Placing and Open Offer

Unite Group PLC
24 July 2002

THE UNITE GROUP PLC - PLACING AND OPEN OFFER

24 July 2002

Not for release, distribution or publication in whole or in part in or into the
United States, Canada, the Republic of Ireland, Japan or Australia


PLACING AND OPEN OFFER
OF 32,857,143 NEW ORDINARY SHARES IN THE UNITE GROUP PLC

The UNITE Group plc, the UK's leading specialist provider of student and NHS key
worker accommodation services, today announces a Placing and Open Offer of
32,857,143 new Ordinary Shares at 175 pence per share.


  • The Company is raising £57.5 million of new equity capital in order to
    capitalise on the attractive development returns available to it and to
    consolidate its market leading position.

  • Following the Placing and Open Offer, the Board believes that the Group
    will have a sustainable capital base to secure up to 8,500 beds per annum
    without requiring further equity.

  • Of the 32,857,143 new Ordinary Shares to be issued by the Company, the
    12,472,146 Placing Shares and 3,859,685 of the Offer Shares will be placed
    firm with institutional and other investors. Qualifying Shareholders will be
    invited to participate in the Open Offer on the basis of 3 Offer Shares for
    every 11 existing Ordinary Shares held as of the Record Date.

  • The Placing and Open Offer has been fully underwritten by UBS Warburg.

Nicholas Porter, Chief Executive Officer of UNITE, said:

'This Placing secures the funding for UNITE's future development activity and
allows the Group to capitalise on the exceptional market opportunity available
to it. The outlook for our business remains extremely positive: our market is
large and growing, development returns in the first half are ahead of
expectations and we have a robust pipeline of attractive projects. This
fundraising will help to maintain our market leadership and provide the Group
with sufficient equity to deliver 8,500 beds per annum.'

The above summary should be read in conjunction with the full text of the
following announcement.



Enquiries:

UNITE

Nicholas Porter, Chief Executive Officer        [phone]
Simon Bernstein, Chief Financial Officer

UBS Warburg

Michael Meade                                   [phone]
Edmund Craston
Bill Hutchings

Redleaf Communications

Emma Kane                                       [phone]/ 07876 338 339



This announcement does not constitute, or form part of, an offer or solicitation
of an offer to sell or issue shares or other securities, in any jurisdiction.
The Placing and the Open Offer will only be made on the basis of information
that will be contained in the prospectus to be published in connection with the
proposed transaction.

The making of an offer in, or to residents or citizens of, certain jurisdictions
other than the United Kingdom ('Overseas Shareholders'), may be restricted by
the laws of the relevant jurisdictions. Overseas Shareholders should inform
themselves about and observe any such applicable legal requirements in their
respective jurisdictions.

The New Ordinary Shares have not been and will not be registered under the
Securities Act and may not be offered or sold in the United States or to, or for
the account or benefit of, U.S. persons (as such term is defined in Rule 902
under the Securities Act) except pursuant to an exemption from such
registration. Notwithstanding the foregoing, no Offer Shares will be offered or
will be sold pursuant to the Open Offer in the United States or to, or for the
account or benefit of, U.S. persons (as such term is defined in Rule 902 under
the Securities Act). Copies of this announcement are not being, and should not
be, distributed in or sent into the United States.

Prices and values of and income from shares may go down as well as up and an
investor may not get back the amount invested. It should be noted that the past
performance is no guide to future performance. Persons needing advice should
consult an independent adviser.

The contents of this announcement, which have been prepared by and are the sole
responsibility of the Company, have been approved by UBS Warburg solely for the
purposes of section 21(2)(b) of the Financial Services and Markets Act 2000.

UBS Warburg is acting for UNITE and no one else in connection with the
transaction and will not be responsible to any other person for providing the
protections afforded to its clients or for providing advice in relation to the
transaction.





