Acquisition and Share Issue

Unite Group PLC
1 June 2001

THE UNITE GROUP PLC
1 JUNE 2001


                            The UNITE Group plc

             PROPOSED ACQUISITION OF UNILODGE FOR £108.8 MILLION
                    PROPOSED £85.8M PLACING AND OPEN OFFER


SUMMARY

-          The UNITE Group plc, the UK's leading specialist provider of
accommodation services for students and NHS key workers, today announced that
it has conditionally agreed to acquire UniLodge for a total cost of £108.8
million.

-          UniLodge is a significant provider of student accommodation in the
UK, with 2,524 rooms currently open and 1,590 rooms awaiting completion.

-          The Acquisition is an important development in the implementation
of UNITE's strategy and will give UNITE greater national coverage and the
opportunity to realise substantial economies of scale.

-          In addition, the Acquisition brings:
           -    greater presence in key locations
           -    additional revenue generating opportunities
           -    an experienced team
           -    enhanced operational capacity
           -    manufacturing synergies
           -    and is EPS and NAV per share enhancing for 2001 and 2002

-          The total cost of the Acquisition of £108.8m will be funded through
a combination of equity and debt.  Teather & Greenwood has conditionally
placed 23,205,557 New Ordinary Shares at 370p with institutional and other
investors.  Of these, 11,087,966 have been placed on behalf of the Company
under an Open Offer, on the basis of one Offer Share for every four existing
Ordinary Shares, to raise approximately £41 million before expenses.  The
remaining 12,117,591 shares have been placed firm on behalf of the Vendors of
UniLodge to raise a total of £44.8 million.

-          Both UNITE and UniLodge operate in an expanding market and both are
in active negotiations in relation to significant pipelines of new development
projects, which would on their completion provide approximately 40,932 beds in
aggregate.  The increased resources available through the Cash Placing and
Open Offer will be used to fund the Enlarged Group's growth plans.

-          In view of its size, the Acquisition is subject to the approval of
Shareholders which will be sought at an Extraordinary General Meeting to be
held at 0900hrs on 20 June 2001 at The Tower Building, 11 York Road, London
SE1 7NX.  Directors and other Shareholders currently holding 56.47% of the
issued share capital have undertaken to vote, or to recommend voting, in
favour of the Acquisition.

COMMENTING ON THE ANNOUNCEMENT, GEOFFREY MADDRELL, CHAIRMAN OF UNITE, SAID:

'The Acquisition is a major step in delivering our strategic objectives and
targeted growth plans.  UniLodge is an excellent fit for UNITE giving us
additional national coverage and further dominance in key target locations.
The Enlarged Group is well positioned to deliver continued shareholder value.'

This summary should be read in conjunction with the full text of this
announcement.

Enquiries to:

Nicholas Porter, Chief Executive                Tel:  [phone]
Simon Bernstein, Finance Director
The UNITE Group plc

Emma Kane, Chief Executive                      Tel:  [phone]
Redleaf Communications Ltd                      Mob:  [phone]

Richard Thompson, Director                      Tel:  [phone]
Martin Lampshire, Director
Teather & Greenwood Limited

Notes to Editors

-          UNITE is the leading specialist provider of accommodation services
for students and NHS key workers, offering a full range of design, build and
facilities management solutions.  The Company was founded in 1991 and
following the Placing and Open Offer would have a market capitalisation of
approximately £250 million at the Placing Price.  UNITE seeks long-term
partnerships with its public sector clients, such as universities and NHS
trusts, to deliver integrated solutions to their individual needs, allowing
those institutions to focus on their core activities.

UNITE ANNOUNCES ACQUISITION OF UNILODGE AND
PLACING AND OPEN OFFER

ACQUISITION OF UNILODGE

The Board of The UNITE Group plc, the UK's leading specialist provider of
accommodation services for students and NHS key workers, today announced that
it has conditionally agreed to acquire UniLodge, one of the UK's most
significant providers of student accommodation services.  The total cost to
UNITE of the Acquisition is £108.8 million.

The Acquisition is an important development in the implementation of UNITE's
strategy and will give UNITE greater national coverage and the opportunity to
realise substantial economies of scale.

