London is a cool investment for student halls
Unite Group is the biggest provider of student accommodation in Britain.
The real estate investment trust has raised £170 million to fund two developments, including its first project in London for five years. Unite has struck agreements to build about 1,000 rooms at King’s College London and 887 at Oxford Brookes University, backed by a share placing representing about 9.2 per cent of its share capital.
As universities have built fewer and fewer of their own halls and residences, partnerships have become a greater part of Unite’s business. The Bristol-based company, which was founded in 1991 and floated in 2000, is the largest manager and developer of purpose-built student accommodation, hosting 50,000 students across 140 properties in 24 university towns and cities nationwide. It has expanded by developing its sites and buying existing halls, including its first significant acquisition on a university campus in February last year, when it bought a 3,067-bedroom scheme at Aston University in Birmingham for £227 million.
The Chief Executive, Richard Smith has said that Unite has avoided London in recent years because the market had been so competitive, but he argued that it had cooled a “little bit” and that the capital was the “No 1 city globally for higher education, but also the most undersupplied city for student accommodation in the UK”.
This is a positive step for younger people who often move to London and struggle to find affordable living spaces within a reasonable distance to their university.
But Unite is apparently delighted by this recent partnership. Pre-tax profit for the company rose by 14 per cent to £229.4 million in the year to the end of December, although revenue slipped to £119.3 million from £120.7 million, in part because of a decline in property sales. Rental income increased from £97.1 million to £99.7 million and like-for-like rental growth rose by 3.4 per cent, slightly slower than the 3.8 per cent a year ago but at the higher end of the board’s guidance.