The Unite Group, the UK's leading developer and manager of student accommodation, announced on Wednesday that it has established a five-year joint venture with Bahraini company Oasis Capital Bank (OCB) to develop three student accommodation properties in London.

The Unite Group, the UK's leading developer and manager of student accommodation, announced on Wednesday that it has established a five-year joint venture with Bahraini company Oasis Capital Bank (OCB) to develop three student accommodation properties in London.

Unite said the properties have an estimated completion value of £194 mln (EUR 226 mln). OCB has bought a 75% stake in the joint venture, investing £39 mln, with Unite holding the remaining 25%.

Unite's three properties under development, amounting to 1,119 beds and representing its entire 2010 pipeline, will be immediately sold to the joint venture for a consideration of £88.2 mln, reflecting an anticipated development yield on cost of approximately 8%.

As part of the financing for the transaction, Unite's existing banking facilities relating to each property will be reduced by an aggregate of £14 mln and transferred into the joint venture. As a result, the joint venture will have access to total debt facilities of £109 mln, of which £51 mln is currently drawn with the remainder available to fund costs to complete.

The estimated value of the three properties on completion is expected to be £194 mln, and the anticipated costs to complete them are £69 mln. Unite will record a loss on disposal of £400,000 as a result of the transaction, equivalent to 0.2% of estimated final value.

The completion of the joint venture has a significant immediate positive impact on Unite's balance sheet, the company said.