THE UNITE GROUP PLC - PLACING AND OPEN OFFER

24 July 2002

Not for release, distribution or publication in whole or in part in or into the
United States, Canada, the Republic of Ireland, Japan or Australia



PLACING AND OPEN OFFER
OF 32,857,143 NEW ORDINARY SHARES IN THE UNITE GROUP PLC

INTRODUCTION

UNITE is raising £57.5 million by the issue of 32,857,143 new Ordinary Shares
under the Placing and the Open Offer at a price of 175 pence per share. Of these
shares, 20,384,997 new Ordinary Shares (representing approximately 27.3 per
cent. of the existing issued share capital) are the subject of the Open Offer
which is being made to Qualifying Shareholders. The Placing Shares and Offer
Shares are to be placed by UBS Warburg with institutional and other investors.
Nicholas Porter has indicated his intention to participate in the Placing in an
amount of £1 million and certain other Directors (or their related interests)
have also indicated their intention to participate for an aggregate amount of
£140,000. The Placing Shares and 3,859,685 of the Offer Shares will be placed
firm. The remainder of the New Ordinary Shares will be conditionally placed
subject to recall to satisfy valid applications under the Open Offer.

BACKGROUND AND INFORMATION ON UNITE

UNITE is the United Kingdom's leading specialist provider of student and NHS key
worker accommodation services, offering a wide range of design, build and
accommodation services solutions. UNITE seeks long-term partnerships with its
public sector clients, such as universities and NHS Trusts, to deliver
integrated solutions to their individual needs, allowing those institutions to
focus on their core activities. In addition, UNITE has a growing portfolio of
properties which are let directly to students.

Market

UNITE's target markets are large, growing and continue to undergo significant
structural development:


  • Students: there are approximately 1.9 million students in higher education
    in the United Kingdom, of whom approximately 1.2 million are in full-time
    education. Of these 1.2 million, approximately 0.3 million live in
    university managed accommodation, approximately 0.7 million live in
    accommodation in the private sector, and approximately 0.2 million live at
    home. As student numbers increase, universities are increasingly seeking
    partnerships for the building and management of new and existing
    accommodation to release capital and management time for core activities. It
    is stated Government policy that by 2010 the proportion of people between 18
    and 30 who shall have undertaken some form of higher education should have
    risen to 50 per cent. Currently, the proportion of school leavers entering
    some form of higher education is estimated to be approximately one third.
    The Directors believe that the achievement of the Government's target would
    result in a significant increase in the size of the student rental market,
    reinforced by the recent historic growth in student numbers.

  • NHS key workers: there are currently approximately 330,000 nursing staff
    employed in the United Kingdom, for whom there are only approximately 50,000
    units of institutional accommodation available. The Government intends that
    the NHS should train 21,000 nurses per annum by 2008, an increase of 60 per
    cent. on the number currently being trained. It is estimated by the Royal
    College of Nursing that the proportion of nurses from abroad could increase
    from approximately 15 per cent. to 25 per cent. by 2010, thereby increasing
    accommodation demand. The NHS is the largest employer in Europe, employing
    approximately 1 million people and nursing staff form only part of the NHS
    key worker rental market.

The market for provision of accommodation to students and NHS key workers is
highly fragmented. Within the higher education sector, the main accommodation
providers are universities themselves (26 per cent.) and private landlords and
major professional landlords/branded operators such as UNITE (58 per cent.),
with the remainder of students living at home. The Directors estimate that the
number of beds currently secured by professional landlords/branded operators
would account for 4 per cent. of this market. Although the Group has a number of
competitors on a regional basis, no one company has the same focus, approach and
breadth of coverage nationally in relation to these sectors. The Directors
believe that UNITE has currently secured significantly more beds than any of its
competitors.

The Directors believe that there are substantial opportunities to increase the
proportion of beds provided by professional landlords such as UNITE. Investment
constraints at many universities and a greater focus on core competencies have
led to an increased pressure to outsource the provision of accommodation to the
private sector. In addition, much of the accommodation provided by private
landlords is of poor quality. According to a government report, approximately 20
per cent. of private accommodation typically occupied by students is considered
unfit for habitation. The Directors believe that increased regulation of the
private accommodation market will lead to a reduction in the supply of
accommodation provided by these private landlords, to the benefit of UNITE.

Within its markets, UNITE targets those locations with the right characteristics
of demand and competition to support the UNITE concept. UNITE has identified 39
key locations in the United Kingdom which it believes fulfil its criteria for
potential demand and existing and planned competing supply. In addition, UNITE
considers other locations where specific opportunities exist, particularly in
relation to stock transfer schemes (referred to below under ''Accommodation'').
Whilst national coverage is important to UNITE, strength within targeted
locations is key to its success.

