18th Dec 2006 07:02
Unite Group PLC18 December 2006 18 December 2006 The UNITE Group plc SUCCESSFUL COMPLETION OF THE FORMATION OF THE £1 BILLION UNITE UK STUDENT ACCOMMODATION FUND The UNITE Group plc ("UNITE"), the UK's leading commercial provider of studentaccommodation, is delighted to announce the completion of the formation of, andcontribution of properties to, the £1 billion UNITE UK Student AccommodationFund (the "Fund") (the "Transaction"). As at closing of the Transaction equity commitments to the Fund received fromleading third party institutional investors total £297 million, an increase of£31 million above the level of commitments in place at the time the Transactionwas announced on 13 November 2006. Approximately 51 per cent. of thesecommitments have been drawn to fund the acquisition of the propertiescontributed to the Fund by UNITE, resulting in third party investors and UNITEhaving interests in the Fund of 61 per cent. and 39 per cent. respectively. Theremaining 49 per cent. of equity commitments will be available to fund thepurchase of future assets. The Fund is expected to own student accommodationproperty worth over £1 billion when fully invested. UNITE received consideration of £515 million from the Fund comprising £419million of cash and £96 million which was re-invested to acquire UNITE's 39 percent. interest in the Fund. The estimated net cash proceeds to UNITE afterrepayment of existing debt secured on the properties and payment of expensesassociated with the formation of the Fund are £33 million. This is in additionto the £33 million UNITE has previously released through a bridge financing. UNITE is also in advanced discussions with a number of other investors who havemade non-binding indications of interest to invest in the Fund. Based on thecontinuing level of interest in the Fund, UNITE is considering sellingadditional units in the Fund during 2007, thereby reducing its interest in theFund and releasing additional cash proceeds. As part of the closing of the transaction, settlement took place of the £280million of commercial mortgage backed securities ("CMBS") issued to provide debtfinancing to the Fund at a loan to value ratio of 55 per cent. The blendedmargin for the securities, 88 per cent. of which are rated AAA, is 21 basispoints over LIBOR. Commenting on the Transaction, Mark Allan, UNITE's Chief Executive, said: "We are delighted to have successfully completed the formation of the UNITE UKStudent Accommodation Fund following overwhelming support from our shareholdersfor the transaction. "The transaction will provide us with capital to fund our development pipelinefrom which we expect to continue to deliver attractive returns to ourshareholders. Shareholders will also benefit from UNITE's long term managementof the assets sold to the Fund which will provide a new and valuable managementfee stream. "The formation of the Fund, together with the successful execution of theassociated CMBS financing, has demonstrated the strong demand from leadinginstitutional equity and debt investors for well managed student accommodationproperties, and firmly establishes student accommodation as an institutionallyrecognised property asset class." ENQUIRIES The UNITE Group plc Telephone: 011 7302 7000 Mark Allan/Tabitha Birchall Financial Dynamics Telephone: 020 7831 3113 Stephanie Highett/Dido Laurimore Notes to Editors: UNITE is the UK's leading student hospitality company. Listed in the FTSE 250index of the London Stock Exchange, the Group focuses on the provision andmanagement of high quality, well-located student accommodation and hospitalityservices in strong higher education markets. UNITE delivers the real student experience, whilst at the same time helping toregenerate cities as part of the community and contributing to the improvementof the country's housing. It undertakes the planning, development andmanagement of sites, often working closely with the universities and colleges,to deliver accommodation for students across all ages and nationalities. UNITEdevelopments typically show high occupancy levels and robust rental growth asdemand continues to rise for places in UK Higher Education and for safe, highquality accommodation for students. Further information on UNITE is available at www.unite-group.co.uk. The contents of this announcement, which have been prepared by and are the soleresponsibility of UNITE, have been approved by Morgan Stanley & Co. Limited("Morgan Stanley") and Macquarie Capital Partners Limited ("MCP"), both entitiesauthorised by the Financial Services Authority, solely for the purposes ofsection 21(2)(b) of the Financial Services and Markets Act 2000. Morgan Stanleyand MCP are each acting for UNITE in connection with the Transaction and no-oneelse, and will not be responsible to anyone other than UNITE for providing theprotections afforded to clients of Morgan Stanley and MCP or for providingadvice in relation to the Transaction. The address of Morgan Stanley is 25 CabotSquare, Canary Wharf, London E14 4QA. The address of MCP is Citypoint, 1Ropemaker Street, 35th Floor, London EC2Y 9HD. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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