13th Jul 2006 07:01
Unite Group PLC13 July 2006 13 July 2006 The UNITE Group plc ("UNITE" / "Group") The UNITE Group plc - Trading Update The UNITE Group plc, the UK's largest provider of student hospitality, todayprovides a trading update prior to entering its close period. The update reports good progress in the year to date, in line with the Board's expectations. • The Group will operate 35,272 bedrooms in 2006/07 academic year (2005/06: 30,996)• Reservations already at 78% for 2006/07• Growing interest in student accommodation as an investment class• Encouraging advances with the Group's joint ventures and asset management activities• The Group is evaluating moving to a co-investing fund management model for the majority of its completed direct let properties. The market Student accommodation is becoming increasingly recognised as an investment classoffering substantial potential for income and capital growth. The role ofpurpose-built, high-quality student accommodation in the physical and economicregeneration of the UK's university towns and cities is also being widelyacknowledged. UNITE, with its in-depth knowledge and experience of this growing sector, isuniquely placed to benefit from these trends, both on its own behalf and onbehalf of its third party management clients and joint venture partners. Reservations performance The Group will be operating 35,272 bedrooms in the forthcoming academic year andmarketing of the portfolio is continuing to attract customers at an encouragingrate. As at 30 June, approximately 78% of available rooms in the Group's portfolio hadalready been reserved for 2006/07. That represents the same proportion ofreservations received at the same point last year, when there were over 4,000fewer beds in the portfolio. Sales mix continues to be an important driver of revenue growth. The Group hasagain been successful in letting an increasing proportion of its portfolio ontenancies of between 50 and 52 weeks, rather than the shorter academic year. 5,156 rooms have been let on 50 to 52 week tenancies for the forthcomingacademic year, compared to 4,095 in 2005/06. Development activity Construction in respect of the Group's 2006 deliveries remains on track and intotal, the Group will deliver 4,276 new bed spaces into its portfolio for the2006/07 academic year. Acquisition and development activity continues in linewith plan in respect of the Group's 2007 and 2008 pipeline. Third party management and Joint Ventures Further strong performance is reported for UNITE's 'Capital Cities' jointventure with GIC Real Estate Pte Ltd. 846 beds in five properties will becompleted for the 2006/07 academic year, taking the total number of operationalbeds in the joint venture to 1,960. UNITE's 'Student Village' joint venture with Lehman Brothers will deliver itssecond village scheme comprising 964 beds in Leeds city centre for occupation inSummer 2006. Student numbers outlook The Group continues to benefit from positive market fundamentals. Although UCASfigures for 2006/07 applications reflect a marginal decline of -3.2% year onyear, that follows the exceptional increase in applications in 2005/06, withaverage annual growth over the past two years of 2.6%. Prospects UNITE continues to make strong progress across its business. Studentaccommodation is increasingly recognised as an attractive commercial propertysector and the experience of the Group and its market leading presence shouldensure that UNITE's shareholders benefit from these positive trends. We have given detailed consideration to the proposed UK REIT structure to beintroduced in 2007. We have concluded that UNITE is unlikely to convert to REITstatus in the short term, given our continuing levels of development activity. Following the successful implementation of our joint ventures and asset saleinitiatives, we believe that there are more appropriate options available to theGroup. In that respect, the Group is evaluating the potential formation of a studentaccommodation fund which would acquire substantially all of the Group'scompleted and stabilised direct let properties (other than those in the UNITEFinance One securitised portfolio). It is also anticipated that the fund wouldacquire additional stabilised direct let properties developed by the Group inthe future. The Group would retain a significant minority stake in any such fundand would act as manager of the properties as well as of the fund itself. Sucha transaction would release capital to repay debt and for reinvestment inongoing development to support future growth. A further update will be providedwith the Group's interim statement in September. Commenting, Mark Allan, Chief Financial Officer of The UNITE Group plc, said: "We have made solid progress across all areas of our business in line withexpectations. With recent transactional evidence in the sector, including ourjoint venture and asset disposals, and the non-cyclical demand and rental growthcharacteristics of our market, the Group is well placed to continue to driveinvestment into the sector. "Development progress is on track and acquisition activity for 2007 and 2008 beddeliveries continues in line with plan. "The Board is confident that UNITE will continue to make good progress againstits strategy to deliver shareholder value through sustainable growth in itsportfolio and build upon its position as the UK's number one student hospitalitycompany." - ends - Enquiries: The UNITE Group plcMark Allan, Chief Financial OfficerTel: 0117 302 7004 Financial DynamicsStephanie Highett / Dido LaurimoreTel: 020 7831 3113 Further information on UNITE is available at www.unite-group.co.uk Notes to Editors • UNITE is the UK's number one student hospitality company. UNITE delivers the real student experience, whilst at the same time helping to regenerate cities as part of the community and contributing to the improvement of the country's housing. • The Group focuses on the provision and management of high quality, well-located student accommodation and hospitality services in strong higher education markets. UNITE undertakes the planning, development and management of sites, often working closely with the universities and colleges, to deliver accommodation for students across all ages and nationalities. UNITE developments typically show high occupancy levels and robust rental growth as demand continues to rise for places in UK Higher Education and for high quality and safe accommodation for students. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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