Last checked at 21 Oct 2008 07:00
Embargoed until 7am 21 October
The UNITE Group plc ("UNITE" / "Group")
UPDATE RE UNITE UK STUDENT ACCOMMODATION FUND
The UNITE Group plc is today holding meetings with a number of shareholders to provide a general update following the third closing of the UNITE UK Student Accommodation Fund ("USAF" / the "Fund"), the specialist investment vehicle to which UNITE acts as manager and in which it has a 20% stake.
During these meetings, the following information will be discussed:
USAF performance and financial capacity
USAF continues to perform strongly, demonstrating the resilience of student accommodation as an asset class. For the nine months ended 30 September 2008 it was the top performing fund in the IPD UK Pooled Property Funds index and the only fund in the index to record a positive return.
Following the third closing, the results of which were announced on 6 October 2008, and taking into account the asset sales announced by UNITE and USAF on 22 August, the Fund had the following financial resources:
£58 million of unconditionally committed equity subscriptions;
A committed, but undrawn, bank facility of up to £120 million, provided by HSH Nordbank and Abbey to fund further asset purchases from UNITE; and
£93 million of cash resources, with updated position set out below.
The Fund also has additional leverage capacity, within its permitted target gearing parameters, of a further £110 million, subject to the availability of further debt facilities. Together with UNITE's planned co-investment stake in the Fund this increased its potential overall investment capacity to a maximum of £380 million.
Following the asset sales in August, however, £30 million of the proceeds received by USAF were placed on fixed term deposit with the London branch of Landsbanki Islands hf, the Icelandic bank which has been put into a form of receivership by the Icelandic Government and is now under the control and supervision of the Icelandic Financial Supervisory Authority. This capital represents 3.5% of the total assets of the Fund. UNITE itself does not have any cash deposits or banking facilities with Landsbanki.
On behalf of USAF, UNITE is pursuing all available channels for the recovery of these funds, but the extent and timing of recovery is uncertain at the present time. In the event that all the monies were to prove irrecoverable, the overall investment capacity of the Fund at its target gearing level would be reduced by £67 million to £313 million. Up to £205 million of this investment capacity is available to acquire stabilised direct let assets from UNITE later this year, under the terms of the Acquisition and Development pipeline agreement between USAF and UNITE. UNITE will use the proceeds from the disposal of these assets to reduce its borrowings and maintain its stake in USAF at 20%.
As reported on 6 October, the performance of USAF's property portfolio remains very strong, with 99% of rooms occupied for the 2008/09 academic year and like-for-like rental growth of 8%.
Update on UNITE's portfolio and development programme
In line with USAF's performance, sales and rental growth across UNITE's owned portfolio have been extremely strong, with 99% of rooms reserved for the 2008/09 academic year and like-for-like rental growth of 11%. In addition, the Group's development programme continues in line with its stated plans, with approximately 2,700 bed spaces on track for delivery and occupation in 2009 and for which all debt and equity funding is in place.
In addition to its 2009 development programme, and as disclosed in the Group's interim statement on 29 August, the Group has approximately 3,700 further bed spaces secured for delivery in 2010 and 2011, for which it has sufficient available financing. The Board is monitoring closely the situation in banking markets and, over the next six months, will decide upon the proportion of the Group's projects that will be committed for delivery in 2010, in time for construction work to commence on those schemes.
No other new material information will be disclosed during the shareholder meetings.
- ENDS -
For further details, please contact:
| Financial Dynamics Stephanie Highett / 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. UNITE Group's strategy, set out at the beginning of 2007, aims to double the size of its UK business by 2012.
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) and is a FTSE 250 company.
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