UK - Student housing specialist manager Unite has agreed to a sale-and-leaseback arrangement for one of its flagship assets in Bristol with the M&G Secured Property Income Fund for a total cash consideration of £21.5m (€24m).

The M&G fund offers institutional investors fixed income-like real estate investments in the UK and its latest acquisition represents a net initial yield of 6.07%.

Unite House, on the other hand, comprises 395 student bed spaces and was developed by Unite in 2000, where it benefitted from a nominations agreement with the University of Bristol.

Unite will continue to operate the property following the disposal of the freehold under a leaseback arrangement for a term of 25 years, subject to an annual rent starting at £1.38m and subject to annual increases linked to the retail prices index.

Proceeds from the sale will be used to repay borrowings and may be reinvested into Unite's development activities if opportunities arise.

After repayment of associated senior debt, the transaction releases approximately £7m of net cash proceeds to Unite.

This transaction is the latest in a number of planned asset disposals by Unite and brings the total contracted consideration from sales in 2009 to £154.3m, including £88.2m of development assets sold into the joint venture between Unite and Oasis Capital Bank.

"This disposal further demonstrates the strong demand in the investment market for high-quality student accommodation," claimed Mark Allan, chief executive at Unite.

"The sale will enable us to repay the debt associated with the asset, further reducing our gearing, with the remaining cash becoming available to reinvest in development activities.

"Having now completed over £150m of asset sales this year, combined with our £82m equity raising last month, we are increasingly well-positioned to secure attractive development opportunities for delivery in 2012 and beyond," he added.

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