarantee commitment, which means they will always get the best deal in the market. Soon, we will also have Empiric properties that offer a more independent living experience. This will further help us drive retention but also gain back some of the market share that we lost in the International segment.

Third, we are taking a more balanced approach in our lower occupancy cities. Here, we intend to remain positioned for value and have lowered some prices where we felt it would drive occupancy and total income. In addition, we are exploring a range of other options as well. This includes securing more nominations where we can, but also reviewing the incentives we offer to exploring tenants needs with a start date in Jan which will coincide with the new intake that some of our universities have started offering now as well.

On both price and incentives, we are seeing the market stay very balanced at the start of the sales cycle. We do have the ability, though, to react to changing behavior, if required.

Next, we are revamping our sales and marketing approach for new as well as refurbish properties. As Joe shared earlier, this is an area that we know we need to get better at as it accounts for nearly 1 point of the occupancy miss from last year. So we're looking at several improvements from how we market these newer assets on our channels to how we develop both physical and virtual showrooms to showcase the full experience that students will have living here through the introductory offer we give them to drive up leasing in our first year of operations.

By improving our performance here, we will also address some of the shortfalls that we had in the International segment. We have major opening in 2026. This is Hawthorne House in London, 50% of which is nominated. But we're also focused on our 2025 openings, Avon and Burnett Points as well as our major refurbs in Bristol, in London and in Edinburgh as well.

Finally, in early 2026, we will start to be in a position to leverage several new commercial capabilities from our new property management and booking engine. We will launch a new web booking journey. We will improve our ability to do attribute-based pricing, and we will be able to execute better our marketing campaigns to both rebookers as well as new students. We expect this investment to help lower our cost of acquisition, improve conversion of web traffic into sales, into bookings and drive up higher sales overall.

So how is this landing in terms of sales performance this year? As of earlier this week, we were at 62% sold, which is pretty much in line with last year. I do want to say, it is very, very early in the sales cycle. It's just been 4 weeks since we launched and that we're in the midst of several nomination conversations, which don't conclude for a few more weeks. Our existing first year students are still deciding what they want to do next year. So there's plenty to play for. And like I said, it's very early days.

In fact, it's just worth looking at how the sales cycle actually develops through the year and how we market ourselves through each of those key milestones. Without going into each element, it basically breaks up into 4 phases. Phase 1 is all about winning rebookers and returners. This usually starts at the end of October and goes through to the end of December. But this year, we expect it to extend into the new year as returners work out exactly what they want to do next year.

Phase 2 is when students submit their UCaaS applications, and universities know what their intake is going to be for the next year. This is when we secure a bulk of our single year nominations and some agents and students start to make early bookings as well. This goes on from late Jan, which is the UCaaS deadline through to the end of March.

The third phase is the main new student acquisition phase. Universities send out their conditional offers by May, so we start to really see U.K. students look to book and also universities start to confirm with us if they want more beds based on the intake that they think they will get. For international students, they usually wait for their visa and they start to book more July onwards through into August.

Phase 4 is the world of clearing. Over 60,000 students normally go through clearing of which nearly 20,000 are new applications with the rest basically changing universities based on their final grades. Usually, we would tend to do anywhere between 4% and 7% of our sales here. And last year, we actually did 3x as many sales as we did the year before. But after an exceptionally strong buildup to clearing as well as its first 2 to 3 weeks, we were surprised by just how quickly it did tail off mid-September as the demand from Chinese international Chinese postgrad students did not materialize in the expected volume.

Now in each of these phases, as you can see, we adapt our marketing messages and channels from exclusive offers sold through our on-site teams for rebookers, to leveraging our international agent network as well as our in-market China team to drive up international sales. During clearing, it's all hands on deck as we help students find their home. This year, we are doing several things differently across these touch points.

As I mentioned before, we have revamped our rebookers offer and our returners offer, and it will run for longer to reflect the slightly longer booking cycle that they're going through. We've also simplified our room classification and the feedback from agents as well as students alike has been that it's made it easier for them to choose the room that they want and also decide what to pay extra for.

We're also adapting our marketing programs to reflect the growth in AI-based search. This means that we are spending more time and effort on making sure our content is best-in-class, and we're also driving reviews to various channels.

Finally, we are holding enough marketing firepower to drive sales through clearing and aligning our incentives to ensure that we capture a greater proportion of the international market before the end of clearing. And it is a sum of all these actions that I believe will help us navigate these changing times. And we do have a track record of doing just that. Take Leeds as an example, one of the largest student cities in the country with multiple universities, including University of Leeds, which is in the top 100 globally and where historically, we, as Unite have done very well across a large portfolio.

But over '23 and '24, the city did face several challenges. From a demand point of view, the reduced -- it had with student numbers due to falling international demand as well as more students commuting at the lower tariff universities. At the same time, there was a lot of new supply entering the market. And to add to it, we had major refurbishment projects at 2 of our properties. Our occupancy fell to just over 90% and rental growth went backwards. As a result, we've had a total reset in the market. We've sold our less well-located assets. We focused our efforts on driving nominations with the University of Leeds where we have a very strong relationship, we've also adjusted prices down in a couple of properties to drive up occupancy and income, and we've invested in our teams and our properties to drive significant improvements in Net Promoter Score as well. The net impact is that we've started to improve occupancy and we're forecasting a return to rental growth this year.

Our university partners here have already reached out to us to see if we can store them with more rooms as they continue to see strong undergraduate demand, this sales cycle, just like they did last year.

So on that note, I'm going to hand over to Mike.

Good afternoon, everyone. I'll now take us through our financial outlook based on our operational indicators and planned investment activity. I'll start with our income guidance for the year ahead. Hopefully, the page is just presented by Joe and Karan provide helpful background to the following guidance, the '26, '27 academic year and beyond. Our overarching assumption is that student housing demand will be broadly stable for the next active year. This is based on a largely 18-year-old population and our expectations for broadly stable international demand and a further increase in students choosing to live at home at medium and low tariff universities.

Our rental growth guidance reflects different dynamics for our nominations and direct let channels as well as a tailored approach to strong income at a city level depending on the occupancy. As you'll see on this slide, we're targeting occupancy of 93% to 96% and rental growth of 2% to 3% for the academic year. Breaking that down, nomination agreements covering almost 60% of our beds will continue to deliver real benefit through annual inflation-linked uplifts on the majority of those agreements, which will result in rental growth of 3% to 4%.

