19th Dec 2005 07:00
Unite Group PLC19 December 2005 Date: 19 December 2005On behalf of: The UNITE Group plcEmbargoed until: 0700hrs UNITE ANNOUNCES £64 MILLION SALE TO SAVILLS The UNITE Group plc ("UNITE"), the UK's leading provider of student hospitality,announces today that it has completed the sale to a wholly owned subsidiary ofSavills plc of 100% of the units in a recently established property unit trustwhich owns a portfolio of three student accommodation buildings operated byUNITE. The total consideration receivable in cash on completion is £64.1million, equating to a 5.22% net initial yield. Under the terms of the transaction, UNITE will retain full responsibility forthe ongoing management of the buildings, as well as a share in the anticipatednet income remaining after management costs. UNITE will retain approximately23% of the gross rents in this regard after paying rent of £3.4 million perannum to the fund under three long term FRI leases. The properties, all purpose built in the past three years, are located inBournemouth, Bath and Portsmouth and provide an aggregate of 1,561 bed spaces,representing around 5% of UNITE's completed portfolio. Two of the properties aresubject to long-term index-linked nominations agreements whereby theUniversities initially guarantee 90% of the rents receivable from students. Thethird property is subject to a long-term lease with the University incorporatingfixed annual uplifts. Following an independent valuation at 30 June 2005, theproperties had a net book value of £60 million. UNITE will use the majority of the proceeds to repay borrowings, with theremaining capital of approximately £17 million to be reinvested into the Group'sdevelopment activities in due course. The unit trust, which was marketed by CB Richard Ellis Financial, has beenpurchased by Savills in order to seed a fund to be launched early next year byits fund management arm, Cordea Savills. The Student Hall Fund has beendeveloped in response to institutional investor demand for funds that allow themto invest in residential property offering both long leases and opportunitiesfor enhanced returns. Commenting on the transaction, Mark Allan, Chief Financial Officer of UNITE,said: "UNITE continues to lead its market and the indirect sale of this portfolio toSavills reflects the continued strong investment demand for well-located,expertly-managed student accommodation. The transaction underpins the strong capital growth in our portfolio reported atthe time of our interim statement and further builds our stream of third partymanagement revenues. Together with the proceeds of our recent share placing,the capital released from this transaction leaves UNITE well placed tocapitalise on the continuing opportunities for growth in our sector." Richard Lake, Director of UK Fund Management at Cordea Savills LLP said: "We are extremely pleased that Savills has acquired this unit trust comprisingthree high quality assets from UNITE. The properties, which will form the seedassets for the Cordea Savills Student Hall Fund, have minimum 20 year leases andguaranteed RPI growth. They are located in popular and established Universitytowns and match our requirement for seed property that creates a bedrock ofsolid and secure income." ENDS Enquiries: The UNITE Group plc Tel: 020 7902 5060Mark Allan, Chief Financial Officer Cordea Savills LLPRichard Lake, Director of UK Fund Management Tel: 020 7409 9932 Redleaf Communications Ltd (for UNITE) Tel: 020 7955 1410Emma Kane/Wendy Timmons Mob: 07876 338339 Further information on UNITE is available at www.unite-group.co.ukFurther information on Cordea Savills is available at www.cordeasavills.com Editors Notes: The UNITE Group plc In November 2005, UNITE raised £31 million of new cash equity to fund furthergrowth. This represented approximately 8.4% of the Group's share capital. 9.4million new ordinary shares were issued at a price of 330 pence per share. In November 2004 UNITE undertook a disposal to Morley Fund Management of aportfolio of four purpose built student accommodation blocks. The totalconsideration for the portfolio was £49.35 million, equating to a 5.77% netinitial yield. UNITE is the UK's number one student accommodation company. Led by strong valuesat its heart, UNITE delivers the real student experience. It helps to regeneratecities as part of the community and it contributes to improving the country'shousing. The Group focuses on the provision and management of high quality, well-locatedstudent accommodation and hospitality services at affordable prices in stronghigher education markets. UNITE undertakes the planning work, development andmanagement of sites, often working closely with the Universities and Colleges todeliver accommodation for students across all ages and nationalities. UNITEdevelopments typically show high occupancy levels and robust rental growth asdemand continues to rise for places on UK Higher Education courses and forquality and safe accommodation. UNITE has pioneered the establishment of student accommodation as an asset classwithin the Real Estate sector. Since the listing of UNITE on the London StockExchange in 1999 the company has grown significantly and now operates 30,996completed and managed bed spaces in the portfolio, with a further 8,642 bedspaces secured for future delivery. As at 30 June 2005 the portfolio was valuedat £1.12 billion. UNITE is a constituent of the FTSE-250 group of companies andhas a current market capitalisation of approximately £425 million. Cordea Savills LLP Cordea Savills is a European property fund manager, offering a comprehensiveservice on a pooled fund or segregated mandate basis. Funds are invested eitherdirectly in property, in investment vehicles, or both. Investment styles rangefrom core to opportunistic. Cordea Savills is the brand name for entities in the Cordea Savills group,including Cordea Savills LLP, Cordea Savills Investment Management Limited,Cordea Savills Wealth Management LLP and Cordea Savills Advisors SpA. As at 30 September 2005, Cordea Savills managed £1.5 billion (€2 billion) ofgross assets for a range of clients including corporate and local authoritypension funds, charities and UK and European private clients. In order to advise and manage discretionary investment management business,Cordea Savills LLP uses its subsidiary company, Cordea Savills InvestmentManagement Limited, which is authorised and regulated by the Financial ServicesAuthority, registration number 193863. Cordea Savills LLP is a limited liability partnership registered in England No:OC306423. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
UniteSavills