18th Jun 2021 08:45
(Alliance News) - Unite Group PLC on Friday said it has sold two London properties for GBP342 million in total to its extended joint venture with GIC Private Limited.
The Bristol-based provider of purpose-built student accommodation sold properties in Wembley and Whitechapel to its London Student Accommodation joint venture with GIC, one of the government of Singapore's investment funds. In May, Unite Group extended the GIC joint venture for a further ten years, to 2032.
With the sale completed, the GIC joint venture will hold gross property assets valued at GBP1.68 billion and pro forma net assets of GBP1.04 billion.
The joint venture will fund the GBP342 million purchase through GBP208 million in equity from Unite and GIC and a GBP140 million loan facility, maturing in eight years, from the investment manager Barings LLC.
Together the properties offer 1,358 bed spaces, usually direct-let to students. Unite Group will continue to manage the properties. The properties combined gross asset value was GBP338 million at the end of 2020 based on stabilised net operating income of GBP14.2 million for the most recent academic year.
The sale reflects an average net initial yield of 4.0%, Unite said.
The FTSE 250 company has now disposed of over GBP260 million in assets on a Unite Group share basis in the year to date. The group noted that this recent sale will slightly dilute this year's European Public Real Estate Association earnings by 0.4 pence per share. However, European Public Real Estate Association earnings per share guidance remains at 27p to 30p for the current year.
Unite Group plans to use the proceeds to repay group debt before reinvesting in its pipeline of property developments.
Unite Group shares were trading up 0.5% at 1,137.98 pence each in London on Friday morning.
By Scarlett Butler; [email protected]
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