LONDON: The Unite Group, one of the UK’s leading owners, developers and managers of student accommodation, announced the disposal of two assets for £100 million to the Unite UK Student Accommodation Fund (USAF), representing a net initial yield of 5.5%.
The assets are located in Birmingham and Newcastle and comprise a total of 1,155 beds.
In addition, USAF announces the launch and pricing of £85 million of bonds issued under its existing debt funding platform, the 3.921% bond due June 2025. The new issue is being placed at a premium to par generating total proceeds to USAF of £95 million, reflecting an implied yield of 1.83%. The proceeds will be used to fund further growth in the fund.
Unite’s share of the new debt represents approximately 2% of the Group’s total borrowings, on a see-through basis, as at 30 June 2019. The issue supports a further marginal reduction in the Group’s cost of debt.
Joe Lister, Chief Financial Officer of the Unite Group plc, commented: “The disposals by Unite to USAF form part of our plan to dispose of £150-200 million of assets per annum during the next three years following the acquisition of Liberty Living. These planned disposals will fund our development activity and support our target to reduce LTV to 35% by 2021.”
Edited by Nayyar Iqbal