Unite Students has set out plans to invest up to £250m into developments this year, after taking a “pause for breath” after the mini-Budget in H2 last year.
However, the future is uncertain for some schemes that Unite has in its pipeline, including two in London and one in Bristol.
Joe Lister, chief financial officer at Unite Students, told EG that those schemes are under its control, but that the company has “not yet committed” to building them out.
The student accommodation developer and operator is reviewing future development starts in its pipeline to “ensure projects deliver earnings accretion in an environment of higher funding costs”, according to a trading update earlier today (28 February).
However, Unite said it broadly expects to commit to more developments during 2023 owing to solid demand from students and universities.
Unite has reaffirmed its commitment to four development projects, which will require £200m in capex.
Those projects are: Derby Road and Lower Parliament Street in Nottingham, Abbey Lane in Edinburgh and Jubilee House in Stratford (pictured), east London. The £200m costs will be funded from cash and credit facilities.
The schemes total 2,123 beds and £339m in development costs, and are expected to deliver a yield on cost of 6.7%.
Lister said Unite typically invests £150m to £250m into developments each year.
He added: “We will get back to that level this year – it is great to see the return of that level of development activity after the uncertainty that was created by the change to funding costs last year.”
In 2022, Unite also acquired three buildings in Manchester – Parkway Gate, Kincardine Court and New Medlock House – to refurbish for PBSA use.
Lister said the approach allowed Unite to “repurpose buildings and target them more to specific customer groups, based on the research we had undertaken”.
Unite segmented its customer base throughout the smaller repositioned developments, with postgraduates being housed together in one building and first- and second-year students in another.
Lister said: “Refurbishment opportunities allow us to move more quickly, and to upgrade existing buildings so we can accelerate the activity, whereas new developments can take longer to come to fruition.”
Unite’s ambitions for 2023 include a mix of new-builds and repositioned assets. It is also targeting more development partnerships with universities.
Lister added: “We are seeing more opportunities to partner with universities, either to acquire existing buildings from them or to develop in partnership with them. We see an opportunity to grow into that space in the next 12 to 18 months.”
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