GSA Expands into Spanish Student Accommodation

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Global Student Accommodation (GSA) has announced its expansion into Spain after having acquired a Spanish student accommodation portfolio.

The portfolio consists of 914 beds across three properties, plus a further 1,320 beds currently in development, which were acquired from funds run by Oaktree Capital Management.

Commenting on the deal, Nicholas Porter, founder and chairman of GSA, said: "We continue to deliver on our rapid European expansion plans, targeting higher education markets where there is a substantial supply-demand imbalance.

"Our brands are carefully targeted towards students, capturing the demand for good quality purpose-built student accommodation combined with excellent customer services."

All of the operational beds are located in central Madrid. The portfolio consists of Galdos, with 370 beds in the centre of the city's main university campus, El Faro with 358 beds in a newly developed building, and Claraval, a prime city centre location comprising of 186 beds.

A further building will be added to the Madrid portfolio when the Lope de Vega University Residence is opened in September, which will be able to accommodation 468 domestic and international students.

Alongside the operational residences, the deal also includes two further development schemes in Barcelona. The two sites are expected to be operational by 2019 and will bring the total number of beds under management in Spain to 2,234.

The expansion into the Spanish market will see GSA also take on the Nexo Residencias brand, making it the third in Europe for GSA, alongside The Student Housing Company and Uninest Student Residences.

Lettings Fees to be Banned

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Legislation banning landlords and agents from charging letting fees looks likely to come into force after it was announced within the Queen's Speech today.

The Queen's Speech this morning outlined a Draft Tenants' Fees Bill will be bought forward, which plans to ban letting fees being charged to tenants as a condition of their tenancy.

The legislation appears to go further than the initial consultation by indicating there will be measures to enforce the ban with provision for tenants to be able to recover unlawfully charged fees. However, at this stage it's unclear whether this will be applied retrospectively.

A survey by Citizens Advice, which formed part of the initial consultation, found nearly two-thirds (64%) of tenants had problems paying letting agents' fees, while 42% had to borrow money to do so. Meanwhile, the 2014-15 English Housing Survey found that the mean average fee paid by a household in 2014-15 was £223, although this varied significantly between location and agent.

The aim of the new bill is to improve transparency in the market while making the private rented sector fairer and more affordable.

An eight-week consultation on banning letting fees closed in April and responses will be used to inform the draft bill.

Universities Struggling in a Competitive Landscape

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In an increasingly competitive market, figures suggest some former polytechnics and colleges are struggling to survive.

Manchester Metropolitan University's Crewe campus is to close in the summer of 2019, with 160 academic jobs at risk.

Despite a recent £70 million redevelopment, the Cheshire site will be shut down after university chiefs confirmed in February it was no longer academically or financially sustainable.

As a result of the job losses, academics will stage a two-day walkout in protest of the university shutting the campus down.

Although students have been told they can finish their degrees, they're concerns lecturers won't be around to teach them.

The scale of the problem for former polytechnics and colleges can be seen in the number of students starting full-time courses between 2011 and 2015. During this period, those attending Russell Group universities grew by 15%, while the number of entrants to MillionPlus institutions, which includes former polytechnics and colleges, declined by 22.9%.

The trend appears to be linked to Russell Group universities lowering their entrance requirements in some subject areas. Sarah Stevens, head of policy at the Russell Group, said: "These young women and men are typically from groups who have historically been under-represented in higher education."

With competition for places intensifying, at least 16 universities have announced redundancy programmes for academic staff.

Commenting on the increasing financial pressures facing institutions, Alan Smithers, director of the centre for education and employment research at the University of Buckingham, suggests some universities may have to merge to survive. Meanwhile, universities or branch campuses such as Crewe, which typically recruit local students from working-class background, are particularly vulnerable.

The news comes ahead of the new Teaching Excellence Framework (TEF), which is to be released this Thursday and ranks institutions on areas such as student satisfaction and employability. Expectations are the new rankings could place further pressure on some universities.

Student Loan Debt Surpasses £100bn

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Student loan debt in the UK has grown to more than £100bn for the first time.

