UK - Student accommodation developer Unite has sold assets in Glasgow, Leeds and Bristol to its Unite UK student accommodation fund for £81.8m (€118m) in cash.

The firm, which is 4.5% owned by ABP, the €215bn Dutch civil service scheme, launched the fund in December last year in a bid to shift its business model towards co-investment and asset management.

The sale announced last week reduces Unite's stake in the fund, which has a target size of £1bn, from 29.3% to 22%.

Tabitha Aldrich-Smith, a spokeswoman for Unite, said the business cycle had driven the timing of the move.

"It's a stable asset, and we've completed the booking cycle," she said.

The transferred properties are largely sold out for the 2007—2008 academic year and Aldrich-Smith forecasts "a continuous cycle" of further transfers to the fund.

Student accommodation has proved resilient as an asset sub-class, largely because it offers a stable income stream and investment characteristics - including yields and relatively low cyclicality - closer to commercial than residential property.

The UK has been Unite's primary market in Europe.

"So far, investors in the fund have been from the UK but we're starting to see interest from the continent," said Aldrich-Smith. "Demand remains high because it's a good diversifier."

Other sector players, such as private equity firm UPP, construct accommodation for undergraduates in partnership with universities. In contrast, Unite develops its own accommodation, often in joint ventures, for third-year undergraduates and postgraduates at the hospitality end of the market, citing demand from overseas students as an "important and growing area".