Unite Student Village Joint Venture

RNS Number : 8843V

Unite Group PLC

20 January 2012

 



20 January 2012

THE UNITE GROUP PLC

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

                             UNITE ACQUIRES REMAINING 49% INTEREST IN

UNITE STUDENT VILLAGE JOINT VENTURE FROM ITS PARTNER

The UNITE Group plc, the UK's leading developer and manager of student accommodation, today announces that it has completed the acquisition of the remaining 49% interest that it did not already own in the UNITE Student Village ("USV") joint venture, from its joint venture partner Parkmetro Limited, a subsidiary of Lehman Brothers. Consideration for the transaction totals £6.2 million, payable in cash, and is deferred until October 2012. Taking into account the additional income receivable by UNITE between completion and payment of the consideration reduces the effective amount payable to £5.3 million. The acquisition is expected to add £2.4 million of NAV in 2012 and additional Net Portfolio Contribution of approximately £1 million. The purchase enables UNITE to take full control of USV and its underlying assets and represents an important step toward simplifying the Group's balance sheet.

In conjunction with the acquisition, UNITE has arranged a new £38 million five year facility with HSBC plc. Existing senior debt in USV, totalling £45 million and due to mature in 2012, was repaid at completion with £3 million of the £7 million reduction in senior debt funded from cash resources within USV acquired as part of the purchase. The all-in cost of finance, including the underlying five year swap rate is approximately 5%.

USV, which was established in 2004, originally developed and operated two large student villages in Leeds and Sheffield. It now owns one remaining asset, the Forge, a 1,381 bed development situated in Sheffield city centre. The Forge represents the Group's largest asset in the Sheffield market and was valued at £58.4 million at 30 June 2011 with net operating income of £4.3 million secured for the 2011/12 academic year. The implied NOI yield on the asset in this transaction is 7.6%. It is 99% let for the current academic year, with nearly half of the rooms let to Sheffield Hallam University, the fourth largest university in the UK.

Commenting on the transaction, Joe Lister, UNITE's Chief Financial Officer, said: "This transaction marks an important step for the Group, enabling us to take full ownership control of a quality property at an attractive price, whilst also enabling us to secure the asset's future financing strategy through a new facility with HSBC. The Forge has shown strong operational performance and is a key asset within the Sheffield market, and taking our ownership to 100% is consistent with our aim to simplify our balance sheet."

*Estimated Net Asset Value represents the capital position of the Fund and does not include undistributed income.

For further information, please contact:

The UNITE Group plc Joe Lister, Chief Financial Officer Paul Harris, Communications Director Sally Quigg, Head of Corporate Communications	Tel: [phone]
FTI Consulting Stephanie Highett Dido Laurimore Toyah Simpson	Tel: [phone]

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 40,000 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.

 

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