Unite seeks 150m for investment arm

UNITE GROUP, the student housing developer and manager, said yesterday its investment arm USAF was raising &pound;150m to expand its property portfolio, in the latest indication that the student property market is thriving despite the downturn.<br /><br />The group has already secured &pound;133m of its target from investors, it said, and has also received applications for a further &pound;23m of capital commitments, which are due to be finalised in the coming week.<br /><br />USAF is Unite&rsquo;s investment vehicle, which it manages and part-owns.<br /><br />&ldquo;This as a positive transaction for Unite, demonstrating its ongoing business model of recycling capital to third party investors, while retaining a stake and fee income. This reinforces the significant investor appetite for the sector and for Unite as an operator,&rdquo; Numis&rsquo; Andrew Cox said.<br /><br />The fund will use most of the new equity to buy properties, valued at around &pound;100m, from Unite later this month, while the remaining funds will be retained for acquisitions, either from Unite or third-parties.<br /><br />After the equity raising, USAF&rsquo;s investment capacity, which includes its target leverage, will rise to &pound;325m.<br /><br />&ldquo;We&rsquo;re expecting student numbers to continue to rise, which will continue to drive rental growth, and so expect to issue a further equity raising in the future to keep up with demand,&rdquo; chief financial officer Joe Lister said.<br /><br />Meanwhile, chief executive Mark Allan said both Unite and USAF were &ldquo;extremely well placed to take advantage of opportunities to invest in the sector over the coming years, to consolidate further their market-leading position&rdquo;.<br /><br /><strong>NICK COLLINS<br />NABARRO LAWYERS ON THE DEAL</strong><br />Unite Group&rsquo;s fundraising was overseen by law firm Nabarro, with real estate group partner Nick Collins and joint venture specialist Justin Cornelius advising.<br /><br />Cornelius has in the past worked on the team that advised Land Securities on its sale of a 50 per cent stake in a major retail block on Oxford Street to Frogmore Real Estate Partners (FREP) for &pound;105m. Collins has worked on the development and management of student accommodation since the mid-1990s.<br /><br />Accountants KPMG were also involved in the deal.<br /><br />As Unite&rsquo;s equity raising for its investment vehicle was for investment into property, rather than into shares, no underwriters or advisers were used in the deal, but real estate investment banking and advisory firm M3 Capital Partners has worked with Unite on its equity raisings in the past.