Unite Acquires Development Site in Manchester
23rd Feb 2017
Unite Group has acquired a development site in Manchester, subject to planning permission.
The acquisition of the site is expected to cost around £41 million and deliver a development yield in line with the group's target level of 8.0-8.5%.
The development will be funded internally and is anticipated to be delivered in time for the 2020 academic year.
The acquisition by Unite takes their total development pipeline to around 7,500 beds and if given the go ahead, will increase Unite's Manchester portfolio to 2,800 beds.
Commenting on the acquisition Richard Simpson, Group Property Director, said: "This acquisition extends our high-quality development programme in a strong regional location where there is growing demand for purpose built student accommodation. Manchester is a thriving student city which we expect to continue to attract high numbers of students. We look forward to working with the local Universities to help meet the strong demand for high-quality student accommodation."
Tier One Capital has acquired a Durham student accommodation scheme in a deal worth £2.3m.
Purchased on behalf of developers, the Newcastle based company is deploying cash it raised within its TOC Property Backed Lending Trust which was floated last month.
Upon its flotation at the end of January it raised £17.3m, with a large proportion of the funds to be put towards 10 initial projects.
The first is the acquisition of the 34-bed student accommodation scheme at St Hilds, Durham, for Ryka Developments.
A spokesman for Ryka Developments said: "The forthcoming expansion of the Durham University campus in the immediate vicinity of St Hilds adds further attraction to an asset capable of producing long-term income for the next twenty years and beyond."
Set up in 2012, Tier One Capital has developed into an investment company supporting private and corporate clients, charities and trusts with a range of services including cash management, investments, estate planning and corporate finance.
The company's growth has recently surged with the launch of its TOC Property Backed Lending Trust, which it hopes to grow into a £500 million fund, with the money raised to be invested into the regionâs growing property market.
Unite Group has reported a 24% increase in EPRA earnings for the year ending December 2016.
The group reported a 24% rise in adjusted EPRA earnings to £61.3 million versus £49.5m reported a year earlier.
Profit before tax was reported at £201.4 million for the 12-month period, which includes property revaluations of £136.3 million. This represents a decline on the previous year where profit before tax was recorded at £388.4 million, with £324.6 million attributed to property revaluations.
As a result, EPS came in at 101.3p versus 164.2p in 2015 due to the lower level of revaluation surplus as a result of yield compression in 2015.
During the period the group maintained a portfolio of 49,000 beds at a value of £4.3 billion, an increase on the 46,000 beds it held at the end of 2015.
For 2017 Unite is expecting its rental growth to be in the region of 3.0-3.5%, supported by its relationships with universities and student number growth. However, this represents a compression on the 3.8% growth in rental income which it recorded for the 2016-17 academic year.
The group has maintained a positive outlook, with 75% of its bed spaces being reserved for the 2017-18 academic year, up from the 67% reported at the same time a year earlier. For the 2016-17 academic year occupancy rates stand at 98%.
Unite has increased the proportion of beds let to Universities with 58% or rooms now under nomination agreements, up by 5,000 beds over the past three years. It expects this to remain around this level in the future. The company also noted that rents on nominations are around 5% lower than their direct let equivalents but sees opportunities to close this discount in the coming years.
With a development portfolio of 7,000 beds, in addition to its expected rental growth, the group expects it could add 15-20p to earnings over the next few years.
Despite UCAS recently reporting a fall in the number of EU domiciled students applying to study at university for the 2017-18 academic year, as of the January 15 deadline, Unite does not expect Brexit to significantly impact student numbers and will continue to focus on its relationships with high to mid-ranked Universities.
Commenting on the results, Chief Executive of Unite Group, Richard Smith, said: "These are another excellent set of results that reflect the quality of our people, properties and service execution that sets us apart in our sector. Looking forward, we will maintain the quality of our portfolio through development and also strategic acquisitions such as our recent purchase of Aston Student Village, our first on-campus. Students and Universities remain our core focus and we will continue to invest in our operational capabilities, providing excellent service and ensuring consistently high satisfaction levels. This strategy, plus the ongoing strength of UK Higher Education, student numbers and the demand for beds means we are confident in further growth."
