Unite buys out development partner in Sheffield

January 20, 2012

Bristol-based Unite, the UK's leading developer and manager of student accommodation, has completed the acquisition of the remaining 49% interest that it did not already own in the Unite Student Village (USV) joint venture in Sheffield. Its joint venture partner Parkmetro Limited, a subsidiary of Lehman Brothers, will receive £6.2m in cash deferred until October 2012. Taking into account the additional income receivable by Unite between completion and payment this will reduce the effective amount payable to £5.3m.  

In conjunction with the acquisition, Unite has arranged a new £38m five year facility with HSBC.  USV, which was established in 2004, originally developed and operated two large student villages in Leeds and Sheffield. It now owns one remaining asset, the Forge, a 1,381 bed development situated in Sheffield city centre. The Forge represents the group's largest asset in the Sheffield market and was valued at £58.4m at June 30 with net operating income of £4.3m secured for the 2011/12 academic year. The implied NOI yield on the asset in this transaction is 7.6%. It is 99% let for the current academic year, with nearly half of the rooms let to Sheffield Hallam University, the fourth largest university in the UK.

Unite's chief financial officer Joe Lister said:  "This transaction marks an important step for the group, enabling us to take full ownership control of a quality property at an attractive price, whilst also enabling us to secure the asset's future financing strategy through a new facility with HSBC. The Forge has shown strong operational performance and is a key asset within the Sheffield market, and taking our ownership to 100% is consistent with our aim to simplify our balance sheet."
Unite shares rose 2.58% or 4.4p to 178.4p this morning.

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