Unite Group, a provider of student accommodation in the UK, has completed the sale of assets worth £220.3 mln (EUR 334 mln) to the Unite UK Student Accommodation Fund (USAF) which it established in 2006. The company said it also sold leased assets worth £21.4 mln to UK peer Morley for its Lime Property Fund.

Unite Group, a provider of student accommodation in the UK, has completed the sale of assets worth £220.3 mln (EUR 334 mln) to the Unite UK Student Accommodation Fund (USAF) which it established in 2006. The company said it also sold leased assets worth £21.4 mln to UK peer Morley for its Lime Property Fund.

Unite will book a profit of £300,000 mln on the sale and charge a further £4 mln, largely related to the amortisation of costs associated with the establishment of USAF in 2006. The sale will be paid in cash, releasing £46 mln equity capital after the repayment of loans and Unite’s co-investment in USAF.

The Fund is financing the acquisition through a combination of debt and equity. Following the acquisition, USAF’s loan to value gearing will be 47% and Unite will cut its co-investment stake in the Fund to around 20%.

The 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. The majority of these properties are fully let for the 2007-2008 academic year and are expected to generate an average net yield of 5.60% over the forthcoming twelve months.

The leased assets sold to Morley comprise 419 bed spaces in Bath and 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 the 30 June 2007 valuations and reflects an average net yield of 5.25%.