UK Student Housing Heats Up: Balyasny's Play in the Unite-Empiric Deal

LONDON, UK – December 05, 2025

A seemingly routine regulatory filing has peeled back the curtain on the high-stakes financial maneuvering surrounding the UK’s student accommodation sector. Global hedge fund Balyasny Asset Management L.P. has publicly disclosed a significant 1.12% interest in Empiric Student Property plc, a company currently at the center of a major takeover bid by its larger rival, The Unite Group PLC. The disclosure, mandated by UK takeover rules, illuminates the complex strategies deployed by sophisticated investors looking to capitalize on one of the year's most significant real estate consolidation plays.

Balyasny’s filing is more than just a formality; it is a clear signal of institutional interest and a bet on the outcome of a deal that promises to reshape the landscape of purpose-built student accommodation (PBSA) in the United Kingdom. As the market digests this move, it casts a new light on the pending acquisition and the broader health of a sector grappling with soaring demand and intense investor focus.

A £723 Million Consolidation Play

The stage for Balyasny’s entrance was set on August 14, 2025, when Unite, the UK’s largest owner and developer of student housing, announced a firm and recommended offer to acquire Empiric. The cash-and-share deal values Empiric at approximately £634 million, with the total transaction value climbing to £723 million when accounting for dividend payments. The move followed months of negotiations and represents a landmark consolidation effort in the student housing market.

For Unite, the strategic rationale is clear. The acquisition aims to integrate Empiric’s complementary portfolio, leveraging Unite’s extensive operational platform and deep-rooted university relationships to unlock significant value. The company projects annual cost synergies of at least £13.7 million, leaning on its proven track record of successful integrations, most notably the 2019 acquisition of Liberty Living which delivered £18 million in yearly savings. Empiric’s shareholders gave their blessing to the deal in October, paving the way for the creation of a dominant market force. Upon completion, Empiric shareholders are set to hold around 10% of the enlarged group.

However, the deal is not yet across the finish line. The UK’s Competition and Markets Authority (CMA) launched a Phase 1 investigation on October 23, 2025, to scrutinize whether the merger could harm competition. With Unite already the sector's heavyweight, the CMA’s review represents the final and most significant hurdle to the acquisition's completion, which is tentatively slated for the second quarter of 2026.

The Arbitrage Angle: Decoding Balyasny's Move

This is the uncertain environment in which Balyasny Asset Management has revealed its hand. The firm's Form 8.3 filing is a mandatory disclosure under the UK Takeover Code, triggered when an entity’s interest in a company under offer exceeds 1%. Balyasny's position, comprising 7,450,817 cash-settled derivatives, gives it economic exposure to Empiric's share price performance without direct ownership.

These derivatives, specifically Contracts for Difference (CFDs), are a common tool for hedge funds executing a merger arbitrage strategy. This strategy involves betting on the successful completion of a takeover. Arbitrageurs buy shares of the target company (Empiric) trading below the acquisition price, aiming to profit from the spread once the deal closes and the price converges to the offer value. The firm’s disclosure that it is also reporting in respect of Unite Group suggests a classic arbitrage pairing strategy, possibly involving taking a short position in the acquirer to hedge against market-wide risks or deal failure.

Interestingly, the filing notes that Balyasny has been actively trading, including several transactions on December 4 to reduce its long position in Empiric at a price of £0.74 per unit. This could represent routine profit-taking on a portion of its stake or a strategic risk adjustment as the CMA's decision date approaches. Regardless of the specific tactics, Balyasny's involvement underscores a strong financial conviction that, despite regulatory hurdles, the Unite-Empiric deal is more likely to proceed than to fail.

A Sector in the Spotlight

The Unite-Empiric saga and the attention from investors like Balyasny are unfolding against the backdrop of a booming UK student housing market. The sector has demonstrated remarkable resilience and growth, attracting £3.4 billion in investment in the first nine months of 2025 alone, a 3% increase over the prior year. Projections show the market growing from £8.52 billion in 2025 to over £12.6 billion by 2033.

This investment fervor is fueled by a fundamental supply-demand imbalance. The number of students seeking high-quality, purpose-built accommodation continues to outstrip the available supply in many key university cities, driving near-full occupancy rates and robust rental growth. Empiric itself reported a like-for-like rental growth of 4.5% for the upcoming academic year. While its overall occupancy dipped slightly to 89% from 95%, the company noted this was due to a strategic shift, with a rise in UK student bookings offsetting a decline in reservations from Chinese students, potentially reflecting shifting geopolitical tides.

All Eyes on the Competition and Markets Authority

Ultimately, the fate of the merger and the success of the arbitrage plays built around it rest with the CMA. The regulatory body is expected to release its Phase 1 decision by December 19, 2025. A clearance would likely cause Empiric’s stock to jump towards the offer value, rewarding the patience of investors. An announcement of a more in-depth Phase 2 investigation, or worse, a rejection of the deal, would send shares tumbling and inflict significant losses on arbitrage funds.

The market's anxiety is palpable. On December 2, Empiric's shares touched a new 52-week low of GBX 72.90, well below the implied offer value, reflecting deep-seated skepticism about the deal's prospects in its current form. This very uncertainty creates the opportunity for funds like Balyasny. The wider the spread between the market price and the offer price, the greater the potential return—and the greater the risk.

The disclosure from Balyasny is therefore a critical data point, a calculated wager from a major financial player that the strategic and economic logic of the Unite-Empiric merger will ultimately overcome regulatory concerns. As the deadline for the CMA’s decision looms, the UK student housing sector has become an unexpected arena for a high-stakes contest of regulatory foresight and financial nerve.