The Directors believe that the Acquisition will create significant shareholder
value for the Enlarged Group.  Pro forma net assets for the Enlarged Group are
£172.4 million, compared to £88.7 million as at 31 December 2000 for UNITE.
The Acquisition is expected to be enhancing in terms of net asset value per
share and earnings per share for the 2001 and 2002 financial year ends.

BACKGROUND AND REASONS FOR THE ACQUISITION

UNITE's overall strategy is to strengthen its position as the United Kingdom's
leading provider of quality, affordable accommodation services for students
and NHS key workers, whilst delivering growth in shareholder value.  UNITE's
approach has been to focus on developing a nationwide presence, whilst
securing strong market positions at the local level.  The Acquisition of
UniLodge will significantly advance the implementation of this strategy.

The Directors believe that the operations of the two organisations are
complementary:

- NATIONAL COVERAGE.  UniLodge's base in Scotland and North West
England is complementary to UNITE's strength in the South and South West of
England.  In the limited number of areas where their operations overlap, such
as Manchester and Liverpool, the Acquisition will enhance UNITE's position as
a leading local provider of student accommodation solutions.

- REVENUE MIX. UniLodge's portfolio contains a greater proportion of direct
let properties than UNITE's. Direct let properties are typically higher
yielding than properties let to universities.

- PRODUCT SIMILARITY. Both UNITE and UniLodge have based their schemes on
cluster flats with a predominance of en-suite rooms, so that UniLodge
properties can be easily assimilated into the UNITE concept.

The Directors expect that the Acquisition will bring a range of benefits and
economies of scale to UNITE including:

- PRESENCE IN KEY TARGET LOCATIONS. UNITE has identified 21 key target
locations in the United Kingdom, which have the optimal size and market
characteristics to support the UNITE concept. UNITE is currently operating in
seven of these locations. UniLodge will provide coverage in four more
locations.

- REDUCTIONS IN MANAGEMENT COSTS. This transaction will afford the Group
sufficient critical mass to generate economies in several services, such as
the negotiation of national supply contracts and security response contracts
and the procurement of planned and reactive maintenance.

- ADDITIONAL REVENUE STREAMS. Several opportunities to generate incremental
sales will arise including by the provision of insurance services, Internet
access and mobile telephony as well as leisure based activities such as room
exchange programmes across the portfolio in summer months and excursions.

- EXPERIENCED STAFF. The Acquisition will bring a team of staff experienced
in property and facilities management. It will, therefore, enable UNITE to
gain market share more quickly and will reduce the need to recruit and train
additional staff.

- ENHANCED OPERATIONAL CAPACITY. UNITE's central support function should
increase the operational capacity of UniLodge's site managers, enabling them
to take on the management of more schemes in due course. The Acquisition will
also result in greater utilisation of UNITE's facilities management centre.

- IMPROVED NEGOTIATING TERMS. The Acquisition may enable UNITE to negotiate
improved terms with the Enlarged Group's contracting partners.

- RECYCLING CAPITAL. As a result of the Acquisition, UNITE should have
sufficient critical mass to enable it to consider recycling its capital to
release funds from mature investments to enable further growth of the
business.

UNITE believes that the Acquisition will underpin its growth plans. UniLodge
brings a strong future pipeline to augment UNITE's own portfolio of potential
schemes. The combination of the two operations will enable UNITE to compete
more strongly for future acquisition and stock transfer opportunities and to
generate additional benefits from developing UniLodge's projects using
UNITE's methodology.

TERMS OF THE ACQUISITION

UNITE has conditionally agreed to acquire the entire issued share capital of
UniLodge for a consideration of £55.6 million, subject to an unlimited
adjustment as described below. In addition, UNITE will assume or refinance
UniLodge's external bank borrowings, estimated at £27.0 million, repay
shareholder loans, estimated at £3.0 million and be responsible for costs to
complete UniLodge's contracted development pipeline, estimated at £23.2
million. Accordingly, the total cost to UNITE of the Acquisition is £108.8
million subject to unlimited adjustment.