Outstanding loans increased by 16.6% to £100.5bn at the end of March, up from the £86.2bn recorded at the same point in time the previous year.

Of the total debt recorded, £89.3bn was associated to loans taken by English students.

Expectations are that the overall level of debt will increase further, as more money is lent out each year, with Sorana Vierue, the vice-president for higher education at the National Union of Students calling the levels "eye-watering".

Prior to increased fees being levied by universities in 2012, when institutions in England were allowed to charge up to £9,000 a year, student debt was less than half its current level, at £45.9bn.

Some are predicting student loan debt to double to £200bn within the next six years, making it economically significant, eclipsing credit card debt currently estimated at £68bn.

Despite yearly tuition fee increases being of concern to prospective students, the total outstanding debt is less meaningful to individuals and will be of greater concern to taxpayers and the government.

Commenting on the current loans system, a spokesperson for the Department for Education said: "Our student finance system removes upfront financial barriers for anyone hoping to study, and students only pay back what they can afford based on their income."

With the average student in England graduating with £32,220 in debt, there are however outstanding questions as to the long-term impact this will have on graduates purchasing power or the ability to contribute to pensions.

Pay Gap Present Upon Graduation

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New research has revealed that women face a pay gap as early as their first year after university, which widens further over time.

Figures released by the government on the careers of British graduates show that men were much more likely to achieve higher pay compared to their female peers, despite graduating in the same year with degrees in the same subjects.

The one exception to the rule was in English, where women received higher pay five years after leaving university.

But the research found the gender pay gap varied between both institutions and subjects. In nursing, a course predominately chosen by women, men were still earning around £2,000 more just a year after graduation.

Another example is Law, where female graduates from Oxford and Essex earned higher pay compared to men, five years after starting work.

However, Pam Tatlow, chief executive of the Million Plus group of modern institutions, suggested the data could be misleading as it failed to include mature students and the self-employed. The figures also failed to adjust earnings based on location, ensuring graduates from universities in and around London received the highest pay post-graduation.

Commenting on the findings, Nicola Dandridge, chief executive of the Universities UK lobby group, said: "Across all universities and courses, official figures show that graduates in the UK are still more likely to be in employment. On average, they continue to earn substantially more than non-graduates.

"However, graduate salaries are not the only measure of success in higher education. Many students seek rewarding careers where high salaries are not their only motivation."

Watkin Jones Offloads Portfolio of Student Accommodation

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Watkin Jones has reportedly booked £153 million from one of the largest student accommodation sales reported in the UK.

The London Stock Exchange listed development company, has completed the forward sale of six student accommodation schemes to institutional investor Europa Generation.

Europa Generation is a joint venture by Europa Capital and Generation Estates Limited, with the goal to invest in prime purpose-built student accommodation across the UK. The Fund will acquire well located assets, where Europa Generation has identified potential for long term sustainable income growth.

The acquired portfolio has a gross development value of £165 million. Net of funding costs Watkin Jones is expected to receive £153 million.

The whole portfolio consists of 1,691 student beds, with five of the schemes due for completion by September 2018.

Commenting on the sale, chief executive of Watkin Jones, Mark Watkin Jones, said: "We are delighted to announce that we have successfully completed the sale of a portfolio of six student accommodation developments to Europa Generation for a gross development value of £165m.

"The group has now forward sold all of its developments that are planned for completion by September 2018. In addition, with the Between Towns Road, Oxford development for delivery in 2019, the number of developments forward sold for delivery before September 2019 has moved to 21, which represents 6,794 beds.

"This sale demonstrates that the group continues to benefit from having very strong and growing relationships with institutional investors, as well as our ability to provide excellent earnings visibility for our shareholders."

University Value for Money Falls Again

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A survey by the Higher Education Policy Unit and the Higher Education Academy, has found that the perceived value for money of attending university has fallen for the fifth year in a row.

The Student Academic Experience Survey found the percentage of students across the UK who thought university was "good" or "very good" value has dropped to 35%.

This marks its lowest ever level and a significant fall on the 53% of students who perceived university as good value or better five years ago.

Students from England, who have the highest tuition fees in the UK, had the lowest opinions of value for money.

