Unite Students and Manchester Metropolitan University have formed a joint venture to develop 2,300 beds at the university’s Cambridge Halls site in Manchester.
Cambridge Halls, which was constructed in the 1990s, provides 770 beds which no longer meet the needs of students. The university has committed to close the existing accommodation, with works due to commence later this year.
The deal is part Unite’s strategy to weather the current economic conditions comprising high inflation, soaring land prices and rising construction costs.
In an interview with Estates Gazette, Unite chief executive Joe Lister has said the FTSE 100 company’s focus is cementing its joint ventures with universities, alongside refurbishment and redevelopment plays.
“University partnerships is a big growth opportunity for us,” Lister said. “It’s one of the by-products of the funding challenges that universities are facing at the moment. Universities have had to cope with their tuition fees remaining frozen for seven years, and that has put some pressure on their overall funding models. They are looking more creatively at how they can provide modern, purpose-built, sustainable accommodation to their students.
“The joint venture model is something we have developed over the past few years.”
Total development costs for the project are £390m. Manchester Metropolitan University will own a 30% stake in the JV, reflecting the contribution of the Cambridge Halls site. Unite’s equity commitment is expected to be around £125m for a 70% stake, which will be funded from internally generated sources, with the remaining funding coming from debt secured against the JV.
To support the university’s accommodation requirements during the development phase, the company has entered into a five-year nomination agreement for 2,550 beds in other Unite Students’ properties in Manchester.
A planning application is expected to be submitted in Q2.
Andrew Fallon, chief property officer at Manchester Metropolitan University, said: “We are delighted to announce our partnership with Unite Students for the redevelopment of Cambridge Halls. This joint venture will provide much-needed additional purpose-built student accommodation in Manchester, right on the doorstep of our university. The project will not only enhance the quality of housing for students, but also benefit the surrounding community through new health, wellbeing and retail offerings.”
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