The amount of consideration is subject to an unlimited upward or downward
adjustment determined by a completion statement prepared by UNITE and agreed
between the parties. The completion statement will be drawn up to reflect the
position of the UniLodge Group as at the date of completion which is expected
to be 28 June 2001. The consideration will be adjusted in the event that:

1.  the total amount owing by the UniLodge Group to its external lenders, after
taking into account cash balances ('net debt') exceeds or is less than £27.0
million; and/or

2.  the aggregate of the estimated building and fitting out costs and other
expenses to complete certain building projects of the UniLodge Group exceeds
or is less than £23.2 million ('cost to complete adjustment'); and/or

3.  the aggregate of the UniLodge Group's net current assets at completion
exceeds or is less than £nil ('the current asset adjustment').
 
FINANCING THE ACQUISITION AND OTHER USES OF FUNDS 

The initial funding requirement for the Acquisition is expected to be £85.6
million, representing the total cost to UNITE of the Acquisition of £108.8
million less the costs to complete UniLodge's contracted development pipeline
estimated at £23.2 million. This funding requirement will be met as to £44.8
million by the issue of the Consideration Shares, as to £1.5 million from
existing cash resources as to £9.3 million by the issue of Consideration Loan
Notes, as to £2 million by the assumption of external bank debt and as to the
balance of £28 million through new senior bank facilities of £41.8 million
arranged by Halifax plc which will be secured, inter alia, against the
UniLodge portfolio of completed schemes.

The costs to complete UniLodge's contracted pipeline will be met from the
Enlarged Group's internal resources, bank debt and the proceeds of the Cash
Placing and Open Offer.

The proceeds from the issue of the 11,087,966 Offer Shares to be issued under
the Cash Placing and Open Offer will raise a further £41.0 million (before
expenses) which will be used:

- to fund the development of schemes of the Enlarged Group in the course of
development;

- to finance further acquisitions of stock by the Enlarged Group;

- to allow the Enlarged Group to participate in the growing number of larger
PFI and 'public private partnership' schemes in the market which require
committed financing;

- to invest in realising the full benefits of the Acquisition; and

- for general working capital purposes.

DETAILS OF THE PLACING AND OPEN OFFER 

Arrangements have been made with Teather & Greenwood, as agent for the
Company, to invite Qualifying Shareholders to apply to subscribe for
11,087,966 Offer Share at the Issue Price of 370 pence per share, on the
basis of one Offer Share for every four existing Ordinary Shares registered
in their name at the close of business on the Record Date. Qualifying
Shareholders may apply for any number of Offer Shares up to their maximum
allocation set out in the Application Form.

The 11,087,966 Offer Shares and the 12,117,591 Consideration Shares, which
together comprise the New Ordinary Shares, have been conditionally placed by
Teather & Greenwood with institutional and other investors. Accordingly, the
Placing and Open Offer has not been underwritten.

The 12,117,591 Consideration Shares and the 3,784,652 Offer Shares which
Directors and other Shareholders have undertaken not to take up in the Open
Offer have been placed firm. The balance of the Placing Shares, being the
7,303,314 Offer Shares which are not the subject of Undertakings, have been
placed subject to recall to satisfy valid applications under the Open Offer.

THE MARKET 

STUDENTS
There are 1.8 million students in higher education in the United Kingdom, of
which 1.2 million are in full-time education. Of these 1.2 million,
approximately 330,000 live in university managed accommodation and a further
700,000 live in rented accommodation in the private sector. As student
numbers increase, universities are increasingly seeking partnerships for the
building and management of new and existing accommodation to release capital
and management time for academic and commercial activities. It is stated
Government policy that by 2010 the proportion of people between 18 and 30 who
shall have undertaken some form of higher education should have risen to 50
per cent. Currently, the proportion of school leavers entering some form of
higher education is only approximately one third. The Directors believe that
the achievement of the Government's target would result in a significant
increase in the size of the student rental market.

NHS KEY WORKERS
There are currently approximately 460,000 nursing staff employed in the
United Kingdom, for whom there are only approximately 50,000 units of
institutional accommodation available. The Government intends that the NHS
should employ an extra 20,000 nurses by 2004. Nursing staff form only part of
the NHS key worker rental market.

Within these markets, UNITE targets those locations with the right
characteristics of demand and competition to support the UNITE concept
profitably. UNITE has identified 21 key locations in the United Kingdom which
it believes fulfil its criteria for potential demand, existing and planned
competing supply and socio-economic conditions. In addition, UNITE considers
other locations where specific opportunities exist, particularly in relation
to stock transfer schemes. Whilst national coverage is important to the
Company, strength within target locations is key to its success. UNITE
recently acquired its first scheme for NHS key workers outside London.

