Unite seeking £100m to accelerate student property development in key cities

March 6, 2014

Bristol-based student accommodation specialist Unite is to raise around £100m through new shares to speed up its development programme in key UK university cities.

The firm said half the new funding would be used in this way to take advantage of cyclically-low development costs. The other half will be used to increase the group’s stake in USAF (The UNITE Student Accommodation Fund) from 16% to 22%.  

USAF is an established, leading multi-investor fund set up by Unite in 2006 and owns a geographically-diverse portfolio of income-generating student accommodation assets worth £1.35bn focused on key university towns and cities.

UNITE chief executive Mark Allan said the fundraising was aimed at “building on a period of sustained strong performance in the business”.

He added: “It allows Unite to capitalise on a window of opportunity in two ways, by accelerating regional development activity and by increasing our stake in the high quality USAF portfolio at returns above those achievable in the open market for investment assets.”

Unite said the fundamentals of the UK student accommodation market remained strong and had underpinned a resilient performance during the challenging economic environment of the past few years.

For the current academic year 2013/14 there are approximately 677,000 applicants for 496,000 undergraduate university places – close to the highest ever levels achieved in 2011/12.

Applications for the 2014/15 academic year were encouraging and show a 4% year-on-year increase. These latest statistics were the result of a long period of significant, almost uninterrupted, growth in student numbers, said Unite/

For the 2013/14 academic year, there were now 1.7m full-time students in the UK compared to 600,000 in 1991. Unite said taking these factors together, it believes that demand for UK university places remains high.

Student numbers are set to increase further following the Government’s announcement in December 2013 of its intention to remove the cap on student places in the 2015/16 academic year and to increase it in the interim by 30,000 places for the 2014/15 academic year.

The Government itself forecasts that the removal of the cap could lead to an increased intake of 60,000 students, equivalent to an increase of 12%.

The rate of growth in the supply of new student accommodation has fallen sharply in recent years, particularly outside London. There are approximately 500,000 purpose-built bed spaces across the UK, leaving approximately 1.2m full-time students needing to find alternative places to live. These conditions are expected to persist for the time being and Unite expects approximately only 31,700 net additional bed spaces to be added to supply in the next three years, of which 9,200 are expected in London. Given the existing shortfall and the projected growth in student numbers, demand remains likely to exceed supply in the long term.

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