UNITE Group plc, the UK's largest manager of branded student accommodation, today announces that is has exchanged contracts, unconditionally, on the sale of eleven operational direct let assets for a total cash consideration of £178.6 million, 2.8% above the assets’ December 2007 valuations. The asset sales have been made in two separate transactions to different purchasers and have been made both on UNITE Group's own behalf and on behalf of the UNITE UK Student Accommodation Fund ("USAF"). The transactions deliver three key benefits:
- An immediate reduction in the Group’s gearing;
- An increase in investment capacity within USAF;
- Clear evidence supporting student accommodation valuations.
In the larger of the two transactions, UNITE Group is selling nine purpose-built student accommodation properties, comprising 3,810 beds in four markets (Southampton, Cardiff, Preston and Stoke), for £152.0 million to Liberty Living, the student accommodation arm of Brandeaux Fund Management. Of the nine properties, four are owned by UNITE Group outright (1,970 beds) and five are owned by USAF (1,840 beds). 
The cash consideration applicable to the UNITE Group-owned assets being sold is £91.1 million, which compares to a 31 December 2007 valuation of £88.4 million for those assets and reflects a net initial yield of 5.7%. Completion is set for 28 August 2008 and the proceeds will be used to pay down existing debt and be reinvested into the Group's development activities over time, as attractive opportunities arise.
| In the second transaction, USAF is selling two properties in Huddersfield comprising 627 beds to Swanbourne for a cash consideration of £26.6 million. This sale is being conducted on behalf of USAF and completion will occur no later than December 2008.
As a result of both transactions, USAF will receive a total cash consideration of £87.5 million, representing a net initial yield of 5.8% and compared to a 31 December 2007 valuation of £85.3 million for those assets. These proceeds will create additional investment capacity within USAF which will be applied in acquiring further assets from UNITE Group over time.
Following completion of these sales, UNITE Group will no longer have an operational presence in any of the five cities mentioned. This follows the earlier sale of smaller non-core assets and cessation of operations in Salford, Luton and Aberystwyth, and is consistent with the Group's stated strategy of focusing its capital and operations in larger and high-growth markets, notably London.
Commenting on the transaction, Mark Allan, Chief Executive of UNITE Group, said:
"These sales, at prices above the December 2007 valuations, provide strong evidence of the resilience of the student accommodation sector at a time when more general property values are under significant downward pressure. The sales are consistent with our stated strategy of focusing our capital on higher growth markets and they provide the Group with significant additional funds at a time when we expect attractive opportunities to emerge."
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