UK-based student accommodation developer and manager Unite Students is selling a portfolio of 11 properties, comprising 4,488 beds for £306 million (Unite share: £236 million) to an affiliate of Lone Star Funds.
The disposal portfolio includes assets in Sheffield (1,700 beds), Reading (703 beds), Leicester (665 beds), Bedford (517 beds), Liverpool (390 beds), Birmingham (337 beds), Bristol (99 beds) and Leeds (77 beds), and has nomination agreements covering 46% of beds on short-term contracts.
Unite Students said the disposal is part of the group’s proactive portfolio management strategy, resulting in increased alignment to high and mid-ranked universities that deliver the greatest quality and value to students. ”It also sees the group exit certain smaller, less operationally efficient assets in cities such as Bristol and Leeds.”
The disposals are priced in line with prevailing book value, which reflects an NOI yield of 5.7%. The properties were treated as held for sale in the balance sheet as at 31 December 2021 and the disposal is incorporated into the company’s guidance for EPRA EPS of 41-43p for the 2022 financial year, which remains unchanged.
Completion will occur on 15 March on four of the properties in the portfolio for £51 million (Unite share: £11 million). The completion of the remaining properties will occur on 31 August 2022.
According to the statement, the disposals reduce see-through LTV to 25% on a pro forma basis, providing the group with capacity to fund its £1 billion development pipeline and explore additional growth opportunities.
Richard Smith, Chief Executive of Unite Students, commented: “We have now completed the disposal programme set out at the time of our acquisition of Liberty Living in 2019. These disposals have increased the focus of our portfolio in the strongest university cities and ensure our ability to sustain rental growth over a longer time horizon. Our balance sheet is also positioned for growth with the investment capacity to deliver our biggest ever secured development pipeline of £1 billion and pursue further opportunities to extend our best-in-class platform“