Image source: Getty Images
The London stock market is packed with brilliant real estate investment trusts (REITs). But many of these property stocks have slumped in value more recently over fears of rising interest rates. The result: investors seeking REIT exposure can pick up some quality operators at knockdown prices.
Take Unite Group (LSE:UTG), whose share price has slumped 28% in the last year. Like other REITs, it’s dropped on changing interest rate expectations due to the Iran war. Yet, the fall here has been especially pronounced due to specific weakness in the student accommodation market.
But here’s the good part. Investors today can today secure a whopping 7.2% dividend yield with Unite shares. At 526p, the company also trades at a 39% discount to its recent net asset value (NAV) per share.*
Is this a great passive income opportunity to consider? I think so, and here’s why…
* Based on Unite’s NAV per share of 879p on 30 June, 2026.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
REIT under pressure
As I say, concerns over interest rates have rocked the share prices of many REITs of late. Hopes of Bank of England cuts in 2026 have now turned to expectations of rate hikes. The longer the Iran war goes on, the greater this threat becomes.
For Unite, its property portfolio declined 6.4% in value in H1 as higher interest rates raised property yields. That’s not all — the firm expects cost of debt to rise to 4.3% this year and 4.5% in 2027, up from 3.9% last year.
Still, Unite hasn’t been hit as hard as some other property specialists. Instead, it’s weakness in the student accommodation sector that’s really damaged the share price. And looking ahead, this remains the main threat as students continue to feel the pinch.
The company owns and operates 142 different properties across 22 university cities. Like-for-like income growth dropped 590 basis points in H1 to just 1.5%, reflecting lower occupancy and weaker rental growth.
However, Unite’s July update wasn’t all bad. In fact, it showed some green shoots of recovery beginning to emerge…
Poised to rebound?
According to the company, “89% of beds are now reserved for the 2026/27 academic year“, up from 87% logged at the same point in 2025.
The reasons are:
- A 7% surge in ‘elite’ university applications.
- Outperformance of its recently acquired ‘Hello Student’ division.
- Soaring costs in the private landlord market.
- A chronic shortage of bespoke student accommodation.
I believe it is this supply shortfall that underpins Unite’s attractive investment case. At those ‘elite’ universities, applicants outstrip the number of accommodation places by 2.3 times. As the number of students grows (and particularly from overseas), I’m confident the property giant’s earnings will steadily recover over time.
A passive income champion
In the meantime, Unite is rapidly cutting costs and targeting asset sales (£300m-£400m worth) to shore up earnings and its balance sheet. This in turn gives the company’s dividends room to continue growing. Payouts have risen in 14 of the past 15 years.
Though there may some further short-term challenges, I’m confident this REIT will remain a top passive income stock. But it’s not the only top dividend stock for investors to consider today…
What income stock do we like better than Unite Group Plc right now?
One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.
And the best bit is that you can see if for yourself, right now, absolutely free of charge!
No jargon. No hard sell. Just a clear look at an income share we think is worth your time.
Royston Wild does not hold any positions in the companies mentioned.
This story originally appeared on Motley Fool