The study tracks the views of students about their time in higher education and is based on a sample of around 14,000 current students. The survey found perceptions of value for money had steadily fallen, with the number arguing university was "poor" or "very poor" value for money doubling since 2012.

The study found the quality of teaching provided was an important factor in whether students believed they were receiving value for money.

There was also a view among students that universities were not doing enough to communicate how tuition fees were spent, with just 20% saying they received enough information on the topic.

Director of the Higher Education Policy Unit, Nick Hillman, said: "The survey shows students want universities to provide information on where fees go, taxpayers to cover more of the costs and policymakers to provide stronger arguments for future fee rises."

Tuition fees has been a hot topic during the general election, with Labour promising to scrap fees in England. Meanwhile the Conservatives and Liberal Democrats have defended the current system of fees and loans.

Mapletree Acquires $1.6bn Student Portfolio

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Mapletree Investments Pte Ltd has announced the acquisition of another student accommodation portfolio, this time from Kayne Anderson Real Estate Advisors.

The portfolio consists of eight purpose-built student housing assets with 3,611 beds in the United States (US), 140 beds in Canada, and four multi-family assets with 1,388 units in the US.

All sites are situated close to their respective university campuses and are within an average distance of 0.2 miles. Current occupancy rates of the purpose-built accommodation is above 90%, with expectations for further improvement.

The total value of transactions with Kayne Real Estates is estimated to be around $1.6 billion, making it one of the largest transactions recorded in the global student housing market.

Mapletree acquired its first US student housing portfolio from Kayne Real Estate in November 2016, with a total of seven assets. This has now been increased to 17 assets with a total of 12,000 beds across 16 cities in the US.

The company's total student housing portfolio consists of 43 assets with 18,024 beds located 29 cities in the US, United Kingdom and Canada.

Commenting on the deal, Group Chief Executive Office, Hiew Yoon Khong, said: "Since 2016, Mapletree has expanded into the student housing asset class on a global scale as it generates stable and consistent earnings. We have been able to grow our portfolio through a number of sizeable acquisitions in the US and the UK. The short time we have taken to achieve this scale demonstrates our Group's capabilities and commitment, and we will continue to grow our current portfolio further globally. We are therefore certainly pleased to have partners such as Kayne Real Estate alongside us in our growth plans."

Citigroup Global Markets Inc acted as exclusive financial adviser to Kayne Real Estate on the entirety of the sale transactions with Mapletree.

Watkin Jones Releases Half Year Results

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Watkin Jones has released its half year results for the six months ending 31 March 2017, with results in line with expectations.

Although revenues for the period were down 8.4% on the same period a year earlier, they were in line with management's expectations. The decline was attributed to the timing of forward development sales and are expected to increase in the second half of the year.

Gross profit for the period increased 23.8% to £29.1 million (H1 2016: £23.5 million), while its gross margin rose 21.8%, up from the 16.1% reported during the same period a year earlier.

Commenting on his group's results for the six months to April 2017, Mark Watkin Jones, said: "The group's student accommodation development business continues to be underpinned by the attractive fundamentals of the student accommodation market, with the group continuing to see strong demand from UK and international clients.

"We have seen increased institutional demand for good quality purpose built assets, with a number of new international funds recently entering the market. This has had a positive effect on development values as competition has increased and yields have sharpened. Clients looking for scale see partnering with Watkin Jones as the best way to secure new assets in prime locations. The forward sale model and student accommodation pipeline of 31 sites provides the group with excellent visibility on future earnings and cash flow."

The group's forward pipeline of 31 sites consists of over 11,200 beds with an appraised development value of more than £920 million. Of the current pipeline, 28 are due for delivery by FY 2019 and three are for delivery in FY 2020.

Fresh Student Living, the group's operation management arm, is contracted to manage 12,117 beds across 43 schemes for the current year. This will increase to 19,532 beds across 65 schemes by the FY 2020.

Unite Students Acquire Two New Developments

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Unite Students has acquired two student accommodation assets, via its Unite Students Accommodation Fund (USAF), in Durham and Birmingham.

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."