Over the last year, UNITE has built up its operational strength in its largest
target towns and cities and is now active in 30 of them. In ten of its key
locations, UNITE now has 1,000 beds or more completed or in the course of
construction. The operational strength of the Group in these key locations has
resulted in significantly reduced operational costs.

Accommodation

UNITE offers high-quality accommodation, typically based on a cluster of
bedrooms around a communal kitchen and dining area. The solutions offered by the
Group to institutions and students are mainly provided through:


  • the direct leasing of properties to institutions;

  • nomination agreements under which UNITE lets direct to students, but with
    an institution typically guaranteeing a minimum rental income at agreed room
    rates; and

  • direct lets of properties to students.

UNITE's long term strategy in relation to the student market is based around the
''Capturing the Continuous Customer'' concept, where first year students in
university accommodation operated by UNITE associate the UNITE brand with
quality and affordability and are then encouraged in their subsequent years to
migrate to direct let UNITE properties, for which UNITE typically receives
higher rents.

Portfolio growth is driven by three main streams of activity:


  • Organic development - the main focus of the Group's development activity,
    involving the identification of suitable sites, either for new build or
    refurbishment by UNITE or its preferred contractors;

  • Stock transfer - the purchase of existing accommodation from an
    institution, which would typically include an agreement to refurbish the
    property, an element of new construction and some form of concession
    arrangement with the institution; and

  • Acquisition - the acquisition of existing accommodation from a third
    party, where UNITE expects to be able to generate value through
    refurbishment, management efficiencies or through improving financing
    arrangements or lease terms.

Additional services

An important element of UNITE's concept is the offering of additional services
such as telephone and Internet access, vending machines, laundry facilities and
the retailing of ''moving-in'' packs. Such services, whilst providing additional
facilities to tenants, also boost revenues from each property. The Accommodation
and Estate Services division carries out comprehensive facilities management
including maintenance and fault logging, security and rent collection services
and is supported by a 24-hour customer service centre. The division also offers
full marketing, booking, viewing and allocation capabilities. The On-Line
Accommodation Service is a further extension of UNITE's facilities management
service and offers, via bunk.com, data on university managed bedrooms in the
United Kingdom and on-line booking and real-time allocation technology.

Recent developments

UNITE has demonstrated considerable momentum over the last few months with a
number of significant developments in its core business. The number of secured
beds has increased to 27,842 at 30 June 2002, an increase of 7,613 organic beds.
Of these 27,842 beds, as at 30 June 2002, 10,880 were income generating, 14,193
were in or secured for development and 2,769 were PPP beds where UNITE had been
awarded preferred bidder status. The value of these secured beds on completion
is currently estimated by the Company to be approximately £930 million
(including both residential and commercial elements), based on estimated current
yields and likely net rental levels.

Notable developments since 1 January 2002 have included:


  • Peabody UNITE: in March, UNITE announced the acquisition of the 50 per
    cent. stake in Peabody UNITE plc, which it did not already own, from its
    London joint venture partner, Peabody Trust, for a consideration of £19.9
    million. As a result, UNITE acquired full control over 1,553 secured student
    and key worker beds in London and uniformity of the UNITE brand across its
    whole portfolio. The business has already been successfully integrated into
    UNITE's mainstream operations and continues to perform well, with 1,122 new
    beds having been secured since acquisition.

  • Financing: in April, UNITE completed a £273.5 million securitisation of
    its mature investment portfolio, reducing the Group's average cost of
    borrowing, increasing the average maturity of the Group's debt and
    underpinning its property valuations. This was an important milestone in the
    Group's strategy, being the first such transaction in the student and NHS
    key worker accommodation market. The transaction demonstrated the
    sustainability of UNITE's model of recycling capital and resulted in the
    release to the Group of approximately £39 million. In addition, the Group
    has recently entered into new revolving development and warehouse debt
    facilities totalling £300 million to fund the continued growth of the
    business.

