Student assets sold in £143.9m deal
UNITE Group, the provider and manager of student accommodation, today announced the sale of a number of assets, including in Leeds, for £143.9m.
The assets sold to the UNITE UK Student Accommodation Fund comprise 1,679 bed spaces across four properties in London, Leeds and Bath. The portfolio is 97% let for the 2010/11 academic year.
Working on behalf of its partners, UNITE acts as fund manager for the UNITE UK Student Accommodation Fund in addition to holding a 16.3% stake in it.
The consideration for the transaction, based on an independent valuation performed by CBRE, represents a net initial yield of 6.44%, 1.8% lower than when it was valued at the end of June.
UNITE said the shortfall related to an “asset specific factor” and was not indicative of broader movements of valuation across the portfolio. The disposal also “crystallises” £9.3m of development profits, the group said.
UNITE will use the proceeds of the sales to pay down related debt of £104.5m leaving net proceeds of £39.4m. It will use the net proceeds to reduce gearing further and invest in developments as opportunities arise.
Joe Lister, UNITE’s chief financial officer, said: “The planned sale of stabilised assets to the UNITE UK Student Accommodation Fund is in line with UNITE’s ongoing developer and co-investing fund manager business model.
“The sale supports the pricing of quality investment assets underpinned by UNITE’s ability to continue to deliver rental growth and strong occupancy levels.
“UNITE will use the net proceeds from the sale to strengthen its balance sheet and invest into attractively priced development opportunities as they arise.”
UNITE established the UNITE UK Student Accommodation Fund at the end of 2006 and has helped the group transform its business model to that of a developer of new purpose-built student accommodation and manager of funds which own student accommodation properties operated by UNITE.
The Fund’s portfolio comprises 19,994 bed spaces in 59 properties across 19 UK markets.