The direct let beds, as you've heard from Joe, are higher occupancy cities, representing around 25% of our beds are in good health, and we expect them to deliver rental growth of 2% to 3%. As you've also heard, we'll adapt our approach in markets with higher vacancy to drive improved income. Pricing will be up in some of these markets and down in others where there's more price vacancy. These markets represent the remaining 17% of our beds and we see thereby seeing broadly flat.

Taken together, our guidance for occupancy and rental growth results in like-for-like income growth of 0% to 4% for the next academic year. The range in our guidance reflects the fact that it's early days in the sales cycle, and we'll look to narrow this guidance over the coming months. As we come to our earnings guidance, it's also worth remembering that only 1/3 of this income falls into the 2026 financial year.

In response to lower occupancy, we've been proactive in reducing costs and improving the efficiency of our platform. Today, our operating expenses at property level account for 30% of our rental income. Our overheads then account for another 6% of rent. These overheads are substantially offset by the management fees we earn from USAF and our LSAV joint venture, which offer a highly valuable source of recurring income. We pride ourselves on this overhead efficiency, but to recognize we need to do more. This is either by reducing cost or generating new management fees, such as those that will come from our university partnerships.

We've already taken action to reduce the full costs and are targeting a 20% reduction in our head office staff costs before the end of 2025. This change is expected to mitigate the impact of inflationary increases in our operating costs from wages and utilities and higher marketing costs in 2026. And as a reminder, we typically look to hedge out our utility costs 18 to 24 months in advance to provide cost certainty. As a result of all of these actions, we expect to see costs in 2026 flat versus 2025.

Next, we turn to earnings and the factors driving our performance in 2025 and 2026. For 2025, we continue to see adjusted earnings in line with existing guidance of 47.50p to 48.25p. This reflects income modestly above expectations, the '24, '25 academic year and costs slightly below budget in the year-to-date. We also expect to realize the benefit of a nonrecurring fee of around 1p on formation of our Newcastle University Venture.

Together, these factors offset the impact of lower-than-expected occupancy for the first term of the current academic year, meaning our guidance remains unchanged.

As we look ahead to 2026, we expect a high single-digit percentage reduction in our adjusted earnings per share from a combination of factors. We expect like-for-like rental growth to have a broadly neutral impact on earnings in the year. This reflects an income reduction from shorter tenancies for the '25, '26 academic year, the impact of which will fall into the first half of 2026. We then expect this to be offset by growth in income for the first term of the '26-'27 academic year. Our development completions will have an initial drag on earnings as they take longer to achieve stabilized occupancy in rent.

For our 2 new buildings and 1 reopening in 2025, we achieved 65% of our target income in year 1, which reflected the challenges Joe noted in leasing off plan in a more competitive market. The combination of reduced income and higher interest expenses on completed projects will reduce earnings by around 2% in 2026, albeit we see it being recovered over time as occupancy reaches target levels.

Our university joint ventures will deliver us 2 sources of fees in the future. Larger fees at the formation of joint ventures, followed by recurring management fees once those properties are operational. We expect to realize lower nonrecurring development fees in 2026 based on the contractual milestones we expect to deliver during the year.

Capital recycling is also expected to have a modest drag on earnings due to increased disposal activity. This reflects the disposals already delivered in 2025 and the GBP 300 million to GBP 400 million of planned asset sales in 2026. As previously guided, higher interest costs will reduce earnings in 2026. This reflects an increase in our cost of debt to around 4.5% due to refinancing activity as well as higher marginal borrowing costs on new debt.

Our EPS range for 2026 reflects the spread in occupancy and rental growth guidance for the next academic year. How we deliver will determine what our earnings come in within this range.

Looking beyond 2026, our focus is on delivering a return to earnings growth. This slide sets out the building blocks on the path to growth from 2027, and it starts with delivering operational excellence. We will grow our like-for-like income by achieving occupancy of 97% or higher in our target portfolio. As you've heard, this will be delivered by stabilizing occupancy in our new developments and positioning the portfolio towards high tariff universities in our strongest markets.

Over the long term, our business has delivered rental growth averaging 70 basis points above CPI inflation, and we expect to continue to deliver above inflation growth in our core markets, this will be supported by index rental growth in our nomination agreements and growing housing demand at the strongest universities. It will also take bold action on costs to ensure we recover our margins over time. This has already started. And as Karan mentioned, our investment in our next-generation technology platforms will unlock material efficiencies in both our cost of sales and overheads over the next 1 to 2 years.

Joe will come on to discuss the strategic opportunity provided by our acquisition of Empiric. In the near term, our focus is on delivering our business plan. We are confident in delivering our cost synergy target for the combined business and see significant opportunity to drive improved occupancy through our larger platform. Together, this activity supports earnings accretion from the acquisition in 2027.

Optimal capital allocation is also a key to ensuring a return to growth, which I will come on to discuss in more detail. We will deliver over 5,000 beds in university partnerships and developments between 2027 and 2030 at a target yield on cost of 7.3%. Around 80% of these beds are in university partnerships, which provides significant visibility over future income.

Our capital recycling will also help drive earnings and NTA growth as we reinvest our disposal proceeds into accretive new investment. However, this will be partially offset by the ongoing adjustment in our borrowing costs to higher market interest rates. As we execute on this plan, we see a pathway for returning to earnings growth in 2027, delivering on these elements also supports total accounting returns of 10% through a combination of recurring income, rental growth and profitable investment activity.

I'm now going to move on to discuss our working capital allocation, following on from the priorities set out by Joe earlier. Our capital allocation decisions are framed around 3 key goals: increasing our alignment to the strongest universities, driving growth in earnings and attractive total accounting returns and maintaining a robust and flexible balance sheet. However, our capital allocation decisions need to reflect the fact that market conditions have changed.

Our cost of capital is increased and occupancy and rental growth has softened. This changes both how and where we will invest in the current market. Our revised approach to capital allocation centers on 4 key areas. Firstly, we'll focus on our development activity around university partnerships, delivering on-campus accommodation at affordable rents. This is an area where we have significant opportunity for growth by leveraging our strong university relationships.

Secondly, we'll be highly disciplined over new development commitments off campus. This will see us reduce CapEx and look to extract best value from our uncommitted schemes. Next, we will accelerate our disposal activity to increase our focus on the strongest universities and mostly constrained markets, which offer the strongest prospects for future rental growth.

And lastly, we'll show flexibility in our investment approach. We will not compromise the quality of our balance sheet, but where we have surplus capital, it will be deployed towards those opportunities offering the strongest risk-adjusted returns.