  • Manufacturing facility: the Group is in the process of commissioning an
    innovative new manufacturing facility at Stroud, Gloucestershire to replace
    its former factory in Bristol. This new facility will be capable of
    producing high volumes of fully furnished bedroom and bathroom modules. The
    facility will operate a fast track and highly automated modular construction
    system that can deliver its own distinctive, consistent brand of quality,
    affordable accommodation. Complete furnished bedroom and bathroom modules
    will be pre-fabricated under factory conditions by UNITE to high standards
    of quality and performance. The modules will then be delivered to site and
    installed as part of the traditional construction process to create
    accommodation that achieves guaranteed quality, increased speed of
    construction and improved cost efficiencies. Production at the new facility
    is anticipated to commence in September 2002.

  • Regionalisation of development and accommodation services functions: over
    the last year, UNITE has successfully integrated the infrastructure acquired
    as part of the UniLodge acquisition, whilst taking forward the Group's
    management strategy of strengthening central and regional infrastructure.
    The Group operates from 5 regional offices, covering 6 regions, each with
    its own dedicated acquisition, development and accommodation services team.
    This regional infrastructure is underpinned by a national management team
    and is complemented by a national call centre and centralised booking
    service. As it has grown significantly in scale, the Group has benefited
    from pricing and cost benefits in estates management and in the procurement
    of third party services, for example, utilities. The regional development
    teams have also benefited from increased scale due to the central
    procurement of goods and services.

Following detailed due diligence on the Sheffield PPP project, a number of
opportunities and issues were identified. A revised bid has been submitted for
the University's consideration. Subject to agreeing mutually acceptable terms,
both parties are seeking to complete the transaction by the end of the year.

BACKGROUND TO AND REASONS FOR THE PLACING AND OPEN OFFER

The net proceeds of the Placing and the Open Offer will be used to establish and
maintain a steady annual growth rate for the Group. The proceeds should, based
on the Directors' current estimates for its development programme, provide the
equity capital required to roll out 8,500 beds per annum. Although it would be
possible to increase the rate at which new beds are secured, the amount of
equity funding required in order to achieve this would also need to increase.
The Board believes that this revised growth target represents an appropriate
balance between the opportunities available from consolidating its market
leading position and maximising the attractive development returns available to
it and the amount of equity required from shareholders to fund this growth. At
the rate of securing 8,500 beds per annum, the Group would control approximately
55,000 beds by 31 December 2005. This would represent approximately 6 per cent.
of the current market in UNITE's 39 key locations which the Directors believe
will maintain UNITE's market leading position and allow it to benefit from
economies of scale and reduced operational costs.

Following the Placing and the Open Offer, the Board believes that the Group will
have a sustainable capital base for its development programme and does not
envisage the requirement for any further equity fundraisings in order to achieve
its revised annual growth rate. The Board will continue to monitor the
appropriateness of the Group's annual growth rate and the development margins
being achieved on new projects. To the extent that either changes significantly
in the future, the Group will consider whether or not it would be appropriate to
return capital to Shareholders or to continue expanding the Group's portfolio.

Capital recycling

The intention behind the Group's funding strategy is to enable equity used to
secure and develop new beds to be recycled in order to fund new developments
once the beds become income-producing. This strategy relies on maximising the
leverage on the Group's portfolio through securitisation and the release of the
development profits generated on new properties in order to fund further
development.

Typically, until a new property becomes income-producing its acquisition and
construction/refurbishment will be funded by dedicated development facilities.
The loan to cost ratio on existing development facilities is approximately 85
per cent. Once a property becomes income-producing, it will be recorded in the
Group's accounts at its completed open market valuation, as determined by an
external valuer, with any valuation uplift recorded as the Group's development
profit. The Group targets a development profit of approximately 25 per cent. on
its properties based upon its historic performance. The property would generally
be refinanced under the terms of a separate warehouse facility. The Group's
recently negotiated warehouse facility has a loan to value (''LTV'') ratio
(calculated on the basis of the revised valuation) of approximately 74 per cent.
This new warehouse facility is on a revolving basis and will be used to finance
properties pending full capital recycling. Finally, when sufficient properties
are available within the warehouse facility, the Group will seek to further
leverage the warehoused portfolio by means of a securitisation in order to
release funds for further development. The LTV ratio achieved in the
securitisation completed in April 2002 was 78 per cent., resulting in the
release to the Group of approximately £39 million.

The Group does not enter into any financial commitment in respect of any form of
property development until it has in place sufficient debt facilities and
available capital to finance that commitment in full. The new debt facilities
recently put in place to fund development and investment activity give the
Directors confidence that further debt funding on similar terms should be
available to finance the continued roll out of the business.

