Empiric Adds Another York Asset to Its Portfolio

Posted by Richard Ward in ,

Empiric Student Property has purchased the land and entered into a forward-funded development agreement for a 106-bed student accommodation scheme in York.

The Percy's Lane development will cost a total of £9.2 million and will involve the demolition of existing buildings on the site and the construction of a new premium purpose-built student accommodation block.

The scheme will consist of a mix of studios and one, three and five bedroom apartments, as well as six bedroom townhouses and communal facilities.

Construction is expected to begin in May, with completion of the site scheduled in time for the 2018/19 academic year.

The property is situated close to Empiric's Lawrence Road development and the recently purchased Foss Studios.

Foss Studios was bought by Empiric earlier in the week for £23.3 million and consists of 220 studio rooms split across three buildings. The development is currently managed by Fresh Student Living but will be integrated onto the Group's Hello Student operating platform at the end of March 2017.

Empiric Chief Executive Paul Hadaway said of the latest scheme: "As a result of these transactions, the group will own a total of 441 beds in York, some 2% of the local full-time student population. The design of the self-contained apartments is in line with our "townhouse" concept, providing students with a group living environment with all the benefits of purpose-built student accommodation."


Tighter Visa Rules Could Cost the Uk £2bn a Year

Posted by Richard Ward in , , ,

According to forecasts produced by the Higher Education Policy Institute, a tougher stance by the Home Office towards overseas students studying at UK universities could cost the country up to £2bn a year.

The report also found that UK higher education could increase revenue from higher fees for foreign students after Britain leaves the EU, but the potential gains would be wiped out if the government insists on tightening student visa numbers.

Commenting on the report, director of Hepi, Nick Hillman said: "Were the Home Office to conduct yet another crackdown on international students, then the UK could lose out on £2bn a year just when we need to show we are open for business like never before."

Mr Hillman suggested an easy and costless solution would be to remove international students from the net migration target, which would also signal a change in direction.

The study examined what the impact could be if further efforts were made to restrict student visas as part of the government's larger strategy to force down immigration. It found that approximately 20,000 students could be deterred, and although universities would lose around £500m a year in fees, the wider UK economy could lose a further £600m a year in reduced spending.

However, the largest loss would be over £900m a year foregone in what the report described as "the detrimental impact on universities' supply chains" through lost spending and the "indirect and induced effects" on the UK economy related to this source of export income.

Deputy chief executive of Universities UK, Alistair Jarvis, said the report provides a "stark" warning of the possible economic loss associated with policies that restrict European or international student numbers. He argued that if universities are to continue to boost the economy and benefit communities, they will need the right support from government.


Starwood Enters the Uk Student Market with £120m Portfolio

Posted by Richard Ward in ,

The US private equity firm Starwood Capital Group has entered the UK student accommodation market with the £120 million purchase of a six-asset portfolio.

The portfolio is understood to consist of 1,595 beds and comprises of Haymarket in Edinburgh, Chestnut House in Cambridge, The Walls in Southampton, St James House in Glasgow and Union Square and Stepney Yard, both in Newcastle.

In a new joint venture with Round Hill Capital, the six-asset portfolio will be managed through Round Hill's operational brand, Nido Collection.

The deal is the first for Starwood in the UK student housing sector, who already own nearly 7,000 student beds in the US.

Commenting on the deal, the company's head of European acquisitions Zsolt Kohalmi said: "We believe that the UK is and will continue to be one of the top educational destinations for international students.

"We are excited to work with Round Hill Capital and Nido as our partners on this investment, which boasts assets in superb locations and strong student markets."

In addition to the existing six schemes the joint venture has also entered into a forward funded deal for the acquisition of a development scheme in Newcastle, which is expected to be delivered in time for the 2018-19 academic year.


Adderstone Group Sees Profits Rise 38%

Posted by Richard Ward in

Newcastle-based property firm Adderstone Group has reported an increase in profits of 38% year-on-year, driven by a number of delivered assets.

The firm reported profits of £4.33m, on the back of consolidated turnover of £35m for the year ending March 2016.