UNITE 

UNITE is the United Kingdom's leading specialist provider of accommodation
services for students and NHS key workers, offering a full range of design,
build and facilities management solutions. UNITE seeks long-term partnerships
with its public sector clients, such as universities and NHS trusts to
deliver integrated solutions to their individual needs, allowing those
institutions to focus on their core activities.

UNITE offers high-quality accommodation, typically based on a cluster of
bedrooms around a communal kitchen and dining area. UNITE has an in-house
manufacturing capability that produces completed modular rooms for transport
to site. This has helped UNITE reduce costs and improve quality and speed of
construction, with the objective of delivering consistent cost and quality
performance throughout the United Kingdom.

The solutions offered to institutions and students are mainly provided
through:

- the direct leasing of properties to institutions;
- nomination agreements under which the Company lets direct to students with
the university typically guaranteeing a minimum rental income at agreed room
rates; and,
- direct lets of properties to students.

UNITE's long term strategy is based around the 'Capturing the Continuous
Customer' concept where first year students in university accommodation
operated by UNITE associate the UNITE brand with quality and affordability
and are then encouraged in their subsequent years to migrate to direct let
UNITE properties, for which UNITE receives higher rents.

Portfolio growth is driven by four streams of activity: organic development,
stock transfer, developer relations and acquisition.

An important element of UNITE's concept is the offering of additional
services such as telephone and Internet access, vending machines and laundry
facilities. Such services, whilst providing additional facilities to tenants,
also boost revenues from each property. The Accommodation and Estate Services
division carries out comprehensive facilities management, including
maintenance and fault logging, security and rent collection services, and is
supported by a 24 hour customer service center. The division also offers full
marketing, booking, viewing and allocation capabilities. The On-Line
Accommodation Service ('OLAS') is a further extension of UNITE's facilities
management service and offers, via bunk.com, data on 340,000 university
managed bedrooms in the United Kingdom and offers on-line booking and
real-time allocation technology. UNITE has now signed contracts with three
higher education institutions for the provision of OLAS.

UNILODGE HOLDING LIMITED 

UniLodge began trading in 1998 to take advantage of opportunities in the
market for independent student accommodation. The UniLodge portfolio
comprises UniLodge's headquarters at Salford, ten completed investment
properties, with 2,524 beds, and seven properties, the development of which
has not yet been completed, which will provide a further 1,590 beds when they
are complete. Of these seven properties, four are currently in the course of
construction with a further two sites held for development, pending
permission and/or building contracts. The seventh property is at Moss Lane
East, Manchester, where contracts have been exchanged but legal completion is
outstanding. The contract is subject to a number of conditions, one of which
relates to the grant of appropriate planning permission. These conditions may
be waived by UniLodge. The largest of these seven properties is a scheme at
Huddersfield which is being constructed on a turn-key basis, with UniLodge
only making final payment once the development has been completed. UniLodge's
properties are located mainly in Scotland and the North West of England.

In addition to its portfolio of completed properties and properties in the
course of development, UniLodge has a strong pipeline of potential future
schemes. UniLodge currently has options over, or is in negotiations relating
to, further schemes involving a possible additional 11,952 beds.

King Sturge has valued UniLodge's portfolio as at 1 June 2001 at £106.65
million on the basis that the seven uncompleted properties have been fully
completed. The cost of completing these seven properties is included in the
valuation at £24.5 million, of which £13.0 million is the outstanding
contract cost of turn-key developments. The value of the properties in their
existing state, other than the property at Moss Lane End, Manchester, which
is still subject to legal completion, is £67.5 million.

UniLodge's strategy differs from that of UNITE in a number of ways. In
contrast to UNITE, UniLodge does not undertake design or construction work.
Instead, this work is sub-contracted to local professionals and contractors.
In addition, UniLodge has focused more on direct let properties than UNITE.
Approximately 61.8 per cent of UniLodge's portfolio is, or is to be, let
directly to students compared to 37.0 per cent for UNITE.

