Site acquisition & update on check-in performanceSource: RNS
20 November 2020
THE UNITE GROUP PLC
('Unite Students', 'Unite', the 'Group', or the 'Company')
ACQUISITION OF NEW CENTRAL LONDON DEVELOPMENT SITE AND UPDATE ON 2020/21 CHECK-IN PERFORMANCE
Unite Students, the UK's leading owner, manager and developer of student accommodation, today announces the acquisition of a new 800-bed development site in Paddington, central London on a subject to planning basis and provides an update on check-in performance for the 2020/21 academic year.
Acquisition of central London development site
The Company has exchanged contracts to acquire a new 800-bed development site in Paddington, central London from Travis Perkins plc ('Travis Perkins') on a subject to planning basis. Total development costs are estimated to be c.£150 million, to be funded from the proceeds of our recent equity issue. The Company is only committed to limited development costs at this stage and has optionality over a development start date, subject to market conditions.
The scheme is targeted for delivery for the 2023/24 academic year, subject to planning approval, and will deliver a development yield in line with the Company's enhanced targets for University partnerships in central London. Discussions are already underway with University partners to support the scheme through planning, with a view to agreeing a long-term nomination agreement.
The development will target a BREEAM Excellent rating and incorporate a range of design features to reduce its embodied and operational carbon, supporting the Company's transition to net zero development and operations.
The acquisition is Unite's second partnership with Travis Perkins following the successful delivery of St Pancras Way in 2014 and, like St Pancras Way, the development will incorporate a new ground floor retail unit for Travis Perkins.
Update on 2020/21 check-ins
As previously disclosed, we have let 88% of bed spaces across the whole portfolio for the 2020/21 academic year (2019/20: 98%). Checked-in occupancy has increased to 80% (8 October: 70%), reflecting those students who have now checked-in to their accommodation and nomination agreements where Unite receives rent directly from Universities.
Customers making up the remaining 8% of occupancy are expected to check-in during January. Rental arrears for the first term are broadly in line with previous years.
Our check-in performance and rent collection to date for 2020/21 is expected to result in a reduction in rental income of up to 20% compared to 2019/20 (previously 10%-20%), excluding the impact of cancellations in 2019/20 due to Covid-19.
We retain our guidance for EPRA EPS of 22-25 pence for FY2020, reflecting progress on rent collection in the first term and delivery of targeted cost savings in the year. Given current uncertainty, it is too early to commit to the reinstatement of dividends. However, the Board will review this decision early in the New Year.
Richard Smith, Chief Executive of Unite Students, commented:
"Our latest land acquisition means we have now secured c.£175 million of new development opportunities since our recent placing. This is a rare opportunity to acquire a zone 1 central London site in an excellent location, which will help to meet the growing accommodation needs of our London-based University partners. We remain confident in the growth outlook for London over the next decade, reflecting the global reputation of its Universities and a positive outlook for growth in UK and international student numbers.
"We have continued to welcome students to our properties over the past month, reflecting the value they place on the learning, socialising and independence that University provides. We know from our recent student survey1 that the majority of students are committed to continuing their studies and returning to their current student accommodation in the New Year and we look forward to welcoming them back in January. For those students that want to stay over the Christmas period, we will be fully operational. We will continue doing all we can to help keep students and our staff safe throughout this challenging period."
1. 93% of students intend to remain at university and continue with their courses for the rest of this academic year and 85% said it was likely they would stay in their accommodation to do this (survey of 1,000 UK students for Unite Students by Opinium from 30th October to 6th November).
For further information, please contact:
Richard Smith / Joe Lister / Michael Burt Tel: +44 117 302 7005
Unite press office Tel: +44 7754 749 301
Justin Griffiths / Victoria Heslop Tel: +44 20 7250 1446
About Unite Students
Unite Students is the UK's largest owner, manager and developer of purpose-built student accommodation, serving the country's world-leading Higher Education sector. Following the £1.4bn acquisition of Liberty Living in November 2019, we now provide homes to 75,000 students across 177 properties in 27 leading University towns and cities. We currently partner with 45 Universities across the UK.
Our people are driven by a common purpose: to provide a 'Home for Success' for the students who live with us. Unite's accommodation is safe and secure, high quality and affordable. Students live predominantly in ensuite study bedrooms, with rents covering all bills, insurance, 24-hour security and high-speed Wi-Fi. We also hold a five-star British Safety Council audit rating.
Founded in 1991 in Bristol, Unite Group is an award-winning Real Estate Investment Trust (REIT), listed on the London Stock Exchange and a member of the FTSE 250 Index. Unite is invested in and operates two specialist funds and joint ventures with institutional investment partners: the £3 billion Unite UK Student Accommodation Fund (USAF) and the £1 billion London Student Accommodation Vehicle (LSAV).
For more information, visit:
Unite's corporate website www.unite-group.co.uk
The student site www.unite-students.com