Adderstone said it continues to re-invest profits generated into group activities and has purchased a number of significant assets for investment and re-development purposes during the period.

Over the past 12 months the company has delivered a number of projects in the region including the 266 bed Stepney Yard student accommodation and the 42 bed Union Studios development.

John Armstrong, Group Finance Director, said: "The impressive results for the year have been achieved despite the uncertainties surrounding Brexit. We are already forecasting further growth in 2017/18, demonstrating that the strategy of refocusing on our core development and investment specialisms is working."

Mr Armstrong also noted that in November 2016 alone, the company secured planning for developments worth a gross value of £70m.

Adderstone Group's development team continues to work with city planners in regards to their proposed Christon Park and North Shore developments. Christon Park is a brownfield housing development situated on the site of the former Greggs bakery in Gosforth and North Shore is a 16 storey landmark apartment development on Newcastle Quayside.

Outside of the region, Adderstone Group is about to submit a planning application for a residential tower in Salford and has embarked on a luxury housing scheme in Bermondsey, London, which will be delivered before the summer.


Unite's Funds Report Like-for-like Growth

Posted by Richard Ward in

Unite Students has announced its latest quarterly valuation update for the Unite UK Student Accommodation Fund (USAF) and the London Student Accommodation Joint Venture (LSAV) as at 31 December 2016.

As at the end of 2016, USAF's property portfolio was valued at £2,288 million, representing a like-for-like increase of 0.6% during the quarter and 5% over the full year. The fund consists of a portfolio of 27,441 student beds across 76 properties, located in 24 University towns and cities in the UK.

Meanwhile the LSAV's portfolio of student bed spaces was valued at £1,009 million, up 0.5% on a like-for-like basis in the quarter and 4% over the full year. The LSAV portfolio is made up of 6,197 bed split across 14 assets in London as well as three properties in Edinburgh.

The increase in like-for-like valuations was attributed to rental growth during the quarter, while valuation yields remained stable in the quarter with 9 basis points of yield compression across the year. The USAF portfolio achieved an average yield of 5.6%, while LSAV's was reported at 4.9%.

Due to the strong total return in USAF during 2016, Unite is expected to earn a net performance fee in the region of £6 million, which will be paid in units in the first quarter of 2017.

Commenting on the results Joe Lister, Unite Students Chief Financial Officer, said: "Demand for our high quality, well located student accommodation and customer offering remained strong throughout 2016. The continued high occupancy and lettings performance, as well as the limited yield compression, contributed to the strong performances of both USAF and LSAV. Bookings for the 2017/18 academic year, which opened towards the end of 2016, have also started well."


Uk’s Purpose-built Student Accommodation Market Valued at £45.8bn

Posted by Richard Ward in

A recent report from Knight Frank estimates that the UK's purpose-built student accommodation sector could reach a total value of £45.8bn by September 2017.

Expectations are that 24,000 beds will come online this year, bringing the total UK purpose-built stock to around 549,00.

Knight Frank said the sector has reported growth of 37% since 2014, from £30.9bn to £42.5bn, making student property one of the fastest growing asset classes in the UK property market. In addition, rental growth was predicted at 2.5% next year.

The property specialists expect investors to build upon newly acquired portfolios and overseas investors to also enter the market after tracking the sector for opportunities.

Rachel Pengilley, Partner of the Knight Frank Student Property Team, said: "As our sector continues to mature, and becomes increasingly recognised for its resilience in uncertain times, we anticipate continued appetite from global capital next year. As we look to 2017, rental growth, strong demand from domestic and international students and a healthy development pipeline are set to be the defining factors in the sector's success.

"We expect to see capital from all four corners of the globe looking to invest in UK and wider European student accommodation."


Unite Group Confirms REIT Status

Posted by Richard Ward in

Unite Group Plc has confirmed its conversion to a Real Estate Investment Trust (REIT) effective from 1 January 2017.

The company announced in 2016 it was seeking approval for various amendments to the Company's Articles of Association in regards to its proposed conversion to a Real Estate Investment Trust (REIT). A resolution to this effect, was passed on 30 November 2016 after the company held a General Meeting to discuss the matter.

