LONDON, UK: Unite Students announced the disposal of two London properties to its London Student Accommodation joint venture (LSAV) with GIC for £342 million (Unite share £171 million), in line with book values and reflecting an average net initial yield of 4.0%.
The properties are located in Wembley and Whitechapel and offer 1,358 bed spaces, of which the majority are direct-let to students. The Wembley property, Arch View House, was completed for the 2020/21 academic year under a forward fund contract.
The two properties had a gross asset value of £338 million as at 31 December 2020 and are valued based on stabilised net operating income of £14.2 million for the 2020/21 academic year. The disposal to LSAV follows the extension of LSAV to 2032 announced on 4 May 2021.
LSAV will fund the acquisition through £208 million of equity from Unite and GIC and a £140 million 8-year loan facility provided by Barings. Upon completion, the Group’s see-through LTV reduces to 30% on a pro forma basis after also adjusting for the £90 million of disposals announced on 30 March 2021.
The net disposal proceeds will initially be used to repay Group debt ahead of reinvestment into the development pipeline and further growth opportunities over time. The transaction will result in a small dilution to 2021 EPRA earnings of 0.4 pence per share. Accordingly, the Group retains its EPRA EPS guidance of 27-30 pence for 2021.
Unite will continue to manage and operate the properties under its management agreement with LSAV. Following the transaction LSAV will hold gross property assets valued at £1,677 million and net assets of £1,041 million on a pro forma basis.
Richard Smith, Unite Students Chief Executive, commented: “I am delighted to announce further growth of our LSAV joint venture with GIC. This follows our announcement of LSAV’s 10-year extension in May and reflects a strong endorsement of both our sector-leading operating platform and the purpose-built student accommodation sector from GIC. The transaction means we have now delivered over £260 million of disposals in the year to date on a Unite share basis. This provides us with significant capacity to reinvest in our development pipeline, including opportunities in London.”
Unite Students is the UK’s largest owner, manager and developer of purpose-built student accommodation, serving the country’s world-leading Higher Education sector.
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17 Jun, 4:35 pm GMT+1 · Disclaimer
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