14th Mar 2005 07:01
Unite Group PLC14 March 2005 Date: 14 March 2005On behalf of: UNITE Group plc ("UNITE")Embargoed until: 0700hrs The UNITE Group plcAnnouncement of £350 million Joint Venture The UNITE Group plc, the UK's largest student landlord, is pleased to announcethat it has today formed a £350 million joint venture ("the Venture") with GICReal Estate Pte Ltd ("GIC RE") to develop and operate student accommodation inthe capital cities of London, Edinburgh, Dublin and Belfast (the "Target Cities"). GIC RE is committing £49.0 million of equity for a 70% holding in theventure whilst UNITE will commit £21.0 million in exchange for a 30% interest. Simultaneously with the formation of the venture, UNITE has today also sold fourof its existing completed assets in the Target Cities, comprising 723 bedspaces, to the Venture for cash consideration of £47.5 million payableimmediately. 69% of the completed bed spaces are let directly to studentswhilst the remainder are operated under a university lease. In total, thecompleted portfolio generates net rents of £2.85 million per annum. Three ofthe properties are located in London and the other in Edinburgh and they werecollectively independently valued at £46.9 million as at 31 December 2004. Two further London-based properties, both in the course of construction andcomprising 391 beds (the "Development Properties"), have also been sold to theVenture. The additional cash consideration attributable to these assets is£12.6 million payable immediately. They are scheduled to reach practicalcompletion in summer 2005 and are expected to generate combined net rents of£1.35 million in the first year of operation. The Development Properties werevalued at £12.2 million as at 31 December 2004 and both are being built usingmodular construction techniques incorporating components from UNITE's off-sitemanufacturing facility. The joint venture, which has an initial term of 8 years, aims to build upon thisseed portfolio (worth £78.4 million upon completion) and develop a £350 millionportfolio of purpose built student accommodation in the Target Cities over thenext three years. UNITE will then operate the assets for the duration of theVenture. In addition to its 30% stake in the new entity, UNITE will also act and receivefees as fund manager for the duration of the venture, as development managerwith responsibility for all acquisition and development activities, and asproperty manager in respect of all completed assets. All properties willcontinue to operate under the UNITE brand and the property management agreementis for a duration of fifteen years. UNITE will be using the sales proceeds of £60.1 million predominantly to repayexisting borrowing and fund its initial equity contribution to the Venture.After accounting for this application of funds, the remaining £6.7 million willbe retained by UNITE to invest in its ongoing development programme across theUK in due course. Macquarie Capital Partners Limited acted as exclusive financial advisor to UNITEand senior debt is being provided jointly by Royal Bank of Scotland plc andBarclays Bank plc. Commenting on the transaction, Mark Allan, Group Finance Director at UNITE,said: "We are delighted to have secured this new partnership with GIC RE. Itrepresents a significant further step for the Group, which is exactly in linewith our financing strategy and which underlines the continued emergence ofstudent accommodation as an investment proposition, particularly for direct letproperties. He continues, "London and Edinburgh are important existing markets for UNITEwith considerable potential for growth. However, in the past, the capitalintensive nature of these markets has restricted us from leveraging theseopportunities fully. This transaction removes those capital constraints andalso provides fresh capital for expansion into the equally exciting markets ofDublin and Belfast." Commenting the transaction, Dr. Seek Ngee Huat, President of GIC RE said: "The market for student accommodation in the capital cities of London,Edinburgh, Dublin and Belfast is underpinned by strong fundamentals. We believethat this joint venture presents a good opportunity for us to work with anestablished and leading player to realise the full potential of this emergingsector." ENDS Enquiries to: UNITE Group plcMark Allan, Group Finance Director (020) 7902 5060 GIC Real Estate Pte LtdMs Tan Chor Hwa, Executive Vice President (65) 6889 888Head, Administration and Corporate Affairs Redleaf Communications LtdEmma Kane (020) 7955 1410/ 07876 338 339 Notes to Editors: About UNITE• UNITE was founded in 1991 by Nicholas Porter• Further information on UNITE is available at the Company's website: www.unite-group.co.uk About GIC RE • Headquartered in Singapore• GIC RE is the real estate investment arm of Government of Singapore Investment Corporation (GIC) that manages the foreign reserves of Singapore. • GIC RE manages a multi-billion dollar portfolio of direct and indirect property investments worldwide.• Further information on GIC RE is available at the Company's website: www.gicre.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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