Under plans being proposed by the government, those university students who purchase essays online could face fines and a criminal record.
To combat the growing essay writing industry, the government is looking to introduce tough new rules amid concerns the quality of a British university degree is under threat.
Recent reports suggest as many as 20,000 students enrolled at British universities are paying thousands of pounds for bespoke essays in order to obtain degrees.
The Department of Education has announced it is in consultation with universities over how to crackdown on cheating students.
The DfE is currently consulting on a variety of proposals with higher education bodies, ranging from fines, academic blacklists and even criminal records for students found submitting professionally written essays.
Commenting on the matter, a spokeswoman for DfE said a change in the law was something that could be considered in the future.
The new guidance is due to be implemented in September so it coincides with the start of the next academic year.
Commenting on the announcement, Universities Minister Jo Johnson said: "This form of cheating is unacceptable and every university should have strong policies and sanctions in place to detect and deal with it.
"Essay mill websites threaten to undermine the high-quality reputation of a UK degree so it is vital that the sector work together to address this in a consistent and robust way."
Although universities use anti-plagiarism software to detect when academic texts have been copied, students submitting bespoke essays as their own can circumvent the software in place, meaning examiners are powerless to prevent foul play.
Oxford University has denied claims it is to open an overseas campus in response to Brexit.
The statement was released after reports emerged that French officials had spoken to senior staff at Oxford to propose a new 'satellite' base in Paris, with construction beginning as early as 2018.
However, Oxford University has dismissed the claims and a spokesman from the university said: "The university has received several constructive and helpful proposals from European colleagues since the Brexit vote. We are not, however, pursuing the model of a campus overseas."
It's understood informal talks have been held with several other UK universities, including Cambridge and Warwick, as part of an active campaign to lure British jobs to Paris.
The talks are said to have taken place in response to the UK's decision to leave the EU, as a campus in Paris, with French legal status, would allow a university to continue to benefit from EU funding.
The proposals suggest the creation of joint research laboratories and degree courses between British and French universities, on top of plans to relocate existing degrees and study programmes.
In addition, French officials are supposedly offering several institutions the chance to open a campus on the site of a development at the University of Paris-Seine to the north of Paris. The land would therefore effectively be free, although they would need to cover the costs associated with building labs and lecture theatres.
Jean-Michel Blanquer, a former director-general of the French ministry of education and now managing director of the highly regarded Essec Business School, confirmed that talks between a number of universities and the French government were taking place.
Mr Blanquer also suggested that although the UK government has said it will try to strike a deal to ensure British universities continue to participate in EU research projects, in the medium term they will inevitably be squeezed out.
Cambridge University may have to drop its long-standing tradition of posting students' exam results outside Senate House under new data protection laws.
The 250-year old tradition has been taking place in Cambridge since 1748, but in May 2018, the General Data Protection Regulation (GDPR) will come into effect, hardening existing data protection laws.
The GDPR may make it illegal for the university to continue publishing details of its students under its current scheme and the university has confirmed they are considering other options, such as an opt-in arrangement.
A spokesman for the university said: "Under new Data Protection legislation, which is due to come into force in May 2018, greater emphasis is placed on an individual's right to choose how their data is collected and used, and on an organisation's responsibility to reflect this in its policies and procedures.
"The University is currently considering the potential effects of this legislation - including the possibility that the public display of class lists may change to an opt-in system - but not decisions have yet been made."
At the end of last year, university students voted to retain the traditional class lists, with university fellows voting the same way the following month.
A report commissioned for the city council has suggested an increasing need for student accommodation in the city.
Although the report revealed that the University of Cambridge accommodates much of its students in university-owned housing, Anglia Ruskin University and other institutions have very little directly-owned accommodation. As a result, students are more likely to live in privately owned halls, shared housing or the family home.