CURRENT TRADING AND PROSPECTS

Current trading remains in line with expectations, with all areas of the
business performing strongly. The Group's current unsecured pipeline amounts to
some 35,000 beds which indicates the range and depth of schemes being considered
by the Group's regional development teams and national acquisition and
development committee.

The Group's development returns in the first half are ahead of expectations,
with the new developments secured expected to deliver significant net asset
value uplift in both the current and future years (excluding the effect of the
Placing and Open Offer). The construction programme is on budget, with a total
of 3,233 new beds (12 properties) scheduled for delivery by September 2002. A
further 8,200 and 2,700 new beds are scheduled for delivery during 2003 and
2004, respectively. In relation to developments that will be completed by this
September and on which the Group has occupancy risk, the Board is particularly
pleased with the level of bookings confirmed for the forthcoming academic year,
with 80.1 per cent. of available beds already reserved. The Board also expects
the average rent across its direct let portfolio to increase by 1 per cent.
above the retail price index for the coming academic year.

The Board looks forward to the future with confidence and believes that the
outlook for the Group remains extremely positive.

Dividend policy

Given the significant impact of UITF Abstract 34 on the Group's earnings (which
was announced on 17 June 2002), together with the £10.4 million of non-recurring
costs incurred as a result of the Group's securitisation being expensed through
the profit and loss account in 2002, the Board intends to hold the current total
annual dividend payment at 2.5 pence per share until reported earnings enable a
progressive dividend policy to be resumed.

THE PLACING AND OPEN OFFER

UNITE proposes to issue 32,857,143 new Ordinary Shares (representing
approximately 44.0 per cent. of UNITE's existing issued share capital) at a
price of 175 pence per share by way of the Placing and the Open Offer.

Arrangements have been made with UBS Warburg, as agent for the Company, to make
the Open Offer inviting Qualifying Shareholders to apply to subscribe for Offer
Shares on the following basis

              3 Offer Shares for every 11 existing Ordinary Shares

registered in their name as at the close of business on the Record Date.
Qualifying Shareholders may apply for any whole number of Offer Shares up to
their maximum allocation.

Of the 32,857,143 new Ordinary Shares to be issued by the Company in the Placing
and Open Offer, 20,384,997 new Ordinary Shares (representing approximately 27.3
per cent. of the existing issued share capital) are the subject of the Open
Offer. 12,472,146 new Ordinary Shares (representing approximately 16.7 per cent.
of the existing issued share capital) are the subject of the Placing. The Offer
Shares and the Placing Shares are to be placed by UBS Warburg with institutional
and other investors. The Placing Shares will be placed on a non-pre-emptive
basis and in consequence will be placed firm. Nicholas Porter and certain
related Shareholders have undertaken not to take up their entitlements in the
Open Offer. Their entitlements in aggregate represent 3,859,685 new Ordinary
Shares. These new Ordinary Shares are also to be placed firm. The balance of the
New Ordinary Shares, being those of the Offer Shares which are not subject to
the undertakings, are to be conditionally placed subject to recall to satisfy
valid applications under the Open Offer.

Nicholas Porter has indicated his intention to participate in the Placing in an
amount of £1 million and certain other Directors (or their related interests)
have also indicated their intention to participate for an aggregate of £140,000.

The Placing and the Open Offer have been fully underwritten by UBS Warburg,
subject to certain conditions, including Admission occurring and becoming
effective. In certain circumstances, UBS Warburg will have the right to
terminate its underwriting obligations in which event the Placing and the Open
Offer will not proceed.

Application has been made for Admission and this is expected to take place on 21
August 2002. Settlement is expected to occur three London business days after
the Extraordinary General Meeting, currently scheduled to be 21 August 2002.

The New Ordinary Shares will be allotted subject to the memorandum and articles
of association of the Company and will rank pari passu with the Company's
existing Ordinary Shares, including the right to participate in all dividends
and other distributions declared, paid or made after the date of their issue on
or in respect of such shares.

The Placing and the Open Offer are conditional, inter alia, upon the passing of
the Resolution at the Extraordinary General Meeting to be held at 10.00 a.m. on
16 August 2002. Further details of the Placing and the Open Offer and a notice
convening the Extraordinary General Meeting will be detailed in a prospectus
which is expected to be posted to Shareholders on 24 July 2002.

