REG - Unite Group PLC - Acquisition <Origin Href="QuoteRef">UTG.L</Origin>

UniteAnnouncement

06/09/2014 14:29

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RNS Number : 7857L
Unite Group PLC
09 July 2014 
 
 Press release  9 July 2014    
 
 
THE UNITE GROUP PLC 
 
("Unite Students", "Unite", the "Group", or the "Company") 
 
USAF ACQUIRES 3,000 BED STUDENT PORTFOLIO FOR £137 MILLION 
 
Unite Students, the UK's leading developer and manager of student
accommodation, announces that the Unite UK Student Accommodation Fund
("USAF"), in which the Group has a 21% stake, has acquired a 2,904 bed student
accommodation portfolio for £137 million. The acquisition was funded through a
combination of cash resources and existing debt facilities following USAF's
recent fund raising in March 2014. 
 
The portfolio comprises nine regional assets and represents the entire
portfolio of the Cordea Savills Student Hall Fund, a private student
accommodation fund. The acquisition increases USAF's property portfolio value
by 10% from £1.375 billion to £1.512 billion, comprising 24,577 beds in 68
properties across 22 UK towns and cities. 
 
Two of the properties acquired are already operated by Unite under sale and
leaseback arrangements so the Group's operational portfolio will increase by a
net 1,862 bed spaces as a result of the acquisition. These two assets, in Bath
and Portsmouth and representing approximately 35% of the acquired portfolio by
value, benefit from long term nominations agreements with Universities and
have significant reversionary potential. Taking account of recent disposals
and planned completions later in the summer, the Group will be operating
43,953 bed spaces for the forthcoming 2014/15 academic year (41,072 in
2013/14). 
 
The newly acquired assets are complementary to Unite Students' existing
portfolio, with approximately 90% by value located in strong regional
locations where the Group already has a significant operational presence and
which are considered to be core. These core locations are Bath, Birmingham,
Bristol, Edinburgh, Leeds, Loughborough and Portsmouth. The portfolio also
includes two smaller assets in Preston and Bradford which will continue to be
operated by a third party manager and are likely to be sold in due course. 
 
The consideration paid equates to a net initial yield of 6.3% and the
acquisition will be immediately accretive to USAF's earnings and marginally
accretive to its NAV. Unite's share of these incremental earnings, together
with additional management and acquisition fees, is expected to add
approximately £2 million (1 pence per share) to the Group's Adjusted Earnings
over the remainder of 2014 and approximately £2 million (1 pence per share)
per annum on a recurring basis going forward. Following the transaction,
USAF's loan to value ratio is 42%, in line with its current leverage targets. 
 
USAF continues to achieve good rental growth and high occupancy levels across
its portfolio. 
 
Commenting on the acquisition, Mark Allan, CEO of Unite Students said: "We are
delighted that USAF has been able to complete this important acquisition from
Cordea Savills. The combination of Unite's existing operational presence
across the country, USAF's financial capacity and the Group's position as
lessee on two highly reversionary assets means that a combination of Unite and
USAF is uniquely well placed to unlock the potential of an excellent regional
portfolio." 
 
A conference call for investors and analysts will take place at 9:00am today,
9 July 2014.  To register for conference call details please contact
ekirmatzis@bell-pottinger.com. 
 
ENDS 
 
For further information, please contact: 
 
 Unite Students Joe Lister, Chief Financial OfficerSally Quigg, Head of Corporate Communications  Tel: +44 117 302 7045Tel: +44 117 302 7070  
 Bell Pottinger Victoria GeogheganNick Lambert Elizabeth Snow                                     Tel: +44 20 7861 3925                       
 
 
Notes to editors: 
 
About Unite Students 
 
Unite Students is the UK's leading manager and developer of student
accommodation. We provide a home for 41,000 students in over 120 purpose built
properties across 23 of the UK's strongest university towns and cities. We
have nearly 1,000 employees and work in partnership with over 50 higher
education providers, as well as renting rooms directly to students. 
 
Our culturally-diverse customers are at the heart of our business and we aim
to provide a home for students that supports their success, whether defined as
academic achievement, personal growth or employability. Our properties provide
high quality, well-located, safe accommodation that is close to university
campuses, transport and local amenities. Our rent includes a study bedroom,
all bills, insurance, 24-hour security and high speed Wi-Fi throughout our
buildings. 
 
Founded in 1991, Unite Group is a FTSE 250 company listed on the London Stock
Exchange. We are pursuing a sustainable growth strategy designed to make the
most of the resilient nature of the student accommodation sector. We aim to
maintain the strongest brand in the sector and operate the highest quality
portfolio through consistent investment in and improvement to our operating
platform, highly selective development activity, asset management initiatives
and portfolio recycling. 
 
In addition to our wholly owned properties, we are also invested in and
operate a small number of specialist funds and joint ventures with
institutional investment partners, the largest of which is the £1.5 billion
Unite UK Student Accommodation Fund (USAF). 
 
The Group's charitable trust, the Unite Foundation, supports widening access
to higher education, integrating students into the community and
employability. It provides scholarships for disadvantaged students at seven
universities and volunteering opportunities for our students and employees
through partner organisations. 
 
For more information visit our corporate website: www.unite-group.co.uk or
www.unite-students.com. 
 
About The Unite UK Student Accommodation Fund (USAF) 
 
The Unite UK Student Accommodation Fund (USAF) is Europe's largest non-listed
real estate fund that purely focuses on student accommodation investment
assets. The £1.5 billion Fund is an open-ended infinite life vehicle. Unite
Students acts as Fund Manager of USAF, as well as owning a significant
minority stake of 21%. 
 
USAF delivered a total return of 12.6% in 2013 and has been among the top
performing funds in the IPD Specialist Funds index over the past five years,
reflecting the quality of its portfolio and consistent rental growth
performance. 
 
This information is provided by RNS
The company news service from the London Stock Exchange