Unite Students Accommodation Fund (‘USAF’) announces acquisition of two properties under development and the disposal of a studio scheme – 25 May 2017
Unite Students, the UK’s leading manager and developer of student accommodation, announces that USAF has exchanged contracts for the acquisition of two assets: a 222-bed development in Durham and a 418-bed scheme in Selly Oak, Birmingham. The combined cost of the developments is £56 million (Unite share £12.9 million). The acquisitions are expected to generate a yield on cost of 6.3% in their first full year of operation.
The University of Durham and the University of Birmingham are both world class Universities ranked 4th and 16th respectively in the Times Higher Education rankings, with a combined student population of 53,000.
In parallel with these transactions, USAF has sold a 128-bed studio scheme in central London for £42 million (Unite share £9.7 million), providing the majority of the funding for the acquisitions. The remainder will be funded by cash. The disposal price reflects a value of £320,000 per bedroom, in line with book value and represents a net initial yield of 4.25%. Disposals in 2017 now total £180 million, on a Unite share basis, against our target of £150-200 million.
The transactions support Unite’s strategy of concentrating its portfolio alongside high-ranking universities with a structural demand and supply imbalance and focusing on cluster flat accommodation rather than single occupancy studios.
Richard Simpson, Group Property Director, said:
These transactions demonstrate our strategy of investing in new, larger and more efficient properties with cluster flat accommodation, available at a lower price point for students. We will continue to deploy funds from the disposals made at the start of the year to further improve the quality of the portfolio and to extend our highly accretive development programme in strong regional locations with top-ranked universities like Durham or Birmingham, where we see the most sustainable growth.
For further information, please contact:
Joe Lister, Chief Financial Officer
Paul Richmond, Corporate Affairs Director
Tel: +44 117 302 7005
Tel: +44 20 3772 2562