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Unite Group Raises New Equity

Posted by Richard Ward in

Image courtesy of Flickr, Creative Commons

Unite Group has announced that the Unite UK Student Accommodation Fund (USAF) has raised £250 million of new equity from external investors. The proceeds represent 17% of USAF's NAV as of March 2019.

Unite has agreed to sell three assets to USAF for £111 million, with Unite's share valued at £83 million. The sale represents a net initial yield of 5.5%, with the offloaded assets located in Portsmouth and Leeds containing 1,223 beds.

Unite is not participating in this equity raise in order to retain funding capacity for its secured development and partnership pipeline, as well as future investment opportunities.

Due to the sale, Unite's stake in USAF will decline from 25% to 23% once equity is fully drawn. These sales form part of the company's planned disposal of £100-150 million of assets.

USAF has a number of additional assets that are currently under offer from third parties that it expects to acquire in the coming months.

Commenting on the sale, Joe Lister, Unite Students CFO, said: "Demand for high quality investment opportunities in the purpose-built student accommodation sector remains strong with the full allocation of new equity being taken up by investors. The confidence shown in both the fund's ability to deliver consistent returns and Unite's ability to drive value from its operating platform has allowed USAF to raise £250 million. The equity raised will allow USAF to continue to improve the quality of the portfolio by continuing to invest in the strongest markets."