University partnerships are the key strategic growth opportunities for our business in the next 5 to 10 years. This reflects the enduring appeal of the residential experience, strongest universities and the vital role of high-quality accommodation plays in attracting students. University partnerships will enhance the quality of our income by delivering the accommodation in the best on-campus locations at affordable rents. We will also benefit from significant income visibility, thanks to our joint venture partners' financial interest in filling the rooms.

Our 2 existing joint venture partnerships are progressing well, and we expect to be in a position to formalize the joint ventures with Newcastle University and Manchester Metropolitan in the coming months. This will enable the delivery of 4,000 new bed -- 4,300 new best over the course of 2028 to 2030 at yields on cost superior to those can deliver off campus. We see a significant opportunity for further partnerships, and we're in discussions with a number of high-quality universities.

Our target is to deliver 1 new partnership deal per year. This isn't easy, but we're confident our platform and university relationships give us a significant competitive advantage. Our off-campus development pipeline now totals GBP 1.2 billion and over 5,000 beds in the U.K.'s strongest university cities and 90% of this pipeline has planning approval. We are committed to 2 on-site projects in London and Glasgow for delivery in 2026 and 2027, which have GBP 110 million of cost to complete. Beyond that, we have flexibility over all future development comments, for us to commit to any new development start, development yields would need to improve and be substantially derisked by nomination agreements.

For us -- more than that, we will also need to recognize the risk to development programs from the new building safety regulation. This has led to delays in construction starts and also poses risks to the schedule occupation of buildings as the new regulations become established. As a result, we expect to see CapEx in our off-campus pipeline reduce materially over the next 2 to 3 years.

Our focus now is on optimizing the value from our land bank, of which 75% by value is in London. We will explore a range of options for doing this, including joint ventures with third-party capital as well as forward funds and outright land sales. For those schemes where we have option agreements, such as our Travis Perkins site in Paddington, we have the ability to exit schemes where they are not viable.

As Joe mentioned earlier, we've been a regular seller of assets, but will now accelerate the pace of our disposal as we position ourselves for a more focused portfolio with increased exposure to high tariff universities, we will target an increase in disposals to GBP 300 million to GBP 400 million per annum, which is roughly a doubling of our recent run rate, and that will come from a combination of different sources.

Firstly, we'll accelerate our exit from some cities and dispose of assets in core markets where we see low returns based on their university alignment. Secondly, we'll also look to realize value opportunistically from disposals of core assets at the right price. We will consider doing this via sales to existing or new joint ventures, which bring the benefit of new recurring management fees. We will also consider outright disposals where we can achieve fair value and see stronger returns from reinvestment.

The final pool of disposals includes nonstrategic assets and development sites, which are now yielding or not viable for future development. We expect these disposals to be modestly earnings dilutive in the near term as we initially repay debt. This becomes earnings accretive over time as these proceeds are redeployed into new investment opportunities. We've continued to see investor appetite from the PBSA sector from a range of institutional private equity and trade buyers with student accommodation forming part of their growing allocations to the living sector. Around GBP 3 billion of assets are transacted this year, which is slightly below the long-term average. We have seen sellers holding off on bringing portfolio to market ahead of the end of the '25-'26 sale cycle as well as in anticipation of the recent U.K. budget, but we now expect to see more stock come to market in 2026.

We've been active sellers over a number of years and see 2 main buyer types in the market. Firstly, core investors seeking modern assets in London and prime regional cities. And secondly, value-add investors seeking higher returns through income upside, cost reduction and CapEx initiatives. Over the long term, valuations of student accommodation have been underpinned and driven by rental growth, which remains fundamental to investors' pricing for the sector. There are a number of transactions currently in the market, which will dictate trend in valuations over the coming 6 to 12 months.

We benefited from a strong balance sheet, which provides the business with flexibility around its capital allocation decisions. This is absolutely appropriate for a business with operational intensity and ongoing investment through development. We continue to target a net debt to EBITDA ratio of 6 to 7x on a built-out basis. And we're currently in the middle of this range after adjusting for the acquisition of Empiric and remaining committed CapEx for our university partnerships and developments.

Our appetite for leverage also reflects our current and marginal borrowing costs. We expect our cost of debt to rise steadily as we refinance existing in-place debt and deliver our committed development pipeline. We'll also explore the opportunity to use third-party capital as a source of cost-effective funding. We have a long and successful track record with our USAF and LSAV funds and see opportunities to access new capital seeking a best-in-class operating partner.

Bringing this together, the increase in our planned disposal activity and reduction in development CapEx means we expect to move from a net investor to a net seller over the near term. Successfully delivering on this plan would result in surplus capital of around GBP 100 million to GBP 200 million per annum. We will deploy this capital where we see the strongest risk-adjusted returns which today means investment in university partnerships and share buybacks. Our investment decisions between the 2 will depend on our opportunity set for university partnerships as well as the returns implied from a share buyback.

Share buybacks provide an opportunity to reinvest in our high-quality portfolio at returns today that are superior to direct investment. We've commit to them where we have surplus capital, and we can demonstrate clear accretion to both earnings and NAV but this will not the expense of maintaining a robust balance sheet.

And with that, I will hand you back to Joe.

Thank you, Mike. So our conviction on the rationale for the acquisition of Empiric remains strong. Over time, we will be in fewer cities but we will serve more students and customers who live in those cities. There are 1 million students living in HMO today. And this market continues to be under pressure from regulation and further increases in the tax burden announced yesterday. And Empiric gives us the scale and the platform to go after that in a meaningful way.

And the PBSA sector is growing up, and it's growing up as a sector. We, as Unite started out as a norms-only business back in Bristol, some 35 years ago, and really then extended and pushed the boundaries of the sector pushing into a direct let business still very much focused on first year and internationals. The student demands and choices are evolving. And whilst we have a certain age may scoff at the thought that customers are telling us that they -- or I am ready for something different in my second year. I'm done with the halls of residence experience. I want more independence. I want it to feel different.

And Empiric provides us with a chance to provide that difference. And we feel that we can extend our customer life cycle by retaining more second and third years by offering that different experience. And in our building in Edinburgh, we opened this year, support that view, we delivered 100 new beds in 1, 2 and 3 bedroom flats in separate blocks. That was 100% sold this year in a market with occupancy of 88%.

And the quality of the portfolio is high. I was up in Edinburgh and Glasgow last month, and I saw it firsthand the quality is excellent. Across the portfolio, the buildings are well located and it supports our shift to high-tariff universities and will help us to reach our 80% target. The buildings are small character full, and they are a different product that allows us to play in that return of space and grow our share of second and third year students.

