Yahoo Finance Unite to raise £170m as it returns to London market
Student accommodation provider Unite plans to raise £170m to fund two developments in Oxford and London, marking its first scheme in the capital in five years.
The company has signed agreements with Oxford Brookes university to build 887 rooms in the city and with King's College London for around 1,000 rooms, the first time it has bought land in London since 2013.
The money will be raised via a share placing of 22.2 million shares, around 9.2pc of its total market capitalisation.
Richard Smith, Unite’s chief executive, said agreeing to provide bedrooms for students through so-called nomination agreements with universities, where institutions guarantee the room rent, was a key part of the company’s growth plan.
“Around 60pc of our rooms are now let to universities, and there is certainly scope to do more partnerships,” he said.
The remainder of its rooms are let directly to students on traditional leases. Unite has a pipeline of 7,550 rooms in major university towns and cities that will be built in the next three years.
The use of privately owned student accommodation has become more common in recent years as universities have built fewer of their own halls and student numbers have risen.
Unite has grown both by building its own halls and by buying up existing portfolios. Last February it made its first major acquisition on a university campus, buying up a 3,067-bed scheme at Aston University for £227m.
Unite said on Wednesday that its pre-tax profits for 2017 were £229.4m, 14pc higher than the previous year. Revenue fell 1.1pc to £119.3m due to a decline in property sales and other income.
The company’s like-for-like rental growth continued to grow, rising 3.4pc, albeit at a slightly slower pace than the 3.8pc the previous year. Unite increased its dividend by 26pc to 22.7p.
David Brockton, analyst at Liberum, said: “[Unite’s] growth is further enhanced by the group’s first mover advantage focused on the leading UK universities coupled with established university relationships and a clear service focus aided by its operational platform.”
Shares in the firm were slightly down on Wednesday morning at 777.5p, 0.32pc lower.
