USAF BOND - LAUNCH AND PRICING

RNS Number : 5008G

Unite Group PLC

06 June 2013

 



Press Release 6 June 2013

THE UNITE GROUP PLC

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

UNITE ANNOUNCES LAUNCH AND PRICING OF £380 MILLION USAF BOND FINANCING

The UNITE Group plc ("UNITE"), the UK's leading developer and manager of student accommodation, today announces the launch and pricing of £380 million of bonds issued under the new debt funding platform for the UNITE UK Student Accommodation Fund ("USAF") that was announced on 1 June 2013.

USAF is the largest specialist student accommodation fund in the UK, currently holding a portfolio of 63 properties valued at over £1.3 billion which are located in 20 markets across the UK providing over 21,000 bed spaces. UNITE is the largest investor in USAF with a holding of 16%.

The £380 million of bonds will have a 10 year maturity (due 2023) and a fixed coupon of 3.4%, representing a spread of 150 basis points over the reference gilt yield. The bonds comprise part of a larger £405 million refinancing, which incorporates a £25 million five year revolving credit facility, corresponding to an overall loan to value of around 50%. The existing USAF bonds being redeemed by this refinancing will be repaid on its next payment date on 28 June 2013. The new bonds are expected to be rated A (sf) by both Standard & Poor's and Fitch.

The new debt funding platform extends the maturity on about two-thirds of USAF's existing debt facilities, increasing USAF's weighted average debt maturity from two years to seven years whilst also resulting in an overall reduction in its total cost of interest from 4.9% to 3.9%. As part of the transaction, USAF will incur costs associated with breaking interest rate swaps of approximately £11 million. UNITE's share of these costs is £2 million and this will form part of the anticipated total cost of the Group's break costs of £6-8 million for the whole of 2013.

UNITE's share of the new debt represents approximately 10% of the Group's total net debt as at 31 December 2012. The refinancing will have the following proforma impact on the Group's debt statistics on a see-through basis:-

-           Average cost of debt reduced to 5.35% (5.5% at 31 December 2012)

-           Weighted average loan maturity increase to six years (five years at 31 December 2012)

-           Proportion of non-bank finance increase to 46% (43% at 31 December 2012)

Joe Lister, Chief Financial Officer of The UNITE Group plc, commented:

"The launch and pricing of the new bond to support USAF's refinancing will have a material impact on the Group's total cost of financing, bringing significant savings and contributing towards our target of a 4.5% earnings yield by 2015. Achieving a strong investment grade rating provides key benefits in giving access to longer term finance, at competitive rates, and diversifying USAF's sources of capital beyond the banking market."

ENDS

For further information, please contact:

The UNITE Group plc                                                                                        Tel: [phone]

Joe Lister, Chief Financial Officer

Sophie Joyce, Head of Corporate Communications          

FTI Consulting                                                                                                  Tel: [phone]

Stephanie Highett

Dido Laurimore

Faye Walters

Notes to editors:

About the UNITE UK Student Accommodation Fund ('USAF')

USAF is an open-ended non-listed real estate fund that focuses on acquiring and operating high quality student accommodation in the UK.

USAF is the largest specialist student accommodation fund. It currently holds a portfolio of 63 properties valued at over £1.3 billion which are located in 20 markets across the UK providing over 21,000 bed spaces.

Established in December 2006, USAF initially raised equity capital totalling £370 million from UK and European institutional property investors. It was initially seeded with a £515 million portfolio comprising 31 properties acquired from UNITE Group.

USAF completed its most recent capital raise in December 2009, raising £167 million of equity. The capital raise was oversubscribed, reflecting the appetite from investors for the student accommodation sector.

USAF has now grown to having over 100 investors. UNITE is the largest investor with a current co-investment stake of 16.3%. UNITE also acts as manager of USAF and operates its properties.

About The UNITE Group 

UNITE 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 42,000 students in over 120 properties across 23 of the UK's strongest university cities, and has consistently proven high occupancy levels across its portfolio.

UNITE works closely with higher education institutions in order to deliver high quality, well-located student accommodation at affordable prices in strong higher education markets. In May 2013 UNITE was awarded Student Accommodation Provider of the Year at Property Week's RESI Awards. UNITE has also been recognised by the Global Real Estate Sustainability Benchmark (GRESB) as a regional sector leader for sustainability.

Founded in 1991, UNITE is a FTSE 250 company 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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