We will sell around 10% of the portfolio in those cities where the alignment to highs is not enough. And we're also comforted by the fact that we're buying the asset 20% below replacement cost. And at the heart of this deal, we see an opportunity to improve the performance of the portfolio over the next 2 to 3 years using our platform, targeting occupancy of 95% plus of the net 2 sales cycles in line with our underwrites.

And just to put that into context, the Unite portfolio has 35,000 first-year students living within it and about 18,000 internationals. We currently retain around 20% of our first-year customers through rebooking. And then 80% of those who don't rebook with us tell us it's because they want a different product. The Empiric portfolio is 8,000 beds, and they are 89% sold this year. So we will need to sell another 500 rooms to get them to 95% occupancy. We sold 800 rooms per week in the 3 weeks following clearing this year. So we're confident that we can drive a better performance from the portfolio, selling to our existing customer base, those rebookers who are looking for a different experience, using our sales techniques, our data and our tech platform, we speak to all of our customers. We understand what they are looking for, and we can now follow up with the different products. We do this with our sales inquiries as well.

And using the scale that we have with international agents offering those agents more rooms, again, at different price points, with our scale gives us greater reach into the agency in that channel that Empiric never had. And then finally, we have around 15 to 20 properties that we can convert to the Empiric model, and we see revenue opportunities here as well.

So we were delighted to get the CMA clearance today, and that was confirmed with no disposals of the portfolio, and that means that we will be able to get our hands on the business in January. And whilst we've missed the start of the rebookers campaign, gives us much of the sales cycle to go after rebuilding their occupancy and also gives us a great run at that synergy delivery through 2026.

We talked publicly about the synergies a lot already, and we aim to deliver that GBP 14 million target by rationalizing in city and regional management costs across the operation by the removal of duplicate costs such as offices, IT platform and plc costs and the benefit of bringing activities such as finance, marketing, HR and IT onto our scalable platform.

With the Liberty acquisition, we outperformed our public target by 20%, and we are looking at best value -- looking opportunities right now to extract best value from cities in 2026 to offset their lower year 1 occupancy as every 1% of occupancy shortfall equates to around GBP 1 million.

And we have a fully kitted out integration plan, which will be phased over 2026, and we will see the transfer and phases of the sales and marketing teams, city teams, the technology transfer and also their back-office functions. So we shared a lot with you today, very conscious of that, and I'll try and bring that all together now about how and where we are taking the business.

And as I touched earlier, our priorities center around delivering operational excellence and optimal capital allocation with our focus on high-quality, growing income and a strong balance sheet. We've set out our medium-term targets around 97% for occupancy, with 60% of that through nominations agreements, delivering above inflation rental growth repositioning the portfolio to 80% aligned to high tariff and the best teaching universities, delivering our revenue and cost plan for Empiric, delivering earnings accretion from 2027, and continuing to see a real opportunity amongst our university on-campus joint ventures, targeting 1 a year and considering share buybacks as part of our capital allocation options with surplus capital while sticking to our leverage targets.

So the fundamentals of our sector remain intact. It is a great higher education sector, the demand for university education will continue and the jobs market will still need highly trained young minds. Unite is a great business, and we support young people at the time of their growth through those great relationships and partnerships we have universities through our best-in-class operating platform, the high-quality portfolio that we have and our highly capable team.

We have been surprised by the pace of change and the impact this year, and we have learned lessons, but we will be proactive, as you've heard today around sales costs, disposals and capital allocation. We will grow our share of second and third year students whilst maintaining our focus on universities, nominations and joint ventures. And this will see us returning to a position of earnings growth.

So once again, thank you all for coming and listening so intently. We'll now open up to some questions, and we'll start with some questions in the room. Hands up, we've got a mic coming.

Sam King from BNP Exane. Three questions, please, guys. One on strategy and 2 on guidance. Just to start on strategy and maybe challenge the alignment to high tariff point, which might sound counterintuitive, but does that actually solve the occupancy issue? Because if we look at performance this year, noting them in Sheffield at both high tariff and had occupancy issues. I see Leeds and Edinburgh also had lower occupancy than average. And then if you look at Portsmouth, for example, that's not high tariff and has traded very well, and that's a market where actually, rental growth has been quite soft recently. So is the decision actually not a bit more nuanced here and it needs to be pivoting the portfolio to focus on markets where say rents are sustainable or there's undersupply. Just any thoughts on that?

Yes. I think it is dangerous to oversimplify and just do pure groupings on tariff groups, you're right. But I think you need to understand. So in Sheffield and Nottingham, which are 2 underperforming cities. Both of those high-tariff universities have seen broadly flat numbers slightly down actually, but it's been in the low tariff universities in those cities where we've seen the weakest level of demand. So it is having to think about in which cities, there is that blend of high and low tariff universities.

And those cities, those 3 cities also suffer from slightly weaker housing markets, I guess, of local weaker local economies. So it's not as simple as focusing on high and low tariff, you're right. But in terms of our analysis and then we do where we will be located, we believe that's the best shorthand for us to be pointing to, to talk about where we will be aligning our portfolio.

Okay. And then second one on -- second 1 on occupancy guidance, which might be for Karan. In the low end of your guidance at 93% implies you get to just 81% for the direct let portion of your portfolio, which is a slowdown versus this year despite the fact that student numbers will up for next year. So any comment around that, what are the specific markets that you're concerned about looking into the next academic year?

Sure. So that the lower end of the range reflects the uncertainty that we continue to see in the properties where we're aligned to the lower tariff university. So that is your Leicester. It is part of your Sheffield. But even in some of the other cities to Joe's point, we have even in a Glasgow, some properties that are more aligned to the city center to those properties.

So I think -- and also, those are also the cities where we tend to have more direct lead rather than nations because those lower tariff universities don't tend to underwrite the deals at the same level. So that's kind of why we're guiding to that lower occupancy level at that stage.

Okay. And then final one for Mike on earnings. You can see the guidance is down some 10%, but I understand that excludes the impact of Empiric, which on my numbers, is 1% dilutive next year. So should we think about the actual downgrade for earnings being 8% to 11%?

Yes. So as Joe said, we will acquire the Empiric business at the end of January, we will be able to give you guidance incorporating Empiric at the time of the full year results. The guidance for the transaction is that it will be broadly earnings neutral in 2026 with the view that it becomes accretive in FY '27.

What's the level of occupancy you need for Empiric for it to be earnings neutral?

To get back to earnings neutrality, we need to get to occupancy of 95% on a stabilized basis.

