UPP Bond 1 Issuer PLC (UPP) has showed less resilience than we previously anticipated under the current challenging operating environment for the student accommodation sector. We think the sector is facing increasing market-based risks led by volatile student numbers mainly due to tighter immigration policies, worsening affordability, and increased market competition. UPP?s lack of nominations at some of the accommodation properties makes it more susceptible to the sector risks, exposing it to cash flow effects because of the occupancy decline. For the 2024-2025 academic year, the weighted average occupancy dropped to 94.7%, contrary to our expectations of occupancy rates of about 98%-100%. Although the project benefits from some financial cushion and portfolio diversification, we think its performance proved more volatile
