Subject: Re: Unite Group UTG, couple of notes
Hi Jim,

I can certainly imagine events that would diminish the UK student population by 20% or more, that have occurred within the last 150 years of history: WW1 conscription, WW2 conscription, Spanish flu (primarily 20-30 y/o).

Heck, you don't even need a problem with demand. Look at 2007, when Unite was a management company rather than a REIT. They got shredded by the GFC along with everyone else.

I can also think of things that would boost demand. The current trend, absent events, is trending to an increase. To foresee matters being 20% below today (currently 2 students needing accomodation, for every PBSA bed, and far worse at the high-tariff unis), for the years to come you also need to somehow explain away future reasonably-expected growth (number of students, length of study increasing) as well as adding in the degrowth you speculate.

Catastrophe might strike, somehow?......any company will have this problem. Heck entire countries can have this problem. Even the entire planet can unexpectedly see a drop of 20% to its economic wellbeing, more than 3 times in the last 150 years.

At least, thank goodness, Unite is operating primarily in places where demand consistently exceeds supply of spaces by a huge margin, going back for many decades.

If your argument is '... so don't put 100% of your money in this magic buyback machine thinking it's a perpetual motion engine' then fair enough, I 100% agree! That's pretty sensible.

But if the argument is simply 'well, I can imagine terrible possible futures, in theory...', why be in any stock at all? At some point you weigh the odds, play the odds appropriately, and let diversification manage the outcome.

Even Berkshire, many people's gold standard stock on this site, could be hit by multiple super-cat events and calamity in other areas of business. BRK dropped 50% 4 times in history and went nowhere for over a decade at a time, yet it wasn't even around for the really crazy stuff - the Great Depression, Spanish Flu, WW1 or WW2. Buffett took it over 20 years after WW2.

> "There's an old rule of thumb never to invest in a concept restaurant chain, they always grow till they pop... It's a different industry, but perhaps not 100.00% different."

There are perhaps tens of thousands of concept restaurant chains in the world at various stages of growth. From among all those tens of thousands, can you suggest just *one*,

A - with such a record of steady stable growth in the last 15 years, that it gets referred to as 'almost a bond' by market analysts for years

B - which pre-contracts its sale of food to each customer for a year at a time (or more)

C - which hedges energy & debt costs years ahead

D - which has cornered 10-15% of the eating-out market nationally, night after night

E - that can borrow almost as cheaply as the government for years at a time

F - where the stock is held by pension funds specifically as a counter-cyclical predictably dull growth asset.

I will be very interested to hear your suggestions.

The closest example I could think of is Greggs, or McDonalds, I'm not sure either would qualify as a 'concept restaurant' for most people, and they certainly don't score well on B or E.

> The budgets got cut, and foreign students were the lever they reached for

Who is 'they'? Is it possible you are conflating feelings about academia / British academia with Unite group as you write that part?

Unite Group does not operate everywhere, they operate generally at the places where finding university housing demand has been a local problem for *centuries*.

That's why they maintained 98% occupancy (vs around 90-95% for a typical REIT) for the last 15 years, and even now maintain it almost everywhere *except* the underperforming competitor they have taken over to turnaround, along with 2-3 towns where every PBSA builder got a little greedy and speculative.

Let me put it this way: in many of the locations Unite prefer to operate, the consistent, steady, growing demand for local student accommodation in those towns predates the existence of e.g. the USA or Canada by *centuries*.

TRS