UNITE Asset Sale Raises 49m
Unite Group PLC
13 October 2004
Date: 13th October 2004
On behalf of: The UNITE Group plc
Embargoed until: 0700hrs
UNITE ASSET SALE RAISES OVER £49 MILLION
The UNITE Group plc, the UK's largest student landlord, announces today that it
has exchanged contracts, unconditionally, for the disposal to Morley Fund
Management of a portfolio of four purpose built student accommodation blocks.
The total consideration for the portfolio, payable in cash on completion, is
£49.35 million, equating to a 5.77% net initial yield.
Under the terms of the transaction, UNITE will retain full responsibility for
the ongoing management of the buildings, as well as a share in the anticipated
net income remaining after management costs. UNITE will retain approximately
30% of the gross rents in this regard, with the remainder being passed through
to the purchaser as rent payable under a lease between the two parties. UNITE
also retains the benefit of future rental performance from any open market rent
reviews in excess of indexation.
The properties are located in Bristol, Leeds and two in Newcastle and provide an
aggregate of 1,246 bed spaces, representing around 4.7% of UNITE's completed
portfolio. Each of the properties is subject to a long-term index-linked
nominations agreement whereby the Universities guarantee between 80% and 95% of
the gross rents receivable from students for terms of between 25 and 30 years.
Following an independent valuation at 30 June 2004, the properties had a net
book value of £48.5 million and an associated net annual rent of £3.0 million.
Morley Fund Management was selected as the purchaser following a marketing
exercise undertaken by CB Richard Ellis Financial. That exercise resulted in
five bids being received at, or in excess of the asking price. Completion is
scheduled to take place on 2 November 2004.
The Group will use the majority of the proceeds to repay borrowings, with
approximately £10 million to be reinvested into the Group's development
activities in due course; this will provide the Group with sufficient equity
capital to fund its roll-out programme into 2007.
Commenting on the transaction, Mark Allan, Group Finance Director of UNITE,
said:
'Our strategy continues to be to lead the market and to focus on scale, quality
and location. The sale of these properties enables UNITE to capitalise on the
value it has created in developing this student accommodation whilst retaining
the responsibility for managing and maintaining it. The level of interest from
across the market in this portfolio was enormously encouraging and clearly
demonstrates the emerging interest in student accommodation as an investment
proposition. We are delighted to be working with Morley on this transaction
which further demonstrates the substantial progress that UNITE has made this
year in diversifying its capital base.'
Nick Mansley, Head of Property Strategy at Morley said:
'We are pleased to be purchasing these investments on behalf of our clients.
We have a continuing requirement for properties backed by long-term high quality
income streams particularly where backed by universities, registered social
landlords or local authorities in addition to our mainstream requirement for
higher risk/higher return investment property.'
ENDS
Enquiries:
The UNITE Group plc Tel: 020 7902 5060
Mark Allan, Group Finance Director
Morley
Nick Mansley, Head of Property Strategy Tel: 020 7809 6810
Redleaf Communications Ltd Tel: 020 7955 1410
Emma Kane/James White Mob: 07876 338339
Further information on UNITE is available at www.unite-group.co.uk
This information is provided by RNS
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