It's Veronique from Kempen & Co. So for me, one question on the nomination agreements. Obviously, it's a bit part that derisks the portfolio. You have the target to increase it. So just want to get a feeling on feasibility of actually increasing it. And also, you mentioned that for this universe, obviously, they've also had some tough years on the financial side. Is there anything changing in your discussions to maybe moving a little bit towards the Continental WALE agreements with universities that don't have actual guarantees, but are just more soft agreements if you're seeing any changes in those discussions.

Maybe I'll start, and Karan, if you pick up if I don't miss anything. Yes, so the first up is the delivery of our development pipeline and university partnerships gives a strong underpin to that growth back in terms of nominations over the medium term.

I think the second thing that we are doing is using pricing in some of those markets, particularly in weaker assets to approach universities now and secure nominations agreements with those universities. The 1-year deals generally don't have income guarantees beyond -- well guarantee beyond year 1. So that gives the universities the flexibility to sort of flex up their requirements over the short term. So we've got a good level of renewals on those agreements that we see. But ultimately, it's down to us to be able to demonstrate that we're offering value for money for students and the highest level of customer service because they are intently focused on that. I think that's one of the things that gives us real customer competitor differentiation through those nominations. I don't know Karan's missed any...

I mean a couple of other points. I think the one big trend that we see this year is the affordability point, the universities, especially for their first tier underground product are really looking for affordable rents. So there are several properties where we have sort of historically directed them. They haven't wanted them, but actually on the affordability level, they're actually keen to talk to us about that. This is a key universities in Bristol, Edinburgh as well.

On your point around soft norms, what we actually tend to do is we often towards the end of January, agree a certain volume with the university that they will feel comfortable to Edinburgh. But as they start to see their demand firm up, that number does tend to pick up, and you'll see that reflected in the different trading updates that we do as well. There's a couple of accounts where we will have just a recommendation on their accommodation portal, which is important as well because parents do trust that approach as well. But over the last 3 or 4 years, we have pushed for more income security because that's something that does then help us financially plan the rest of our year.

Maybe one follow-up on that. You indeed mentioned affordability, but at the same time, for this nomination agreements, you still target 3% to 4%. I appreciate you mentioned like it's 10% under-rented. But isn't that still something that then comes up in those discussions?

It does come up. But I think this is where I think I was talking to somebody earlier, we do have a lot of credit in the bank with the universities. I think they look at us as a long-term partner. They know the things that we did during COVID to support them. They know over the last 3 or 4 cycles when some of the direct lens and cities were going double digits, where we were much more balanced in our approach. So they know they are good years and bad years. And the rental clauses that we have in there are reflective of those caps and sort of ceilings as well. So so far, we have had no real challenge from the university. And at the end of a 10-year agreement, we might reset that rent to be, again, market plus or minus 5% depending on the assets.

But I think the good thing for us is -- and which is why I say it's such a competitive advantages for us and difficult for competitors. It's built on multiple years of performance, not just a transaction.

Rebecca Parker from Goldman Sachs. I'm just wondering if you could talk to more -- are you all thinking around capital deployment, just given you've released some yields that you've got for your development and your JVs and how you're thinking about in context of where the shares are trading and share buybacks and whether you'll need to execute upon these disposals to then consider that capital deployment?

Yes. So I think we've set out a revised capital capital allocation framework today, you've heard us talk about, and we do see that as a medium-term framework. I think the principle of not increasing leverage to buy back shares is kind of firmly felt and firmly established. And so therefore, we will need to generate surplus capital from our disposal activity to then consider whether we allocate that into buying back shares or not.

I think given where the shares are trading at today, it certainly makes it a more attractive cost of capital than deploying into straight off-campus development. I think that's sort of something that we are very clear on. With on-campus development JVs, we still see the IRRs as very attractive, and we still see the opportunity to deploy capital to that space. So as we release capital, we will be looking at that through a very firm lens as to whether we can deploy capital. And as Mike's chart sort of set out that if we're able to sell that GBP 300 million to GBP 400 million of disposals, and that creates quite a meaningful chunk of capital that we've got our ability to make decisions on.

It's Tom Musson at Berenberg. Just following up slightly on Sam's question about the 93% occupancy at the bottom end of the range for next year and -- you mentioned wanting to, I think, focus harder on occupancy. So if the 93% occupancy was to transpire, would it not sort of mean the sales cycle has got increasingly competitive? And so how does that align with still delivering 2% rent growth? Because I think in the Leeds case study that you showed in the years where occupancy was 92% and 93% rent growth was either minus 4 or 0.

Yes, happy to say that, Tom. So yes, I mean, we talked about the conditions we see in the market for next year. So we think actually overall housing need will probably be flat to slightly up. We've clearly given a guidance range that is slightly below in the midpoint where we were this year. If market conditions are the same, and if we execute better, we can be at the top end of that range, at the end of the range, we're arguably being slightly cautious now, but we're still very early in the sales cycle that Karan said, and we'll need to work through that. And hopefully, we have to tighten that range for you over time.

I think in terms of price, it's important to say that you do have a significant underpin in the rental growth from the nomination agreements. That is 3% to 4%, and it's across around 60% of the beds. And as much as in that scenario, you pointed out where we might be at 93% occupancy, there would -- yes, I think it's fair to say probably be more discounting and we'd be using price to drive occupancy. We still think there will be a number of strong and undersupplied markets. We will be able to grow rents for those direct leads.

Can you hear me? Aakanksha Anand from Citi. Two questions from my side. I'll go one by one. The first one is on the returns that you're expecting, the IRR returns that Mike briefly mentioned on the university partnership JVs. How have those returns changed given that now we are forecasting 2% to 3% rental growth compared to 3% to 3.5% we were forecasting before?

Yes. Aakanksha, so on those university partnerships, we've been targeting IRRs, including the fees we generate in the mid-teens. And generally speaking, there is a rental growth mechanism within those agreements that has been contractually agreed at the outset of those discussions. So it is an inflation plus rental growth mechanism over the long term and the university will contract to take the beds on an annual basis.

So as much as, yes, the wider market has probably seen rental grade soften somewhat. In the case of these university partnerships, we have real visibility over the future income growth, which also protects our return.

In addition the starting rents within those university partnerships are below the market rate on day 1. So it does give them flexibility and some protection around that rental growth over time.

Understood. The second one, just long term, what thoughts do you have on the split between direct lets and nominations? Is it still expected to be a 60-40? Or can we expect it longer term to get closer to like an 80-20 split?

