Last checked at 16 Dec 2008 07:00
Date: 16 December 2008
On behalf of: The UNITE Group plc ("UNITE")
Embargoed until: 0700
The UNITE Group plc ("UNITE" / "Group")
UNITE ANNOUNCES £171M SALE OF ASSETS
The UNITE Group plc, the UK's largest provider of student accommodation, today announces the successful conclusion of the planned sale of assets to the UNITE UK Student Accommodation Fund ('the Fund' / 'USAF'), for consideration totalling £171.3 million.
The assets sold comprise 2,625 bed spaces across 13 properties in prime locations in the key student markets of London, Reading, Manchester, Liverpool, Sheffield, Bristol, Exeter, Plymouth, Leicester, Coventry and Nottingham. The properties are 99% let for the 2008/09 academic year and will further enhance the Fund's portfolio of high quality student accommodation.
The consideration achieved, based on an independent valuation by CBRE, represents a net initial yield of 6.15% and is 3.7% higher than the carrying value of the assets in the Group's 30 June 2008 interim financial statements, prepared under International Financial Reporting Standards ('IFRS'). Under IFRS, certain of the assets sold to the Fund were carried at cost on the Group's 30 June 2008 balance sheet, rather than at open market value. When compared to the open market value, which is used in arriving at adjusted net asset value, the consideration reflects a fall in value of 5.3% since 30 June.
Consideration is in cash, releasing equity capital of £36 million net of UNITE's further co-investment in the Fund and the repayment of associated senior debt. UNITE will use this capital to strengthen its balance sheet and reinvest into its development activities as appropriate when markets recover. UNITE's co-investment stake in the Fund now stands at approximately 19%.
Commenting, Joe Lister, UNITE's Chief Financial Officer, said:
This planned sale of stabilised assets supports UNITE's ongoing strategy to be a developer and co-investing fund manager. The sale demonstrates both the continued appetite amongst investors for student accommodation and the sector's resilient characteristics within this period of wider economic decline. The net proceeds from the sale will be used to strengthen the Group's balance sheet and will be deployed into development activities when appropriate opportunities emerge."
ENDS
For further details please contact:
| The UNITE Group plc Joe Lister Mark Allan | Tel: 0117 302 7004 |
| Financial Dynamics Stephanie Highett / Dido Laurimore / Rachel Drysdale / Laurence Jones | Tel: 020 7831 3113 |
About UNITE Group
UNITE Group is the UK's largest manager of branded student accommodation, with a business model that focuses on being a developer and co-investing asset manager. In the 2008/09 academic year, UNITE Group will operate accommodation for some 36,000 customers throughout 23 key university towns and cities across England, Wales and Scotland. UNITE Group undertakes the planning, development and management of sites, often working closely with the universities and colleges, in order to deliver high quality, well-located student accommodation at affordable prices in strong higher education markets.
Together with its development pipeline, UNITE Group manages a property portfolio valued at c. £2.9 billion on completion.
With student rents resilient to economic cycles, and the continued growth in student numbers, especially from overseas, UNITE Group developments typically show high occupancy levels in a market where there is a general shortage of quality supply.
Founded in 1991, UNITE Group is listed on the London Stock Exchange (UTG).
UNITE UK Student Accommodation Fund
UNITE Group established the UNITE UK Student Accommodation Fund ("USAF" / the "Fund") at the end of 2006. The Fund was initiated with the principal objectives:
to release capital that is tied up in mature, stabilised investment assets for investment into higher added value development activity;
to provide UNITE Group with more growth capital in the medium term;
to diversify UNITE Group's sources of income by providing a new, valuable revenue stream arising from management fees from the Fund; and
to provide financial returns to investors in the Fund.
The Fund helped transform UNITE Group's business model to that of a developer of new purpose-built student accommodation and manager of funds which own student accommodation properties operated by UNITE Group and in which the Company has a significant minority stake.
See our websites:
Investors and corporate: www.unite-group.co.uk
Students: www.unite-students.com
Graduates: www.livocity.com