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Unite Students to buy new site in Middlesex Street
Unite Students, a manager and developer of student accommodation, has exchanged contracts to buy a new development site in Middlesex Street, London, with around 1,000 beds.
The acquisition is subject to achieving a planning consent and is being supported through planning by Kings College London, with a view to securing a long-term nomination agreement.
The new building is planned to be completed for the 2021/22 academic year and will provide "much needed" accommodation options for students. Total development costs are estimated to be around £195m with a development yield of around 6.25%, which is in line with the company's target for University Partnership transactions.
Unite said the London student market remains "significantly" undersupplied with only 81,000 purpose-built beds currently in operation.
Chief executive officer Richard Smith said: "This is our first major development in London since 2013 and represents an important return to the City with the support of one of the UK's leading universities. This reflects our strategy of building long term partnerships with the UK's top universities in strategically important locations where there is a shortage of affordable, high-quality student accommodation."
Numis said the acquisition not only delivers a strong return and extends the earnings growth profile, but will also maintain the group's focus on delivering a high quality income stream.
"Unite has strong momentum and we believe the current share price is an attractive entry point despite the headline premium to NAV given the visibility over earnings growth and future NAV contribution from developments, plus the explicit support Unite enjoys from its university partners."
At 0845 GMT, the shares were up 1.3% to 795p.