Yes. We've always liked nominations agreements, and I think they provide a good oil to the sort of or lets, which tend to move more with markets. And then, I guess, in the very strong years, you see better rental growth on direct lets in softer years, you see better rental growth on nominations. And obviously, you get the income guarantee as well. So having that balance is important.

I think as we've talked about today, we see that opportunity to take more second and third years in our portfolio, and I think that will -- some of those won't be covered by nominations agreements. We -- whilst occasionally, we talked to universities about whether they were nominate second and third years and international students. I don't see that they will do that going forward.

So we may see a stretch above 6% particularly if we're able to secure those or we see our sensible rents and sensible terms. So we don't see that as an upper limit. But I think we're setting that out as a target to build to post Empiric acquisition, and then we will to see whether we can go beyond that at some stage.

Camille Tan from [indiscernible]. Two questions. First one on occupancy, part of your path to growth, you're targeting 90% occupancy again. If I just look on Page 13, most of those yellow bars are below the '24, '25 levels. Why should investors believe that 2027 is an inflection point rather than the beginning of a structurally lower growth or occupancy environment?

Yes. I think that within those cities, where we've seen the shortfall in demand that has been the shortage of recruitment at the lower tariff university. So as we talked about briefly around Sheffield and Leeds, they have 2 universities. And where we've seen the shortfall in the drop-off in occupancy has principally been at those lower and mid-tariff universities. So the repositioning of the portfolio, setting out a target GBP 300 million to GBP 400 million a year over a few years means that we will be reducing exposure at those maintaining exposure to the better universities where we expect to continue to see growth. So I think it is that repositioning the portfolio, which is fundamental to allowing us to reposition and get back to that 97% underpin that we've historically had.

And then on the second one, what makes you confident that high-tariff universities won't experience a similar behavioral shift from domestic students living at home as affordability concerns remain high?

Yes, I think it comes down to a graduate premium and the difference in graduate premium between the better quality and the weaker universities and it is hire at those better universities. And I think the employability data, the customer's choice data that we're seeing through polling from UCaaS and that intention to stay home has been actually held up very well across those high tariff universities. So from a student behavior perspective, I think provided we continue to see that decent employment market for graduates of those high-quality universities. We believe that students will and parents will continue to make that investment to go away and study those and see it as part of the overall university experience.

And I think there's lots of kind of evidence anecdotally as well that university is much more than just about getting a degree. And if you want to succeed, then having that residential experience is part of that experience.

It's Paul May from Barclays. I've got 3 questions. Again, we go one by one, you're mentioning increasing disposals, but as you highlighted, the market has suffered and it's not just suffered for you, it suffered for everyone. Just wonder what confidence do you have that you can sell those assets for the prices you want? And should we expect those assets to be written down quite materially in the next coming results for you to -- ahead of selling those?

Maybe I'll start, Mike, and you can chip in. So -- we've long been a seller of assets, Paul. We've sold assets coming out of the financial crisis. We sold assets coming out of COVID, and we have generally sold assets in our weaker performing cities. So there are ways for these assets. The average price per bed in those bottom 3 cities value per bed is GBP 65,000. That compares per bed, not per building, 65,000 per bed. That would compare to about 150,000 to build in those markets. So there is real value still to be had there. And we've sold assets which aren't full. Historically, I'm not saying it's easy. It does take time to sell these assets, particularly if they aren't performing or aren't full.

And things generally are taking long to sell because of the fire safety investigations that are required at the moment as well. So I don't think this will be some Q1, you'll see GBP 300 million of as from those bottom markets, but we will work hard to deliver them. We've got the skills in our team. And as Mike said on his slide, we will supplement that with sales of lower-yielding assets, which are full as well. And I think that we see that if you can sell an asset in London, it in the 4s, and you can redeploy that capital somewhere in the 7s, that still makes sense for us to do. So that GBP 300 million to GBP 400 million of disposal program will be a combination of assets. As we say, it's going to be a multiyear program to finalize that refining to the quality and the 80% target that we want, but it's something that we will need to execute on, and we will need to execute on that over the next couple of years.

And Mike, if you would add anything to that?

No, I think the only other thing to say is sort of following on from Joe, the market will decide what these assets are worth. We think they are marked in the right place based on the disposal activity we've done in this kind of value-add asset historically. The question for us will be based on where the market sees pricing, what are the returns to Unite at holding those assets? And could we do better if we cashed out and reinvest it elsewhere, and that's how we'll think about it.

And I suppose it's -- the difficulty is looking back over history, the market was different, as you say. It's changed pretty much about a month, if you look at your September confidence of hitting your guidance and the October of not hitting that. It changed very, very quickly. That's going to have a material impact on people's decision-making surely. And when would we get some clarity over where the market is at, do you think?

Yes, there's still quite a few transactions in the market. I don't think anything's really traded of value since the closeout of the sales cycle. So -- but we'd expect to see in the next few months a few of those transactions start to trade. And I think the values at the year-end will hopefully have something that they can look to from a transaction. If not, I'd expect some of those transactions may have repriced if they haven't closed out.

So I think we really need to wait and see what those transactions point to both sort of the back end of this year and into the start of next year, but that will be the first time we'll get that visibility, whether there'll be a sentiment-driven value, who knows. That's sort of the art of valuation isn't it. But from a transaction perspective, I think we should see something reprice sort of around the year-end.

And then just following on from the question of the medium term and looking into FY '27. I appreciate you're not providing guidance for that. But looking at the sales you expect for the academic year '26-'27, which have an impact -- greater impact on '27, is there a risk we see another year of earnings decline in '27 versus '26 or a flattish sort of outlook? Is that a fair way to think about it?

Yes. It's fair to say, Paul, clearly, income is a big driver of our earnings growth in the medium term. So how we perform and how we deliver on that 0% to 4% like rental growth guidance for the '26-'27 academic year will have a big influence on our ability to grow earnings. And clearly, we want to execute and be it towards the top end of that range. I think if we're towards the weaker end of that range, we will have to go harder in some of the things we do. So that will be sort of -- we talked about being ruthless on costs going harder at the cost base. It will also mean slightly different decisions potentially around capital allocation. So we will have to adapt based on our income, but the target is very much to get back to that earnings growth 2027.

Any more in the room?

Andres Toome from Green Street. So just a few follow-ups on capital allocation, mostly sort of mentioned disposals and it's in the bridge for EPS as well. But it didn't -- it doesn't sound like there's maybe anything in negotiations or in the process. So I'm just wondering why do you already have it as a negative drag on your earnings this year -- or sorry, 2026? And then secondly on that, you made the case for share buybacks as well. So considering that, wouldn't that affect in any case be neutral at worst if you deploy that money into share buybacks?

