Unite Regulatory News (UTG)

11 Nov 2009 07:00



11 November 2009

The UNITE Group plc

("UNITE" / "Company" / "Group")

UNITE agrees £21.5 million sale and leaseback of Bristol asset

The UNITE Group plc, the UK's leading developer and manager of student accommodation, announces that it has exchanged contracts, unconditionally, to sell Unite House, Bristol to M&G Secured Property Income Fund for a total cash consideration of £21.5 million, representing a net initial yield of 6.07%. As at the most recent valuation date, 30 June 2009, the property was valued at a net initial yield of 6.62%. Completion is scheduled to take place on 16 November 2009.

Unite House comprises 395 student bed spaces and was developed by UNITE in 2000, benefiting from a Nominations Agreement with the University of Bristol.  UNITE will continue to operate the property following the disposal of the freehold under a leaseback arrangement for a term of 25 years, subject to an annual rent starting at £1.38 million and subject to annual increases linked to RPI. Based on actual occupancy for the 2009/10 academic year, UNITE expects the property to generate a total net operating income of £1.48 million, meaning that it will retain a profit rent of approximately £0.1 million from the operation of the asset for this academic year. At 30 June 2009, the property was valued with reference to this total net operating income at £20.7 million.

Proceeds from the sale will be used to repay borrowings and to reinvest into the Group's development activities as opportunities arise. After repayment of associated senior debt, the transaction releases approximately £7 million of net cash proceeds to the Group.

This transaction is the latest in a number of planned asset disposals by UNITE and brings the total contracted consideration from sales in 2009 to £154.3 million, including £88.2 million of development assets sold into the joint venture between UNITE and Oasis Capital Bank established in August 2009.

Mark Allan, Chief Executive of UNITE, said:

"This disposal further demonstrates the strong demand in the investment market for high quality student accommodation. The sale will enable us to repay the debt associated with the asset, further reducing our gearing, with the remaining cash becoming available to reinvest in development activities. 

"Having now completed over £150 million of asset sales this year, combined with our £82 million equity raise last month, we are increasingly well positioned to secure attractive development opportunities for delivery in 2012 and beyond."

ENDS

Notes to Editors:

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

Development: UNITE undertakes the acquisition, planning and development of purpose-built student accommodation in the UK.

Professional property management: UNITE is home to some 38,500 students and has consistently proven high occupancy levels across its portfolio.

Co-investing asset management: Working on behalf of its partners, UNITE acts as Fund Manager for the UNITE UK Student Accommodation Fund in addition to being 18.6% stakeholders. UNITE also manages a number of Joint Venture partnerships.

UNITE is committed to improving the living standards of the nation's undergraduates, improving their university experience and helping to meet the shortage of university accommodation. The Company has also pioneered the use of high quality modular manufacturing and runs the largest production plant in Europe, UMS (Unite Modular Solutions). UNITE is a leading industry spokesperson on the provision of student accommodation in higher education.

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

Websites:

Investors and corporate: www.unite-group.co.uk 

Students: www.unite-students.com