Unite sells student housing assets to fund for EUR 107m

The Unite Group, a leading developer and manager of student accommodation in the UK, has sold a portfolio of five assets to the Unite UK Student Accommodation Fund for £95.4 mln (EUR 107 mln). The transaction followed the successful completion of the £167 mln capital raising, inclusive of Unite’s co-investment, for the fund.

The portfolio comprises 905 bed spaces across five properties in London, Edinburgh, Exeter and Glasgow, further enhancing the fund's portfolio of high-quality, direct-let student accommodation. USAF now holds 58 properties in 18 cities, representing 19,468 bed spaces.

Taking into account the target leverage of the fund, USAF now has the capacity to invest up to a further £225 mln in either acquisitions from Unite or other income-generating student accommodation assets from third parties, as well as funding a programme of modest refurbishments of certain properties within the fund’s existing portfolio.

The consideration for the transaction, based on an independent valuation performed by CB Richard Ellis, represents a net initial yield of 6.35% and is 18% higher than the carrying value of the assets in the group's 30 June 2009 half-year financial statements, prepared under International Financial Reporting Standards (IFRS). Under IFRS, some of the assets sold to the Fund were carried at cost rather than at open market value. When compared to open market value, which is used in arriving at the company’s adjusted net asset value, the consideration reflects an increase in value of 6% since 30 June 2009.

Following the fund’s capital raise, Unite's co-investment stake in USAF stands at 16.3%.