Yes. So Andreas, in terms of the impact of capital recycling in the '26 guidance, we've obviously made some disposals this year, so we share around GBP 150 million of disposals and they were pretty much weighted to the end of August. So you do get the full 12 months impact of that. We think the GBP 300 million to GBP 400 million disposals that we're talking to next year will be slightly H2 weighted. But we are also already having conversations about bringing a portfolio to market. That's more sort of value-add stock we talked about, but we're also having conversations around core assets that we can sell maybe slightly sooner than that.

And then sorry, the second part of your question was around?

Reallocating that capital.

Reallocating. So this guidance does not assume a reallocation of that capital into reinvestment at a positive spread. Clearly, if we make good progress in good time on those disposals, it will give us scope to invest via we've said university partnerships or also potentially share buybacks. The mix of how we deploy that capital when it's available will depend on the opportunities we see in front of us. And -- we are looking to do more on university partnerships when we have that capital, it will depend on the opportunities we see in front of us.

And then secondly, on development and development yields, you sort of think 7% plus is good capital allocation. But I guess you're shares are trading at an implied yield which is above 7% on an unlevered basis. So why wouldn't that target be more like 8% to 9% perhaps?

I think Andrew is within 7% plus, there's numbers bigger than the 7% that we'd be pushing for. So there's a long way to go to go from development yields in the mid-60s to something that's 7%, 8%, 9%. Clearly, that will mean that some of those schemes would likely to be unviable, and the discipline for us is to say that we will not build schemes where they don't hit the kind of returns we need.

I think the other point we drew out there is that nomination agreements need to back those income returns. But your point is a very good one. We need to think about how long it takes us to get to that development yield. We need to think about the risk involved in delivering it. And if there are better alternative uses of capital through share buybacks when we have that capital available, we will think very hard about.

And then finally, how do you see the opportunity perhaps to tilt your product from student housing to other types of living perhaps in micro living, co-living, sort of niches where the product fit out -- fits the other side of that angle. Is there any impediments around that? Or is that even a consideration?

Yes. I think what we've seen in the sector is a number of the recent consents that have been gained are more open and more varied. So will either include co-living or a blend of co-living and PBSA. And it feels like that sort of combination and merging of use classes is happening. With our Manchester scheme, we've actually got 4 very different product types within the 2,300 beds that we will be delivering. Now they are all focused on students, but we're starting to see that blend of different product types and blocking of buildings into different products becoming more normal.

So I think as we look forward to and we get a to the track of developing, I think, a wider uses and wider kind of consent will be something that we will be pushing for? Because I think, as I say, we've seen success from other players in the marketplace of being able to do that and to be able to manage them more effectively than I think it would have been historically.

And I think students are more comfortable living in kind of nonpurpose-built blocks as well in a range of different tenants, particularly for those second and third years. So we see Empiric has a great sort of stepping stone into that space to just start to learn and understand that market there. And I think as we think forward to new schemes then that wider sort of sense of uses will be something that we do consider.

[indiscernible] ABN AMRO. One question maybe on the developments because you mentioned that the 2025 deliveries are basically running below budget. So what's today's occupancy rate for those developments? And you also mentioned that students are sort of hesitant to sign up for new developments because they are worried on the delivery date. Is that fare -- basically actual fare? Are you running behind schedule on some of these developments? And this is something that you can mitigate there if this fare is basically not another real fare that you do deliver on time. And I'll do the question after that.

I'll take the one on maybe to start with in the development. So as I said, in terms of the buildings that we opened new or reopen this year, we achieved 65% of our target income, occupancy were actually slightly higher -- but what we did when we realized that the conditions were tough around leasing up new buildings as we took decisions to, in some cases, shorter tenancies. So we went maybe a 51-week sale that was targeted in international students, when we saw that market was harder, we moved it down to maybe more than 40-week tenancy in the first year to try and stabilize that income. So there is a bit of a gap to go to recover, both in terms of selling out in terms of all beds, but also in terms of stepping up the length of those contracts to where we originally budgeted.

Karan, do you want to pick up the point around student behavior and choosing student buildings, which are under construction or nearing completion?

So what we have found is that as there has been more supply in certain cities where students have had choice, they've not wanted to take the risk and the agents who often advise these students have preferred to go with assets that have been open and stabilized. So especially in the first year, where there's a risk that might be delayed by 2 to 3 weeks, they've opted for more stable sort of solutions. We saw that last year as well with our property that we opened in Nottingham. It was about 2 weeks delayed. And in the end, it kind of rounded about half. This year, it's almost full. So as students have come back, realize quality, realized the experience. We've not only been able to keep a lot of the rebooks from the original 50%, we've also been able to attract and reposition the asset completely.

So the product quality of what we're delivering is actually really good the overall service provision is really good. They just don't want to take the risk when there are other options available. So for us, that means that we've got to try and deliver those properties a bit earlier. And we've got to do a better job of marketing them so people understand the overall experience and have contingencies if things do get delayed.

And I think with the building safety regulations now means that you need to get a sign-off once the building is being completed. It's got a gateway 3 that could take between 8 to 12 weeks. That will mean that student schemes have to be delivered significantly earlier than they have been beforehand. So you'll see that gap emerging. I think that does put further pressure on the ability to build new schemes.

Okay. And then on the shorter lease terms, so it's also mentioned in the press release that students taking a little bit shorter leases. So what's the trend? Do you think this is a trend? And can you quantify that?

Yes. So on the leasing, what we find is that when you're a U.K. domestic customer, you're really looking for a 40- to 44-week tenancy, which really mirrors the academic year that they're going through as well. So where historically, we may have preferred a 51-week if you're pivoting to a U.K. undergraduate or even an international undergraduate customer, that lease lend needs to change.

The other thing that we've also found is that some students are looking -- actually, could we take one semester, they want to commit for all 3 semesters at the same goal. So where we've got a bit of availability, we have offered that semester, and then we do a pretty good job of them retaining them and backing it if we need to as well.

I think this is a function of one alignment to the academic year. And secondly, just being a little bit more cautious about what if I don't like the university, what if I don't like the course, I want a little bit of flexibility on how I could make some changes.

So one follow-up question on that. Sorry, Veronique from Kempen. You mentioned indeed you offered shorter leases, but what's the actual rental growth that you saw in October versus September? In other words, did you have to give a discount to get to the 95% in occupancy? And if so, how confident are you that, that doesn't impact your next leasing cycle?

Do you want to go first?

