3rd Jul 2019 07:57
(Alliance News) - Unite Group PLC is to buy a portfolio of student accommodation worth over GBP2 billion from Canada Pension Plan Investment Board, Unite said Wednesday.
Liberty Living Holdings Inc owns a portfolio comprising of 24,021 student beds, valued at GBP2.2 billion as of May 31.
It is "high quality", Unite said, and will add exposure to new Russell Group universities in Southampton and Cardiff. Some 82% of the portfolio is aligned to "high and mid-ranked" universities, Unite added.
Unite is to pay GBP1.4 billion on a net asset value-for-net asset value basis, in a combination of cash and shares.
The cash element will be worth GBP800 million, with the remaining GBP600 million in 72.6 million new Unite shares, which will represent 20% of the enlarged company. Unite is also to place a further 26.4 million new shares to raise GBP240 million to help fund the cash element.
Following the deal, Unite will target disposals of GBP150 million to GBP200 million over the next three years, per year, and will maintain its 85% dividend payout ratio.
Unite Chief Executive Richard Smith said: "This is a transformative acquisition which brings together the best of two companies with a wealth of expertise and experience in delivering for students and university partners.
"By combining two highly complementary portfolios, the enlarged group will be well positioned to meet the growing need for affordable, high-quality student accommodation in university towns and cities where demand is strong."
"This, combined with our best-in-class operating platform, will mean more choice for universities and an enhanced service and welfare offer for students," Smith continued.
"Backed by a conservative capital structure, this acquisition accelerates and extends our earnings growth and provides opportunities to further enhance total shareholder returns."
The acquisition requires UK Competition & Markets Authority approval, and Unite expects it to complete by the end of the third quarter of 2019.
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