The council's assessment of the study's findings is that the current strategy for student accommodation is largely appropriate but could be improved to address the need for market and social housing, as well as student accommodation.
The report said: "It is recognised that this is a fluid situation, and that there is likely to be a continuing strong supply of new student housing in the city, prompted by the financial attractiveness of this form of development.
However, in part this attractiveness arises out of the level of unsatisfied demand for such accommodation. At this stage, the evidence falls short of proving that there does not remain a need for purpose-built student housing, especially to improve the choice and opportunities for ARU students."
Due to the study, the council will propose some changes to the Local Plan, including the need to confirm that all student accommodation schemes are formally tied to a particular educational institution, which has specific accommodation needs.
The report also proposes the creation of a working group made up from council officers and representatives of higher education institutions, in order to monitor student accommodation and work together.
The construction company Stepnall has won the contract to build a multi-million pound student accommodation development in the centre of Leicester.
Designed by MAS Architecture, the four-storey student accommodation block in Princess Road East, is just a five-minute walk from the University of Leicester and within easy reach of De Montfort University.
The student block will consist of 110 self-contained studio bedrooms each fitted with an en-suite bathroom. The site will also come equipped with a basement communal area, including a cinema room and a private gym.
Work on the site has already begun and the site is expected to be operational in time for the start of the academic year in September.
Stepnell operations and commercial manager Thomas Sewell said of the site: "This development will create outstanding student accommodation within a few minutes' walk of the University of Leicester.
"Our team has a strong record of successfully delivering high-profile construction projects for the higher education sector and we are excited to bring that expertise to this important scheme."
The University of Edinburgh have confirmed that Professor Peter Mathieson will become the next Principal and Vice Chancellor of the university.
Professor Mathieson will move from his current role as President and Vice-Chancellor at the University of Hong Kong, which he has held since April 2014.
Before moving to Hong Kong, he worked as the Dean of the Faculty of Medicine and Dentistry at the University of Bristol. He also served as Fellow of the Academy of Medical Sciences as well as chairing the Research Grant Committee of Kidney Research UK.
Commenting on his appointment Professor Mathieson said: "I now look forward to leading the University of Edinburgh forward into its next chapter. Like Hong Kong, Edinburgh is a truly global institution with a great reputation for excellence in teaching and research.
"Working together with students, staff and supporters, I am confident we can build on that reputation in the future â during what are exciting and challenging times in the world of Higher Education."
Professor Mathieson will take over from Professor Timothy O'Shea who has held the position as Principal and Vice-Chancellor for 15 years. Mr Mathieson is expected to take over the role in late 2017 or early 2018, although the University have yet to confirm his exact start date.
Unite Students has disposed of 13 student properties, comprising 4,175 beds, to a Brookfield-managed fund for a total of £295 million.
Unite's share of the portfolio is valued at £102 million and completion of the deal is expected in Q2 2017.
Unite said the disposal is part of the company's strategy to provide the capital needed to fund further growth in its high-quality development pipeline which is focused on mid to high ranked University locations with the most secure long-term growth prospects.
The deal represents the first stage in Unite's plan to recycle around £150-£200 million of assets during 2017 so it can take advantage of the ongoing strength in the investment market for well let student accommodation.
Proceeds of the sale will be used to fund Unite's recent 3,100 bed on-campus acquisition at Aston University and the remainder will be put towards its development activity and investment properties.
The resulting sale will offset any changes in gearing and earnings impact expected from the Aston University acquisition and ensures proforma LTV is at 34% and in-line with the Group's target level.
Commenting on the sale, Richard Smith, Chief Executive of Unite Students, said: "This sale is an important part of our strategy to recycle capital to fund our ongoing investments, focused on the strongest university towns and cities, where we have deep university relationships and where we can provide the best accommodation and services for our students. Our development pipeline supports further earnings growth as we continue to invest in strong student markets."
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