PGIM grabs student properties from Unite in £184m deal

Unite Students has sold six properties to PGIM Real Estate for £184m – a 6.2% yield. The properties, comprising 2,948 beds, are located in Birmingham, Cardiff, Leicester, Liverpool, Nottingham and Sheffield and have an average age of 18 years. Some 31% of the beds in the portfolio are let on short-term nomination agreements. Unite said the sale was part of its portfolio management strategy to “increase alignment” to high and mid-ranked universities which have the strongest outlook for student demand and support sustainable rental growth. Generation Partners will act as the asset and development manager, and its operational management arm, Now Student Living, will be retained as the property manager. PGIM said it planned to conduct a rolling refurbishment programme across the entire portfolio to modernise the accommodation and to provide best-in-class facilities for students. The refurbishment programme will also enable material improvements to sustainability and energy efficiency via initiatives including passive measures that minimise the energy demand, refurbishment of plant to provide more energy-efficient services and the introduction of on-site renewable energy sources.  Tobias Waldschmidt, senior portfolio manager of European core-plus strategy at PGIM Real Estate, said: “In the current market environment, it is rare to find a stabilised portfolio with high-quality yielding assets located in key regional cities. We believe the UK PBSA sector has strong underlying fundamentals as demand for student housing is only set to increase with more students applying for university. We are confident that, together with Generation Partners, we can add value to this portfolio on behalf of our investors, whilst delivering a secure stable income stream from day one.” Unite said proceeds from the sale would be used for asset management activity and to meet redemption requests. Unite chief executive Joe Lister said: “These disposals continue our disciplined approach of recycling capital for reinvestment and further increases our alignment to the strongest universities. The growth outlook for purpose-built student accommodation remains compelling and we are tracking a number of new investment opportunities at attractive returns.”