FINANCE: Unite has said that unless there is a correction in land values it is unlikely to secure any further London development sites this year.
Reporting on a “productive” first quarter, the student accommodation provider said it continued to progress its London Student Accommodation Venture sites but is unlikely to add to the pipeline in 2014.
It said: “Competition for development sites in London remains high and as anticipated we have not secured any further opportunities beyond the current LSAV pipeline.
“Unless there is a correction in land values, it is unlikely that we will secure any further London development projects this year.”
It is on site at Angel Lane, Stratford for a 2015 delivery and has gained planning for Stapleton House, Islington and Olympic Way, Wembley and is preparing to start on site later this year for a 2016 delivery.
Unite continues to simplify its co-investment vehicle structure and said completion of the £174m sale of its three-strong OCB joint venture portfolio was expected before 30 June.
Its share of proceeds, after repayment of senior debt, will be around £18m, which it will use to buy additional units in the Group’s UCC joint venture, as previously disclosed.
At the same time, the group plans to invest a further £8m to take its stake in UCC to 50% and satisfy the preconditions of a merger of UCC into LSAV, its other 50/50 joint venture with GIC.
Once the UCC/LSAV merger has been completed, the number of co-investment vehicles operated by the Group will fall to two, LSAV and USAF.
USAF raised £106m of new equity in the period, of which Unite accounted for £55m, funded primarily from proceeds from the group’s placing and open offer, taking the group’s USAF stake to 21%.
The proceeds of this capital raise have been used initially to repay borrowings in the fund, although USAF is actively considering acquisition opportunities at the current time.
Updating on reservations, it said 73% of rooms were already let for the 2014-15 academic year – up from 71% this time last year.
It added that the group had a positive rental growth outlook and that the business was on track to perform in line with management expectations for the full year.
Unite also announced a two-year £40m investment programme to develop and strengthen its brand and operating platform.
Chief executive Mark Allan said: “The first few months of 2014 have been productive, with a number of important strategic initiatives concluded and the business continuing to perform strongly in all areas. Our market outlook remains positive and we are on track to deliver both our short- and long-term growth targets.
“With the business performing strongly and a supportive market environment, we believe this is the right time to invest in our brand for the long term, strengthening our competitive advantage further. With the support of our co-investment partners we now have a substantial targeted investment programme for the next two years, which we believe will cement Unite’s position as the most trusted brand in the sector.
“Together with our high-quality portfolio, new development pipeline and robust financial position, we believe this brand investment programme will underpin our growth prospects for the long term.”
bridget.oconnell@estatesgazette.com
