UNITE Completes ?121m Debt Facility

RNS Number : 4207C

Unite Group PLC

01 May 2012

 



Press Release 1 May 2012

THE UNITE GROUP PLC

('UNITE', the 'Group', or the 'Company')

UNITE COMPLETES NEW £121 MILLION DEBT FACILITY

WITH LEGAL & GENERAL

- TRANSACTION REPRESENTS LEGAL & GENERAL'S

FIRST REAL ESTATE DEBT FINANCING DEAL -

The UNITE Group plc, the UK's largest developer and manager of student accommodation, today announces that it has secured a new £121 million, 10 year debt facility with Legal & General.   The all-in cost of the new borrowing, which is at 60% loan-to-value, is fixed at 5.05% for the duration of the loan. The loan will amortise to £109 million, 55% loan-to value, by 2022.

Together with headroom in other existing facilities, the new loan provides capacity to pay down the Group's remaining facilities that mature in 2013, extending its next refinancing event until May 2014. Following the refinancing, the Group's weighted average debt maturity increases to 3.5 years.

The transaction reduces the Group's see through cost of debt by 10 basis points from 5.7% at 31 December 2011 to 5.6% , generating proforma annual savings of approximately £0.6 million. These savings will offset the swap break costs amounting to £4.7 million (3 pence per share) that have been incurred as part of the transaction and  will be recognised in the first half of 2012. Following the transaction the proportion of the Group's debt that is hedged has increased from 69% at 31 December 2011 to 80%.

The debt facility represents Legal & General's first real estate debt financing deal and has been arranged by LGIM (Legal & General Investment Management)Commercial Lending Ltd ("CLL"), which was established in May 2011 and which also acts as facility agents.

 The new loan forms part of UNITE's strategy to introduce new lenders to the Group, particularly from non-bank sources, and  brings the total amount of new debt raised in 2012 to over £200 million.

Joe Lister, Chief Financial Officer for the UNITE Group, said: "Securing this new, long term facility with a lender of Legal and General's quality, is further testament to the strength of UNITE's business and marks an important step for the Group. We have now arranged over £400 million of new debt facilities for UNITE and its funds in the last 12 months.

"Controlling gearing levels and extending debt maturities remains a key priority for UNITE and we will continue to work closely with our financing partners to further strengthen the Group's financial position over the year. Our long track record and recent successes in raising new finance give us continued confidence for the future."

Ashley Goldblatt, Head of Commercial Lending at Legal & General Investment Management,  comments: "Having looked at the market in depth over the last year and with an experienced team in place, this first, sizeable, complex transaction answered our objectives in developing this area of our business.  UNITE represents a market leader, with a strong track record, operating in a resilient but non-traditional sector of the real estate market. 

"Additionally we have proven ourselves capable of taking a more flexible approach to lending, as is seen in the ten year loan term.  Traditionally insurance companies have restricted themselves to long term loans, of 15/20 years or more, that match their long dated liabilities, whereas those banks that are still willing or able to lend are only prepared to do so on short terms.  This is a space that we feel comfortable in filling."

ENDS

For further information, please contact:

The UNITE Group plc                                                                       Tel: [phone]

Joe Lister, Chief Financial Officer

Paul Harris, Strategy and Corporate Relations Director

Sophie Joyce, Corporate Communications Manager           

FTI Consulting                                                                                   Tel: [phone]

Stephanie Highett

Dido Laurimore

Toyah Simpson          

About The UNITE Group 

The UNITE Group is the UK's leading developer and manager of student accommodation, with a business model that focuses on two core areas:

1.         Development and Asset Management: UNITE undertakes the acquisition, planning and development of purpose-built student accommodation in the UK. Through the continuous assessment of quality and location of its investment portfolio, UNITE is well positioned to deliver value-adding strategies to those assets where further opportunities are identified. Working on behalf of its partners, UNITE acts as Fund Manager for the UNITE UK Student Accommodation Fund in which it owns a 16.3% share. UNITE also manages a number of Joint Venture partnerships.

2.         Professional property management: UNITE is home to some 41,000 students and has consistently proven high occupancy levels across its portfolio.

UNITE works closely with universities and colleges, in order to deliver high quality, well-located student accommodation at affordable prices in strong higher education markets. 

Founded in 1991, UNITE is listed on the London Stock Exchange (UTG).

For more information, please visit www.unite-group.co.uk or www.unite-students.com.  

About CLL 

Legal & General's real estate debt financing vehicle, LGIM Commercial Lending Ltd ("CLL") was established in May 2011.  Headed by Ashley Goldblatt, who was previously head of fixed income at AXA Investment Managers UK limited, the team combines over 50 years' experience.

 

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