RNS Number : 8551B
Unite Group PLC
22 August 2008
Release date: 22 August 2008
On behalf of: The UNITE Group plc ("UNITE" / "Group")
THE UNITE GROUP PLC
UNITE GROUP ANNOUNCES £178.6 MILLION ASSET SALES
The UNITE Group plc, the UK's largest manager of branded student accommodation, today
announces that is has exchanged contracts,
unconditionally, on the sale of eleven operational direct let assets for a total cash
consideration of £178.6 million, 2.8% above the
assets' December 2007 valuations. The asset sales have been made in two separate transactions
to different purchasers and have been made
both on UNITE Group's own behalf and on behalf of the UNITE UK Student Accommodation Fund
("USAF"). The transactions deliver three key
benefits:
* An immediate reduction in the Group's gearing;
* An increase in investment capacity within USAF;
* Clear evidence supporting student accommodation valuations.
In the larger of the two transactions, UNITE Group is selling nine purpose-built student
accommodation properties, comprising 3,810 beds
in four markets (Southampton, Cardiff, Preston and Stoke), for £152.0 million to Liberty
Living, the student accommodation arm of Brandeaux
Fund Management. Of the nine properties, four are owned by UNITE Group outright (1,970 beds)
and five are owned by USAF (1,840 beds).
The cash consideration applicable to the UNITE Group-owned assets being sold is £91.1
million, which compares to a 31 December 2007
valuation of £88.4 million for those assets and reflects a net initial yield of 5.7%.Completion is set for 28 August 2008 and the proceeds
will be used to pay down existing debt and be reinvested into the Group's development
activities over time, as attractive opportunities
arise.
In the second transaction, USAF is selling two properties in Huddersfield comprising 627
beds to Swanbourne for a cash consideration of
£26.6 million. This sale is being conducted on behalf of USAF and completion will occur no
later than December 2008.
As a result of both transactions, USAF will receive a total cash consideration of £87.5
million, representing a net initial yield of
5.8% and compared to a 31 December 2007 valuation of £85.3 million for those assets. These
proceeds will create additional investment
capacity within USAF which will be applied in acquiring further assets from UNITE Group over
time.
Following completion of these sales, UNITE Group will no longer have an operational
presence in any of the five cities mentioned. This
follows the earlier sale of smaller non-core assets and cessation of operations in Salford,
Luton and Aberystwyth, and is consistent with
the Group's stated strategy of focusing its capital and operations in larger and high-growth
markets, notably London.
Commenting on the transaction, Mark Allan, Chief Executive of UNITE Group, said:
"These sales, at prices above the December 2007 valuations, provide strong evidence of the
resilience of the student accommodation
sector at a time when more general property values are under significant downward pressure.The sales are consistent with our stated
strategy of focusing our capital on higher growth markets and they provide the Group with
significant additional funds at a time when we
expect attractive opportunities to emerge."
Ends
The UNITE Group plc Tel: 0117 302 7004
Mark Allan
Joe Lister
Tabitha Aldrich-Smith
Financial Dynamics Tel: 020 7831 3113
Stephanie Highett / Dido
Laurimore / Laurence Jones
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 08/09 academic year, UNITE Group will operate accommodation
for some 36,700 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.
Previous Asset Sales in 2008
In May UNITE Group announced planned asset sales of £54.0 million. These transactions
followed the redemption of the UNITE Finance One
("UFO") bonds in October 2007 which, together with the creation of the UNITE UK Student
Accommodation Fund ("USAF"), has enabled UNITE Group
to progress towards a developer and co-investing asset manager model and to adopt a more
proactive asset management strategy designed to
deliver enhanced shareholder returns. This includes both the sale and leaseback of core
operational properties let under long-term
agreements to Universities and the sale of non-core assets which no longer fit its strategic
business plan.
UNITE UK Student Accommodation Fund
UNITE Group established a £1 billion UNITE UK Student Accommodation Fund at the end of
2006. The principal objectives of the Fund are:
* 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; and
* to diversify UNITE Group's sources of income by providing a new, valuable revenue
stream arising from management fees from 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
This information is provided by RNS
The company news service from the London Stock Exchange
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