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Unite Group outlines two acquisitions, disposal

25 May 2017 07:29

Unite Group said its Unite Students Accommodation Fund (USAF) has exchanged contracts for the acquisition of two assets.

These were for a 222-bed development in Durham and a 418-bed scheme in Selly Oak, Birmingham.

The combined cost of the developments was £56m, with Unite's share being £12.9m. The acquisitions were expected to generate a yield on cost of 6.3% in their first full year of operation.

In parallel, USAF had sold a 128-bed studio scheme in central London for £42m, with Unite's share being £9.7m, providing the majority of the funding for the acquisitions.

The remainder will be funded by cash. The disposal price reflects a value of £320,000 per bedroom, in line with book value and represents a net initial yield of 4.25%. Disposals in 2017 now total £180 million, on a Unite share basis, against our target of £150-200 million.

"The transactions support Unite's strategy of concentrating its portfolio alongside high-ranking universities with a structural demand and supply imbalance and focusing on cluster flat accommodation rather than single occupancy studios."

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