5th Feb 2014 08:36
LONDON (Alliance News) - Unite Group PLC Wednesday said it has exchanged contracts to acquire a development site near the University of Aberdeen, Scotland, which it plans to transform into accommodation for 400 students.
The 120,00 square foot scheme, still subject to planning consent, is expected to have a total development cost of GBP20 million and is expected to deliver yield in line with Unite's target returns of 9.5% to 10% on cost.
The site, which is targeted to open for the 2016/17 academic year, is currently occupied by a derelict, listed school building, and the development will include its refurbishment as part of the design of the property.
The listed building, once renovated, will house 18% of bedrooms.
Unite said the project will be the second scheme funded from proceeds of its June 2013 share placing.
The student accommodation provider said it is also in exclusive negotiations to acquire two further sites in similarly "strong regional locations "and which are expected to exchange later in the first quarter of 2014.
When contractually secure, these two further projects will account for the remainder of the June 2013 share placing proceeds and also are supportive of the group's target returns, it said.
"Aberdeen has a thriving economy underpinned by the oil and gas industry and two strong universities with 19,000 full time students seeking accommodation," Unite Managing Director of Property Richard Simpson said in a statement.
"The fundamentals of the student accommodation market remain strong with 2014/15 application numbers up 4% on last year, and applications from non-EU students and UK school leavers at record highs," he added.
Unite shares are up 0.5% at 409.90 pence early Wednesday morning.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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