Unite acquires 3,067 bed Aston Student Village for £227 million in first major on-campus acquisition with GIC – 10 February 2017
Unite Students, the UK’s leading manager and developer of student accommodation, announces that it has acquired Aston Student Village (“ASV”) for £227 million in a 50:50 joint venture with GIC, Singapore’s sovereign wealth fund. ASV, which represents Unite’s first major on-campus acquisition, comprises 3,067 beds across five large, detached properties on Aston University’s campus in central Birmingham.
ASV is currently the only accommodation offered to students at Aston University, which has a student population of 11,000, with no additional accommodation available either under direct ownership or through nominations agreements. The modern, high quality accommodation is fully occupied.
Aston University has consistently achieved strong league table positions and is currently ranked 33rd in The Times’ Good University Guide. The acquisition provides Unite Students and Aston University with the opportunity to establish a long-term strategic partnership, including nominations, in due course. ASV takes Unite’s presence in Birmingham to over 5,000 beds, providing the opportunity to deliver efficiencies across the whole portfolio in the city.
Unite is planning to invest in the accommodation over the summer to provide the next intake of students with the Unite customer experience. By enhancing the experience and product for customers and integrating the buildings into our PRISM operating system, we will drive rental growth opportunities as well as cost and operational efficiencies. The acquisition creates an excellent opportunity to demonstrate the benefits of our scale, operational capability and reputation, and open up further opportunities across the sector.
The purchase price represents an acquisition yield of 5%, in line with recent transactions in the student accommodation sector. This yield will grow to over 6% following investment into the portfolio and the implementation of the Unite Students platform. ASV will generate gross annual income of around £17 million for the 2017/18 academic year and will be immediately accretive to earnings and NAV.
ASV has been acquired into Unite and GIC’s LSAV 50:50 joint venture. Unite will receive management and acquisition fees and the acquisition is expected to add approximately 1-2p to the Group’s annual EPRA Earnings on a recurring basis.
LSAV is funding the acquisition with 40% equity and 60% debt (provided by TH Real Estate under a 10-year facility). Unite will initially fund its share of the acquisition through additional borrowings, with disposals planned for later in the year offsetting this increase in net debt. Following the transaction, LSAV’s LTV ratio is 39% and Unite’s see-through LTV (on a pro-forma basis) is 38%.
Birmingham is a thriving metropolitan city with the second largest student population in the UK, with over 70,000 students resident in the city during term time. The city is home to two other leading UK universities: the University of Birmingham and Birmingham City University.
Richard Smith, Unite Students Chief Executive Officer, commented:
“I am delighted to announce this acquisition, our first on campus. Birmingham is one of the top cities for students and this acquisition demonstrates the value of our strong relationships with Universities and also the benefit of our position as market leader, both by scale and efficiency and the service that we are able to offer to students as a result of our PRISM operating system.
“I look forward to strengthening our relationship with Aston University, working within the campus, helping to support their growth and providing their students with great accommodation and a service experience that will support their personal and academic achievements.”
Madeleine Cosgrave, Regional Head, Europe, GIC Real Estate, said:
“GIC is pleased to strengthen our partnership with Unite, a leading manager and developer of student accommodation in the UK, through this acquisition. ASV is a high-quality asset uniquely located both on-campus and in the city centre. We are confident in the long-term growth potential of this asset and the student housing sector which we find attractive for its resilient income streams.”
For further information, please contact:
Richard Smith, Chief Executive Officer Tel: +44 117 302 7005
Joe Lister, Chief Financial Officer
Victoria Geoghegan Tel: +44 20 3772 2562