However, like UNITE, UniLodge manages its properties with a view to
generating additional revenues from facilities management and the provision
of additional services such as telephony, IT provision, car parking and
vending areas. A property manager is responsible for each of UniLodge's
direct let properties, including all aspects of the operation of the property
such as processing lettings, collecting rent and generating non-rental
income. These property managers are supported by a central sales and
marketing team which advertises and promotes the properties both nationally
and locally.

THE ENLARGED GROUP 
                                                                              
  COMBINED PORTFOLIO                                                          
  (NO OF BED SPACES)                                                          
                        COMPLETED     PROPERTIES IN        PROPERTIES    TOTAL
                                        DEVELOPMENT       SECURED FOR         
                                                          DEVELOPMENT         
  CONTRACTED LEASE                                                            
       UNITE                1,569             1,036               732    3,337  
       UniLodge             1,462                 0                 0    1,462
  NOMINATIONS                                                                 
       UNITE                1,274               788             3,265    5,327
       UniLodge               110                 0                 0      110
  DIRECT LET                                                                  
       UNITE                1,248                 0               538    1,786
       UniLodge               952             1,092               498    2,542
  Total contracted          6,615             2,916             5,033   14,564  
                                               
                            
  UNCONTRACTED                                                                
       UNITE                                                            28,980
       UniLodge                                                         11,952
  Total uncontracted                                                    40,932  
   
                                                                        
Note:     Figures for UNITE are based on the position as at 31 December 2000.
1,887 of the bed spaces included above in respect of UNITE are held within
the Group's Peabody UNITE joint venture.

UniLodge currently has a workforce of 27 employees, the majority of whom are
based in Salford, who bring with them an excellent knowledge of the student
accommodation market. These employees will be integrated into UNITE's
existing Group structure and in particular into the Accommodation and Estate
Services division. The other operating divisions within the Enlarged Group
will be the Development division, dealing with all aspects of design, project
management and development of properties and Construction Services Group
Support division, dealing with finance, personnel and market research and
other Group issues.

CURRENT TRADING AND PROSPECTS 

Since 31 January 2001, UniLodge has continued to evolve its pipeline of
development projects. UniLodge has recently signed an option agreement
securing control of a 410 bed project in Coventry and exclusive positions
have been negotiated over a further 924 beds in Birmingham and Leicester.

Occupancy at completed properties remains in line with UniLodge management's
forecasts and schemes in the course of development remain on schedule for
delivery in accordance with forecast timetables.

UNITE continues to trade satisfactorily. Since the year end, UNITE has
announced that it has been selected as the preferred bidder for stock
transfer schemes at Loughborough, Portsmouth and Northumbria totaling over
2,600 beds. UNITE today announced that it has exchanged contracts to purchase
two properties in Manchester and Sheffield, totaling some 1,117 beds, for a
total consideration of £30.7 million. UNITE has also launched OLAS, its
on-line accommodation service, with contracts with three higher education
institutions and has announced the opening of a Scottish office.

Both UNITE and UniLodge operate in an expanding market and both are active in
negotiations in relation to significant pipelines of new development
projects, which would on their completion provide approximately 40,932 beds
in aggregate. These projects include several major schemes under the
Government's Public Private Partnerships Initiative, including projects for
Swindon & Marlborough NHS Trust (preferred bidder, 140 beds), Loughborough
University (preferred bidder, 860 beds) and University of Northumbria
(preferred bidder, 345 beds). The Directors are confident that as a result of
the Acquisition, and with the increased resources available to it from the
Cash Placing and Open Offer, the prospects for the Enlarged Group are
excellent.

EXTRAORDINARY GENERAL MEETING 

In view of its size, the Acquisition is subject to the approval of
Shareholders. An Extraordinary General Meeting will be convened at 9.00am on
20 June 2001 at The Tower Building, 11 York Road, London SE1 7NX at which
shareholder approval will be sought. The Directors and certain other
Shareholders, together currently holding a total of 25,047,083 Ordinary
Shares, representing 56.47 per cent of UNITE's issued share capital have
undertaken to vote, or in the case of 1,031,039 such shares, to recommend
that the shares in question be voted, in favour of the Resolution at the
Extraordinary General Meeting. A circular is being despatched to Shareholders
today detailing the background to and reasons for the Acquisition and
containing details of the Placing and Open Offer.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS 
                                                                              
  Record date for Open Offer                           29 May 2001            

  Latest time and date for receipt of completed        9.00am on 18 June 2001 
  Forms of Proxy                                                              

