Multi-million-pound sale of city centre development site completes
The sale of a development site in Leeds City Centre has now completed in a £12.2m deal, nearly £2m more than the original valuation in November.
Regional REIT announced last year it was to sell its land on Merrion Way on a subject-to-planning basis to Unite Students.
The site was originally acquired by Regional REIT in 2016 as part of the Wing Portfolio alongside the adjacent Arena Point office development. At that time the entire holding, including the office development, was valued at £10.5m.
Following the acquisition, London and Scottish Investments, the Asset Manager to Regional REIT, recognised the potential for the repositioning of part of this asset for alternative use, undertook an early surrender of the lease, and agreed to a joint venture with Unite Students.
Having successfully worked with Unite to obtain planning consent for a large-scale student housing development, Regional REIT has achieved a final sale price of £12.2m for the site. This is an increase on the price of £10.5m indicated in the announcement of 10 November 2017. Regional REIT retains the 19 storey Arena Point office building currently valued at £8.45m (Dec 2017).
Stephen Inglis, Chief Executive of LSI and Director of Regional REIT, said: “We worked closely with Unite to get planning permission for the Merrion Way site, and are delighted it has now been granted. The hands-on approach we have taken with this site – from identifying its potential use as a student development, lining up a buyer and then starting the planning process – clearly demonstrates how we actively manage the portfolio to create significant shareholder value.”
Nick Hayes, Group Property Director at Unite Students, added: “When this site opens in 2020 it will take our presence in Leeds to 4,470 beds, with a further development close to University of Leeds and Leeds Beckett University. Its acquisition is in line with our stated returns and reflects our strategy of aligning with high and mid-tier universities in cities where demand for student accommodation is strong.”
In November, Unite Students exchanged contracts to acquire the site. The scheme then received planning approval in June for 1,000 student beds. The total development cost is expected to be £80m , funded from Unite’s internally generated sources. The new building is expected to be open for the 2020 academic year and deliver a yield on cost of 8%.
Unite, a manager and developer of student accommodation, said the transaction reflected the firm’s strategy of aligning its property portfolio with high-ranking universities where student numbers are growing whilst underpinning further earnings growth and visibility.
The site will increase Unite’s Leeds portfolio to 4,470 beds, serving a student population of 58,000, and further enhancing Unite’s operating efficiency in the city. In the last five years, Unite’s occupancy in the city has been 99% with over 1,200 beds subject to nominations agreements with Leeds universities.
