UK student housing company UNITE Group said it has completed the planned sale of some £242 mln (EUR 338 mln) of assets following the redemption of UNITE Finance One bonds announced in October. The bulk of the assets, worth £220.3 mln, were sold to the UNITE UK Student Accomodation Fund while £21. 4 mln of leased assets were sold to Morley, the property fund management arm of British insurer Aviva, which purchased them on behalf of its Lime Property Fund.
UK student housing company UNITE Group said it has completed the planned sale of some £242 mln (EUR 338 mln) of assets following the redemption of UNITE Finance One bonds announced in October. The bulk of the assets, worth £220.3 mln, were sold to the UNITE UK Student Accomodation Fund while £21. 4 mln of leased assets were sold to Morley, the property fund management arm of British insurer Aviva, which purchased them on behalf of its Lime Property Fund.
Assets sold to USAF comprise 4,426 bed spaces and are located in prime locations within the important student markets of Manchester, Liverpool, Sheffield, Bristol, Plymouth and Aberdeen, UNITE Group said. The majority of these properties is fully let for the 2007-2008 academic year and is expected to generate an average net yield of 5.60% over the next twelve months. Consideration will be in cash, releasing equity capital of £ 46 mln after repayment of loans and UNITE’s co-investment into USAF. Those funds will be reinvested into development activities over time. After the transaction, UNITE said its co-investment stake in USAF would be reduced to about 20%.
Assets being sold to Morley comprise 419 bed spaces across four properties in Bath. UNITE said the sale is in line with its strategy of exiting from certain leased properties following the bond redemption. The properties are let to the University of Bath on leases expiring between 2023 and 2029 on Full Repairing and Insuring terms. The price achieved on the sale of these leased assets is 7% below June 30, 2007 valuations and reflects an average net yield of 5.25%.
The asset sales come as UNITE pursues a strategy of releasing capital from mature, stabilised investment assets to higher value-added development activity. To that end, UNITE established the £ 1 bn USAF at the end of 2006 and sold an initial portfolio to it for £ 515 mln. The creation of the fund was also designed to provide UNITE with more growth capital in the medium term and to diversity the group’s income by providing a new revenue stream from fund management fees.
