Subject: Re: Unite Group (UTG), UK, falling knife.
Latest thoughts, having bought more recently.

The Russell Group rankings, for some of the lower rankings universities have fallen in recent years, due to the growing status of universities in China and Singapore. Chinese students in particular, pay a lot of attention to the global rankings. Given that foreign students tend to stay in halls for their entire study life, this is not a helpful dynamic for demand. Empiric has reported some occupancy softening for this very reason.

The recent high profile case of Chinese intervention to influence U.K. universities, is not a great narrative, along side ever increasing geopolitical tensions.

However, the current discount for Unite makes any negative narrative seem very overblown. when looked at over the long term. China, with its huge population, is currently in a depression and yet it is sending thousands of their young people to the U.K. to study.

The U.K. has a world leading reputation for higher education and attracting students from overseas. Surely we can take some comfort from the fact that people like Lee Quan Yew, studied at Cambridge and LSE. Oxford has been around since 1096 and there is a fair chance Unite will be renting rooms to Oxford students for many years to come. And inflation will mean those rents will keep creeping up.

Remaining philosophical, I regard an investment in Unite at current prices, as a high probability of a satisfactory return and safety of principle. Let’s say, the NAV discount remains for many years and all I get is a 6.7% dividend, which grows due to the 20% capital retention and inflation. Well that might sound unattractive in a world of booming AI stocks, but it is our lifetime, cumulative compounding record that matters. I see Unite as something that might hugely outperform in a falling stock market…and who knows maybe the NAV gap closes for an extra boost.

Good to see more smart money getting on board.