Unite Students, the biggest developer and manager of student accommodation in the UK, has teamed up with Singapore’s GIC to acquire a major residential campus in Birmingham for £227 mln (€266 mln).
The vendors are Aston University and Lloyds Bank.
Aston Student Village (ASV) comprises 3,067 beds across five large, detached properties and represents Unite’s first major on-campus acquisition. It is currently the only accommodation offered to students at Aston University, which has a student population of 11,000.
ASV takes Unite’s presence in Birmingham to over 5,000 beds. The company plans to invest in the accommodation over the summer to provide the next intake of students with upgraded facilities.
The purchase price of £227 mln represents an acquisition yield of 5%, in line with recent transactions in the student accommodation sector. Unite said the yield will grow to over 6% following investment into the portfolio and the implementation of the Unite Students platform.
ASV will generate gross annual income of around £17 mln for the 2017/18 academic year and will be immediately accretive to earnings and NAV, Unite said. The campus will be held by Unite and GIC's LSAV 50-50 joint venture, which will fund the acquisition with 40% equity and 60% debt, provided by TH Real Estate under a 10-year facility.
Unite will initially fund its share of the acquisition through additional borrowings, with disposals planned for later in the year offsetting this increase in net debt. Following the transaction, LSAV’s LTV ratio is 39% and Unite’s see-through LTV (on a pro-forma basis) is 38%.
Commenting on the deal, Richard Smith, CEO of Unite Students, said: ‘Birmingham is one of the top cities for students and this acquisition demonstrates the value of our strong relationships with Universities and also the benefit of our position as market leader, both by scale and efficiency and the service that we are able to offer to students as a result of our PRISM operating system.’
Madeleine Cosgrave, regional head of Europe at GIC Real Estate, said: ‘ASV is a high-quality asset uniquely located both on-campus and in the city centre. We are confident in the long-term growth potential of this asset and the student housing sector which we find attractive for its resilient income streams.’
Birmingham has the second-largest student population in the UK, with over 70,000 students resident in the city during term time. Besides Aston University, the city is home to two other leading UK universities: the University of Birmingham and Birmingham City University.
