Leeds student accommodation sold as part of £111m deal

Student accommodation developer the Unite Group plc has announced it is selling two sites in Leeds and Portsmouth in an £111m deal to USAF.

They sites combined offer a total of 1,223 beds. Unite says this represents a net initial yield of 5.5%. It has not yet named the Leeds site.

Unite UK Student Accommodation Fund (USAF) is a non-listed open-ended fund focused on acquiring high quality student accommodation in university towns and cities across the UK, and has a portfolio of nearly 25,000 beds across the UK.

At the same time, Unite announced that USAF has successfully raised £250m of new equity from external investors. The proceeds represent 17% of USAF’s NAV as of March 2019.

Unite’s stake in USAF will reduce from 25% to 23% when the equity is fully drawn. These sales form part of planned disposals of £100-150m (Unite share) during 2019.

Following the acquisition, USAF has significant further investment capacity of £250-300m and has a number of further investment assets, which are currently under offer from third parties.

Joe Lister, Unite Students chief financial Officer, commented: “Demand for high quality investment opportunities in the purpose built student accommodation sector remains strong with the full allocation of new equity being taken up by investors.

“The confidence shown in both the fund’s ability to deliver consistent returns and Unite’s ability to drive value from its operating platform has allowed USAF to raise £250m.

“The equity raised will allow USAF to continue to improve the quality of the portfolio by continuing to invest in the strongest markets.”