Student Castle Propose Huge New Skyscraper in Manchester
18th Sep 2018
Both properties are currently under development and come in at a combined cost of £56 million, with Unite's share in the schemes totalling £12.9 million.
The development in Durham consist of 222-beds, while the site in Selly Oak, Birmingham has a total of 418 student bedrooms. Combined, the acquisitions are expected to generate a yield on cost of 6.3% in their first full year of operation.
The development in Durham was initially refused planning permission by the council in April 2015 on the basis it failed to "preserve or enhance the character and appearance" of the Durham Conservation Area. It was also deemed to have an overbearing impact on those living in close proximity. However, the decision was overturned on appeal, citing that the possible harm to the conservation area is outweighed by the benefits it will bring.
USAF has also sold a 128-bed studio scheme in central London for £42 million, with Unite's share of the sale (£9.7 million) being used to help fund the latest acquisitions.
The disposal represents a value per bedroom of £320,000 and a net initial yield of 4.25%.
Total disposals for the year have now reached £180 million, versus the company's target of £150-200 million.
Commenting on the deal, Richard Simpson, Group Property Director, said: "These transactions demonstrate our strategy of investing in new, larger and more efficient properties with cluster flat accommodation, available at a lower price point for students. We will continue to deploy funds from the disposals made at the start of the year to further improve the quality of the portfolio and to extend our highly accretive development programme in strong regional locations with top-ranked universities like Durham or Birmingham, where we see the most sustainable growth."
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