  Extraordinary General Meeting                        9.00am on 20 June 2001 

  Latest time and date for splitting Application       3.00pm on 20 June 2001 
  Forms to satisfy bona fide market claims only                               

  Latest time and date for receipt of Application      3.00pm on 22 June 2001 
  Forms and payment under the Open Offer                                      

  Dealings in the New Ordinary Shares expected to      8.00am on 28 June 2001 
  commence on the Official List                                               

  Expected date on which New Ordinary Shares will be   28 June 2001           
  credited to CREST accounts                                                  

  Expected date of dispatch of definitive share        3 July 2001            
  certificates for the New Ordinary Shares                                    

Application Forms which are personal to Shareholder(s) named thereon, and
which may not be transferred except to satisfy bona fide market claims are
being posted today.

END

Enquiries to:

Nicholas Porter, Chief Executive                Tel: [phone]
Simon Bernstein, Finance Director
The UNITE Group plc

Emma Kane, Chief Executive                      Tel: [phone]
Redleaf Communications Ltd                      Mob: [phone]

Richard Thompson, Director                      Tel: [phone]
Martin Lampshire, Director
Teather & Greenwood Limited

DEFINITIONS

                                                                              
  'Acquisition'                The proposed acquisition by UNITE of the       
                               entire issued share capital of UniLodge, as    
                               described in this announcement and the         
                               Circular.                                      
  'Admission'                  The admission of the New Ordinary Shares to    
                               the Official List in accordance with the       
                               Listing Rules and to trading on the London     
                               Stock Exchange.                                
  'Cash Placing'               The conditional placing of the Offer Shares    
                               with institutional and other investors,        
                               subject to recall to satisfy valid             
                               applications under the Open Offer, as          
                               described in this announcement and the         
                               Circular.                                      
  'Consideration Loan Notes'   Up to £11 million nominal variable rate        
                               unsecured loan notes 2011 of the Company to be 
                               issued as part consideration for the           
                               Acquisition.                                   
  'Consideration Shares'       The 12,117,591 new Ordinary Shares which are   
                               to be allotted by the Company as part          
                               consideration for the Acquisition              
  'CSSCF'                      CS Structured Credit Fund, Limited             
  'Enlarged Group'             The Group as enlarged by the Acquisition       
  'Group'                      The Company and its subsidiary and associated  
                               undertakings.                                  
  'Issue Price'                370 pence per New Ordinary Share               
  'New Ordinary Shares'        The Offer Shares and the Consideration Shares  
                                                                              
  'Open Offer'                The conditional offer by Teather & Greenwood,   
                              at the request of and as agent for the Company, 
                              of 11,087,966 New Ordinary Shares to Qualifying 
                              Shareholders on the terms and conditions set    
                              out in this document and in the Application     
                              Form.                                           
  'Ordinary Shares'           Ordinary shares of 25 pence each in the capital 
                              of the Company                                  
  'Placing'                   Together the Cash Placing and the Vendor        
                              Placing.                                        
  'Qualifying Shareholders'   Holders of existing Ordinary Shares whose names 
                              appear on the register of members of the        
                              Company at the close of business on the Record  
                              Date (other than certain overseas shareholders).
  'Shareholder(s)'            Holders(s) of Ordinary Shares                   
  'Teather & Greenwood        Teather & Greenwood Limited                     
  'Undertakings'              The deeds of undertaking from Directors and     
                              others not tot take up their entitlements in    
                              respect of an aggregate of 3,784,652 Offers     
                              Shares.                                         
  'Vendors'                   The existing shareholders of UniLodge           
                              (including CSSCF)                               
  'Vendor Placing'            The conditional placing of the Consideration    
                              Shares with institutional and other investors.  
  'UniLodge'                  UniLodge Holding Limited                        
  'UNITE'                     The UNITE Group plc.                            

Teather & Greenwood Limited, which is regulated by the Securities and Futures
Authority Limited, is acting for UNITE in connection with the Proposals and
no one else and will not be responsible for anyone other than UNITE for
providing the protections afforded to customers of Teather & Greenwood
Limited nor for giving advice in relation to the Proposals.

This announcement is not for release, publication or distribution in or into
the United States, Canada, Australia or Japan.

END