Unite Group PLC (GB0006928617.SG) Earnings Call Transcript & Summary

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.