Unite Group cuts beds

By Martina Fuchs

LONDON (Reuters) - Unite Group (UTG.L), the UK's largest provider of student housing, reported a rental growth rate of around 10 percent for the academic year 2008/2009, but said it was cutting its 2010 projects by half in order to conserve cash.

In a trading statement on Tuesday, Unite's Chief Executive Mark Allan said the sector had some resilience to the credit crisis due to continued high demand.

"We expect the portfolio's occupancy and rental performance to remain strong in a recessionary environment, reflecting both the trend of increasing student numbers and the quality of the group's portfolio," Allan said.

But for 2010 Unite said it would cut its projects by half in order to conserve cash in uncertain economic times.

"If the market conditions were different, we would build 3,000 beds in 2010 but we took the decision to scale that right back. We will continue construction plans for developments already underway and deliver 2,700 beds in 2009.

"But we will cut the number of planned beds from 2,700 to 1,200 in 2010, mostly in London," finance director Joe Lister told Reuters.

By 12:13 p.m., shares in the company were down 4.8 percent at 89 pence.

The Bristol-based company, which was founded in 1991, currently manages 36,000 student beds in 23 university towns across the UK.