The company's latest investor event held in London in December shows the company is on track to deliver against its 2016 expectations.

During the 2016-17 lettings cycle, Unite was able to achieve occupancy rates of 98% with annual like-for-like rental growth of 3.8%.

For 2017-18 the company has maintained a positive start with reserved rates increasing to 42% compared to 40% at the same point in time the previous year, while expectations are rental income will increase by 3-3.5%.

Unite operates 49,000 beds with a further 6,850 in the pipeline and will continue to focus on the UK's strongest Universities as it looks to increase the proportion of its revenue received towards higher tariff group institutions.


Imperial College President warning on academic visas

Posted by Tom Walker in , ,

The President of Imperial College London, Professor Alice Gast, has raised concerns that the ongoing uncertainty around Brexit has resulted in academics wasting brain-power worrying about visas rather than focussing on research. Prof Gast - a chemical engineer and former President of Lehigh University in Pennsylvania, USA - stated in an interview with the FT that the lack of clarity around the Government's post-Brexit immigration policy, along side home secretary Amber Rudd's suggested clamp-down on international student visas, was "dangerous for science".

This sentiment is in line with a recent report from the House of Lords, in which the Lords Science and Technology Committee stresses the importance of freedom of movement and a need to ensure that the UK continues to attract the best scientific talent; the report recommends that the Government recognise the distinction between students and other immigrants and treat student numbers separately when implementing immigration policy.

On the topic of research funding, Professor Gast highlighted the collaborative work that Imperial has already undertaken with other research institutions in Europe, the US and China through a series of seed funds. The London-based university currently receives 14% of its research funding (£52m per year) from the EU, and whilst the UK Treasury has agreed to fund research projects that have already won grants from the EU's Horizon 2020 programme - a multi-billion pound science and innovation pot - Gast's remarks allude to a contingency plan that is being developed by the university to hedge against the threat of future R&D underinvestment by a post-Brexit Government.


Government Criticised for Failing to Communicate Change in Tuition Fees

Posted by Richard Ward in , ,

The Government has been criticised for not announcing changes to tuition fees on the Department for Education's website.

The legislation that will allow universities to increase tuition fees in England to £9,250 is expected to impact more than 500,000 students beginning their courses in the Autumn.

The changes to the fees were officially placed onto a government website last week but were not announced by the Department for Education. Opposition parties have called the move "shabby", arguing the move was designed to avoid scrutiny, something the Department for Education has rejected.

The regulations relating to the change in fees were published on December 15th on legislation.gov.uk, the same day school league tables were released.

According to Labour's Gordon Marsden, the government was trying to maintain a low profile in regards to the increase in fees.

Meanwhile Liberal Democrat leader Tim Farron said: "This is a shabby little way to announce something, hiding it away in the far-flung corner of a government website.

"This shows the government at their worst, avoiding scrutiny and debate."

The intention to increase tuition fees had been announced in the summer and will enable nearly all universities to apply the higher amount of £9,250 per year. Institutions also have the option to apply the increased fees to existing students.

Defending the increases, Universities have argued that the value of tuition fees have been eroded by inflation and they needed an increase to remain financial sustainable.


Bank of England to Buy University Debt

Posted by Richard Ward in ,

The Bank of England could purchase £350 million in debt sold by Cambridge University.

The university has been added to a list of institutions whose bonds the Bank of England is prepared to buy as part of its quantitative easing (QE) programme.

For the coming round of QE the Bank is looking to snap up £435 billion in bonds from both private and public organisations.

The scheme is designed to increase the money supply, making funds more readily available for financial institutions to lend to profitable enterprise.

Universities comprise £1.2 billion of the £131 billion identified so far by the Bank as potential purchases. In addition to Cambridge University the Bank has also added debt from Cardiff, Manchester and Liverpool's universities to the list. However, Cambridge University represents the institution with the largest bond at £350m, which was issued four years ago, with an interest rate of 3.75%.

To be considered for the list, the organisation must be considered sufficiently creditworthy for the debt to be secure. Perversely, according to credit rating agency Moody's, Cambridge University currently has a better credit rating than the British state itself.