EXPECTED TIMETABLE


Record date for entitlements under the Open Offer                            19 July 2002

Latest time and date for splitting Application Forms (to satisfy bona        3.00 p.m. on 12 August 2002
fide market claims on Qualifying Shareholders only)

Latest time and date for receipt of Application Forms and payment            3.00 p.m. on 14 August 2002
under the Open Offer

Latest time and date for receipt of completed Forms of Prox                  10.00 a.m. on 14 August 2002

Latest time and date for receipt of completed Forms of Proxy                 10.00 a.m. on 14 August 2002

Extraordinary General Meeting                                                10.00 a.m. on 16 August 2002

Admission effective and dealings in the New Ordinary Shares expected         8.00 a.m. on 21 August 2002
to commence

Expected date on which New Ordinary Shares will be credited to CREST         21 August 2002
Accounts

Expected date of despatch of definitive share certificates for the New       22 August 2002
Ordinary Shares





Definitions

In this announcement:

'Admission' means the admission of the New Ordinary Shares to the Official List
and to trading on the London Stock Exchange's market for listed securities
becoming effective in accordance with the Listing Rules and the admission and
disclosure standards published by the London Stock Exchange respectively

'Application Form' means the personalised application form accompanying a
prospectus which is expected to be posted to Shareholders on 24 July 2002 for
use by Qualifying Shareholders in relation to the Open Offer

'Directors' or 'Board' means the directors of the Company

'Extraordinary General Meeting' or 'EGM' means the extraordinary general meeting
of the Company expected to be held at 10 a.m. on 16 August 2002

'Group' means the Company and its subsidiary and associated undertakings (as
defined in section 258 of the Companies Act 1985, as amended)

'Listing Rules' means the listing rules of the UK Listing Authority made under
section 74 of the Financial Services and Markets Act 2002

'London Stock Exchange' means London Stock Exchange plc

'New Ordinary Shares' means the 32,857,143 new Ordinary Shares to be issued
pursuant to the Placing and the Open Offer

'Offer Shares' means the 20,384,997 new Ordinary Shares, which are to be offered
to Qualifying Shareholders under the Open Offer

'Official List' means the Official List of the UK Listing Authority

'Open Offer' means the conditional offer by UBS Warburg, at the request of and
as agent for the Company, of 20,384,997 new Ordinary Shares to Qualifying
Shareholders on a pre-emptive basis at 175 pence per share on the terms and
conditions set out in a prospectus which is expected to be posted to
Shareholders on 24 July 2002 and in the Application Form

'Ordinary Shares' means ordinary shares of 25p each in the capital of the
Company

'Placing' means the conditional placing of the New Ordinary Shares on behalf of
the Company with institutional and other investors

'Placing Shares' means the 12,472,146 new Ordinary Shares which are to be placed
firm on a non-pre-emptive basis with institutional and other investors

'PPP' means public private partnership

'Qualifying Shareholders' means holders of existing Ordinary Shares registered
on the register of members of the Company at the close of business on the Record
Date (other than certain overseas shareholders)

'Record Date' means 19 July 2002, being the record date for the Open Offer

'Resolution' means the special resolution to be proposed at the Extraordinary
General Meeting

'secured' means bed spaces which are at a property which an accommodation
provider has (a) acquired and holds as an investment or (b) acquired and which
is in the course of construction or (c) acquired and holds for development or
(d) contracted to acquire or (e) in relation to a PPP acquired preferred bidder
status

'Securities Act' means the United States Securities Act of 1933 (as amended)

'Shareholders' means holders of existing Ordinary Shares registered on the
register of members of the Company

'UBS Warburg' means UBS AG, acting through its business group UBS Warburg or,
where appropriate, its subsidiary UBS Warburg Ltd.

'UNITE' or the 'Company' means The UNITE Group plc

'United Kingdom' or 'UK' means the United Kingdom of Great Britain and Northern
Ireland

'United States' means the United States of America, its territories and
possessions, any State of the United States and the District of Columbia

'unsecured' means bed spaces which are at a property in respect of which UNITE
has an option or is in negotiations, but which are not yet 'secured' by UNITE




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