Unite Regulatory News (UTG)

1 Dec 2009 07:00



1 December 2009 

THE UNITE GROUP PLC

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

UNITE UK STUDENT ACCOMMODATION FUND TO RAISE

UP TO £150 MILLION OF NEW EQUITY CAPITAL

The UNITE Group plc, the UK's leading developer and manager of student accommodation, today announces that The UNITE UK Student Accommodation Fund (the "Fund"/"USAF") is in the final stages of raising new equity capital to fund the expansion of its portfolio. 

Binding subscription agreements have already been received for £133 million from major third party institutional investors. In addition, the Fund has received applications for capital commitments totalling a further £23 million, which are anticipated to be formalised within the next week. Final subscriptions are likely to be capped at a total of £150 million. A substantial proportion of these commitments have been secured from institutions who have not previously invested in the Fund. In accordance with the terms of the Fund's Trust Instrument, the new units will be issued at a 6.7% premium to the last reported net asset value of the Fund (30 September 2009).

Taking into account the target leverage of the Fund and additional co-investment by UNITE as outlined below, the binding commitments and applications for capital will, upon acceptance, increase the Fund's further investment capacity to approximately £325 million. Part of the new equity raised will be utilised for the planned acquisition of a portfolio of assets from UNITE for approximately £100 million later this month (the "Transaction"). A further announcement in respect of the Transaction will be made in due course. 

In addition to the third party capital raised, UNITE intends to co-invest in the equity raise pro-rata to its current holding of 18.6% up to a maximum amount of £18.6 million. The consideration will be satisfied from equity released to UNITE on completion of the Transaction and the Group's existing cash resources (not including proceeds from the recent Share Placing).

The balance of new equity, together with leverage capacity, will be retained by the Fund for further acquisitions from UNITE in due course, to fund a programme of modest refurbishments of certain properties within the Fund's existing portfolio, and for the potential acquisition of income-generating student accommodation assets from third parties during 2010. At 30 September 2009, USAF's portfolio was valued at £877 million and the Fund had borrowings of £481 million.

Commenting, Mark Allan, Chief Executive of UNITE, said:

 "The support for USAF by both new and existing institutional investors, as demonstrated by the success of this fund raising to date, underlines the ongoing growth in appetite for access to the student accommodation asset class. The Fund's performance has continued to demonstrate resilience, supported by its carefully constructed portfolio of income-producing high quality assets and the robust fundamentals demonstrated by the student accommodation market during the downturn. 

"Since Summer 2009, UNITE has been instrumental in attracting considerable new investment to the sector, either on its own account or through its various co-investment vehicles; a clear demonstration of the value of the UNITE brand. As a result of these steps and this planned capital raising, both UNITE and USAF are now extremely well placed to take advantage of opportunities to invest in the sector over the coming years to consolidate further its market-leading position."

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About The UNITE Group

The UNITE Group 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 will be home to some 38,500 students during the 2009/10 academic year 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% shareholders. UNITE also manages a number of Joint Venture partnerships.

UNITE works closely with the universities and colleges, in order to deliver high quality, well-located student accommodation at affordable prices in strong higher education markets.

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

The UNITE UK Student Accommodation Fund

UNITE Group established the UNITE UK Student Accommodation Fund at the end of 2006. The Fund helped transform UNITE'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 and in which the Company has a significant minority stake.

The aggregate size of the Fund's portfolio following the planned acquisition in December 2009 will be approaching £1 billion with 19,468 bed spaces in 58 properties across 18 UK markets. Following the equity raise the number of unitholders in the Fund is expected to rise to over 100.

www.unite-group.co.uk

www.unite-students.com