Re Joint Venture

Unite Group PLC
08 August 2005



Date:                         8 August 2005
On behalf of:                 The UNITE Group plc ('UNITE')
Embargoed until:              0700hrs



The UNITE Group plc
UNITE CLOSES SECOND STUDENT VILLAGE JOINT VENTURE


The UNITE Group plc ('UNITE'), the UK's leading provider of student
accommodation, today announces the formation of its second joint venture with
Lehman Brothers, the global investment bank, for the development and operation
of a 968 bed student village in Leeds.



UNITE and Lehman Brothers will own 51% and 49% respectively of the equity in the
joint venture, which is for an initial term of five years and will be deadlocked
with each party having equal voting rights and board representation.  The joint
venture partners have each invested in a special purpose vehicle to acquire,
develop and hold the student scheme, with UNITE having satisfied its
consideration through the transfer of the development land into the vehicle and
Lehman Brothers having satisfied its consideration with £3.4 million in cash.
The development land has been independently valued at £3.7 million and UNITE has
therefore received £0.1 million in cash from the joint venture, resulting in its
net equity contribution of £3.6 million.  UNITE will also be fully reimbursed
for all costs incurred to date on the development and will record neither a
profit nor a loss as a result of the transaction.



The student village, which is in Leeds city centre, is ideally located for
students from both the University of Leeds and Leeds Metropolitan University as
well as Leeds College of Music and it will offer a broad range of accommodation
and facilities.  UNITE's partner contractor, Carillion, is currently on site and
building completion is anticipated in August 2006.  The property is expected to
be worth £43.2 million on completion and will be let directly to students,
generating an annual rent roll of £3.9 million when fully stabilised which,
after deducting expected operating costs, equates to a net yield of 6.9%.
Senior debt for the joint venture is being provided by Fortis Bank.



In addition to its investment in the joint venture, UNITE will also retain
responsibility and receive a fee for the development and subsequent management
of the property.  It will also receive a 'promote fee' if, on termination of the
joint venture, the actual returns achieved exceed targeted returns.  The joint
venture agreement contains customary exit provisions, which in the case of UNITE
may be subject to shareholder approval at the time of exit where relevant.



The joint venture enables UNITE to further its strategy of growing its portfolio
of owned and managed beds in target locations, whilst making the most efficient
use of its capital.  UNITE expects to maximise the return on its equity invested
through the receipt of development, management and promote fees as described
above in addition to the anticipated development gains.



Commenting on the transaction, Mark Allan, Group Finance Director for UNITE,
said:



'This joint venture builds on our first transaction with Lehman Brothers, closed
last year, and illustrates the continued investor demand in our sector.  It
demonstrates the strength of our relationship with Lehman Brothers and the
successes of our first joint development in Sheffield, which will open in
September this year.   Leeds is an important market for UNITE and developing a
further 968 beds in the city underlines our confidence in the strength of the
local market and our long term commitment to the Universities and Colleges in
Leeds.'



ENDS


Enquiries:


The UNITE Group plc
Mark Allan, Group Finance Director            Tel: [phone]
Redleaf Communications Ltd                    Tel: [phone]
Emma Kane                                     Mob: [phone]
Wendy Timmons



Notes to Editors:



  • In April 2004, UNITE secured the first student village joint venture with
    Lehman Brothers, worth £45 million on completion. The 1,162-bed student
    village in Sheffield, known as The Forge, will be opened for the start of
    the 2005 academic year.



  • UNITE currently has three student residences in Leeds and on opening the
    new student village, UNITE will operate a total of 2,219 beds in the city.



  • Full-time student numbers in Leeds have grown by some 24% over the past
    three years. (Full-time Student numbers in Leeds 03 / 04: 47,066).








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