Hedge Funds Bet Big on Beds: Balyasny's Move in Unite-Empiric Deal

LONDON, UK – November 25, 2025 – A routine regulatory filing has pulled back the curtain on the high-stakes financial maneuvering within the UK's booming student accommodation market. Global hedge fund Balyasny Asset Management has disclosed a significant 1.22% interest in Empiric Student Property plc, the target of an ongoing takeover by sector giant Unite Group plc. The disclosure, mandated by UK takeover rules, reveals a sophisticated strategy using derivatives, offering a clear signal of where "smart money" sees value in a sector fueled by relentless demand and intense corporate activity.

A Sector in Consolidation: The Unite-Empiric Takeover

The backdrop for Balyasny's disclosure is the near-complete acquisition of Empiric Student Property by its larger rival, Unite Group. This landmark deal is set to further consolidate a fragmented but highly lucrative market. On August 14, 2025, the boards of both companies announced their agreement on a recommended cash-and-share offer, a move that received the green light from Empiric's shareholders in early October.

The deal, which initially valued Empiric at approximately £634 million, will see its shareholders receive a combination of new Unite shares and cash for each share they hold. The path to completion was significantly cleared just this week, on November 27, 2025, when the UK's Competition & Markets Authority (CMA) granted unconditional Phase 1 clearance, removing a major regulatory hurdle.

With the final court sanction hearing scheduled for January 26, 2026, the deal is in its final stages. The effective date is anticipated to be January 28, 2026, at which point Empiric shares will be suspended from trading, marking the end of its journey as an independent entity and its integration into the Unite portfolio. This takeover is not just a transaction; it's a strategic consolidation that underscores the competitive pressures and opportunities for scale within the purpose-built student accommodation (PBSA) space.

The Hedge Fund Playbook: Transparency Through Derivatives

Balyasny's involvement is detailed in a Form 8.3 filing, a mandatory disclosure under the UK's Takeover Code for any party holding an interest of 1% or more in a company involved in a bid. The code's purpose is to ensure total transparency during these sensitive periods, preventing the creation of a "false market" and ensuring all investors are on a level playing field.

What's particularly insightful is how Balyasny holds its position. The filing reveals the 1.22% interest, equivalent to 8,153,019 shares, is held not through direct stock ownership but via cash-settled derivatives, specifically contracts for differences (CFDs). This financial instrument allows an investor to gain economic exposure to the price movements of an asset without owning it. In essence, Balyasny is betting on the value of Empiric's shares without holding the shares themselves, and therefore without any voting rights to influence the takeover's outcome.

The filing also notes that Balyasny has been "reducing a long position." This indicates the hedge fund is actively managing its exposure, likely taking profits as the share price converges towards the final offer value from Unite. With the deal's success now highly probable following CMA approval, the arbitrage opportunity—the gap between the market price and the deal price—has narrowed. For a fund like Balyasny, this is a signal to begin crystallizing gains from a successful M&A bet. This pattern of using derivatives to play takeover scenarios is a hallmark of multi-strategy hedge funds, which leverage deep market analysis to profit from corporate events.

Betting on Beds: The Unstoppable Appeal of Student Housing

Balyasny's strategic investment is not happening in a vacuum. It is a calculated move in one of the UK's most resilient and attractive real estate sub-sectors. The UK student accommodation market, valued at over £8.5 billion in 2025, is projected to grow at a compound annual rate of over 5.4% through 2033. Investment has been pouring in, with nearly £50 billion committed over the past decade and £2.8 billion transacted in the first nine months of 2025 alone.

The fundamental driver is a chronic and worsening supply-demand imbalance. UK universities remain a global magnet for students, with UCAS projecting applications to hit one million by 2030. This influx of domestic and international students is running up against a limited supply of quality housing. Across 20 major university cities, the student-to-bed ratio is a stark 2.7 to 1, meaning nearly three students are competing for every single bed in purpose-built accommodation.

This imbalance translates directly into strong financial performance for operators like Unite and Empiric. Occupancy rates are consistently high, and rental growth has been robust, averaging over 8% recently. Investors, from private equity firms to sovereign wealth funds, are drawn to the sector's defensive qualities and predictable, inflation-linked income streams, making it a safe harbor in a volatile economic climate.

Reading the Signals: What This Means for the Market

For investors in Empiric and Unite, the Balyasny filing is less a sign of interference and more a vote of confidence in the deal's logic and impending completion. For the broader market, it's a powerful indicator of the institutional appetite for UK student housing. The use of derivatives by a major hedge fund underscores the financial sophistication now prevalent in this once-niche asset class.

Looking ahead, the trends that make the sector attractive are set to continue. Student expectations are evolving, driving demand for greener, smarter, and more community-focused living spaces that prioritize wellbeing and digital connectivity. While challenges such as rising construction costs and planning hurdles persist, the underlying demand fundamentals remain exceptionally strong.

The Unite-Empiric deal is likely a precursor to further consolidation as smaller players struggle to compete with the scale, brand power, and operational efficiency of larger operators. As institutional capital continues to flow into the sector, seeking stable returns, the strategic maneuvers of sophisticated investors like Balyasny Asset Management will remain a key feature of the landscape, offering a fascinating glimpse into the financial engine driving the future of student living in the UK.