Yes, I'm happy to. Yes, Veronique, so where we were at sort of July when we had our interim results, we were about 85% sold at that stage and on the bookings to date, we were running at about 5% rental growth, and that's sort of annual rental growth the way we calculate it. And a big -- that was really sort of pretty consistent across our direct lets and our nomination agreements. However, as you say, we then ended up the sales cycle at 95% occupancy with 4% rental growth. And really, the reason we saw that dilution in the last 10 points of occupancy because we were selling beds either on shorter tenancies than we planned or in some cases, on first semester lets.

So around 1.5 points of the occupancy we saw in the year was a first semester tenancy and that drags down the overall rental growth. To put that into historical context, we generally sell about half as many beds for a first semester, so that did have an impact in terms of whether rental growth it up.

We got about 10 minutes of questions, Mike, is there anything on the webcast that we need to pull out that we haven't covered?

We do have a few on the webcast, so I'll canter through these quickly. First is from Ian Richard, a private investor. Why are you targeting 80% exposure to high-tariff universities and not 100?

Yes. I think that we do see that there are good universities who aren't in that high tariff group. And I say the government is very supportive of and we're seeing strong demand from students to go to universities, which a very good employability outcomes. So Manchester is a good example of that. They've got one of the highest employment rates of all universities right across the U.K. They've been growing their student numbers by between 5% and 6% per year over the last 4 or 5 years, they've got low international exposure. That is a university, which has forged excellent relationships with industry, it does a lot of placements for their students, and it is meeting a need and a requirement for our students to go and study there.

It doesn't meet the category of a high tariff university, which is generally research heavy and focused on different types of products and different types of education. So -- that's why I talked about being even more forensic about which universities and which markets that we want to generate in. So there will always be an element of buildings that and universities that we want to work with.

Next one is from Guillaume Langelier at Columbia Threadneedle. As part of the Empiric transaction, were you surprised that international postgrad take-up was below its prior year levels.

I guess the short answer is yes. I think that we were surprised on our own portfolio that, that post-graduate take-up was lower than we were anticipating. We saw the Visa data was very supportive throughout the sales cycle, up 7%, and we were expecting to see a recovery in post-graduate sales as well. Through the Empiric process, we did reduce our occupancy assumptions in year 1 because there was them tracking behind where they had been historically. But they ended up being short of that underwrite as well.

So I think it was a similar level to our shortfall, and it really does come down to that shift of internationals from post grand to underground.

The next one, the webcast is from [ Daniela Lungu First Sentier ]. It sounds like your disposal program targets the weakest assets in the weaker cities. What is the likelihood that there are buyers for those assets? And what kind of discounts might you have to accept?

I think we probably covered that one, Mike.

Next one, Nick Baker MFS, what share of nomination agreements are effectively linked to inflation and what share are a function of local market rents, longer term, should we think about nomination agreement growing at a similar rate to the direct let market?

I can take that. Yes. So all of our multiyear agreements have rental flows in them that as a cap and collar based on either CPI or RPI, and we sort of normally use November-December data to set those. The single year norms, which are about 11% on -- so of the 59%, 48%, year 11% a single year. Those will get repriced every single year based on current market conditions.

On the second point around do we see them coming together. I think once we start to go to the disposal program, and we sort of have a comparable portfolio DL and nominations in a city and where we are targeting to drive rental growth sort of 50 to 100 basis points ahead of inflation. I think you will start to see some more commonality in the rental growth. But right now, the portfolios are quite different. So sometimes it becomes difficult to compare DL versus nomination rents because there are different cities, different properties, different products.

I think it's one of the features of having a multi-asset multi-tenant portfolio that we do see different levels of performance in cities and in assets every year, and it's probably something which you haven't seen because we've always sort of delivered at the upper end of our occupancy numbers, and we haven't seen that sort of slight movement you see and differences in rental growth between noms and direct let within cities.

So it generally is that where you have that very strong demand, you can dry your prices dynamically through the sales cycle, and that's what delivers your stronger rental growth from direct lets when you've got very strong demand and squeeze supply in those markets. And as we've seen this year, when you have some softness, that's when your nominations performance, and you may need to do a bit more price activity but that is sort of an element of dynamic pricing when you're selling 65,000 rooms every year across 22 different cities. So that will be something and is a feature of having an operational business with dynamic pricing across our estate.

Probably have time 2 more, and then we'll look to wrap up.

Neeraj from Barclays here. A quick one on your credit profile. Do you see a risk of negative rating action from S&P on the back of this operational weakness or any potential valuation to decline?

We're in a good place in terms of our rating in general, and we've generally been sort of closer to the better end than the worst end. Clearly, we want to keep our leverage in a conservative place. And I think that's what we set out in terms of our capital allocation strategy. We're not going to stretch the balance sheet, keep our net debt, EBITDA and interest cover at what we think are appropriate levels. And it's really all about how we can get back to growing our income, growing our earnings. And ultimately, that's the underpinning of look of credit rate.

Paul, finish this off.

Sorry. One, just a quick follow-up on the short tenancies you mentioned I think in the past, the 97% occupancy that you delivered has been on the academic leasing. So if it was all for 51 weeks, it was for the full year, and obviously, there's a mix of that. I assume the 95% is on a similar basis, but actually then if you think about it through the whole year, it's a much greater decline? Is that the best way to think about it?

The way we've always disclosed occupancy pull is on beds sold. So historically, it's always been the same, whether it's been sold for a semester or for the entire academic year, where you get the impact of short -- selling shorter tenancies or longer tenancies is in the rental growth. So rental growth figure is an annual rental growth figure. So where you would see it in last year's numbers, for example, is in that dilution of rental growth I talked about earlier as opposed to the occupancy.

Okay. So there's not an additional impact because it's left for 10 weeks less than it would have been if it was on a so if something should have been let for 51 weeks and it's been about for 40 weeks, it will be 100% occupied in the numbers, but you're saying the rent would be lower? Or how best -- sorry, just to understand?

I think this goes back to the point I made around how the rental outturn we deliver the '25, '26 impacts the guidance for FY '26. So to your point, sort of where we'd have shorter tenancies or more semester lets, you are getting that income through the back end of 2025. However, you may not be receiving it on all of those beds. As I said, semesters about 1.5 points of occupancy through 2026 and maybe not through the summer of 2026. So where we've seen that dilution in rental growth, that impacts FY '26 as opposed to FY '25.

Well, thank you all for calling and bearing with us as we took you through lots of information and lots of detail. I really appreciate you coming listening intently and we're around if you want to chat, but otherwise, we'll catch up with you all soon.