Unite Students has outlined plans to initially invest up to £200m into build-to-rent properties and is seeking joint venture partners for operational asset acquisitions and forward-funded schemes.
The FTSE 100 group made its BTR debut in September last year, when it bought 180 Stratford, E15, which consists of 178 homes.
Unite said the property, which it is planning to refurbish, has seen 11% rental growth since the purchase.
Joe Lister, chief financial officer at Unite Students, told EG that BTR forms part of its strategy for medium to longer-term growth, alongside its existing focus on student accommodation.
He said that between £100-200m has been earmarked as an “incremental step” into the sector.
“We have been very careful to take our shareholders with us on this journey – we’re not suddenly changing strategy,” he added.
“We still think the student market is very exciting, [but] it’s clear there’s huge demand for [BTR]. And we’ve got that differentiator of being able to run it. There are not many national platforms in BTR.”
United footprint
Unite is looking for BTR opportunities in cities where it already has a student presence, as it believes the “crossover of operations is very important”.
The developer is looking to fund BTR assets with 300-700 homes and is open to mixed-use assets that also have a PBSA element.
However, Lister said Unite is not interested in funding developments with large retail or office components.
Lister said Unite’s BTR jvs will mirror existing partnership models with universities within its PBSA platform, in which it will agree to buy a development when it is completed and run it.
“It’s not a bad time to buy now, with where interest rates have moved,” added Lister. “Some of the developers are keener to talk to us and are looking for funding solutions.”
Unlike its Unite Student platform, the developer does not intend to operate its BTR assets in its own independently branded offer, although Lister said this could be revisited once the portfolio gets “to scale”.
Investing in parallel with PBSA
Unite is also looking to expand its PBSA platform this year, in which it will be investing £250m, as EG reported earlier this year.
Lister said: “Coming out of Covid, we have seen ongoing demand from our partner universities, and this is a good opportunity to buy land and make some sensible returns from it.
“We are appraising a lot of schemes and what we have seen over the last six-to-12 months is [that] land prices have started to fall a bit, but build costs have continued increasing.”
Cities identified for expansion include London, Manchester, and Edinburgh.
Lister highlighted that universities have been increasingly willing to engage during the past two years, as universities seek different solutions to alleviate “the pressure on accommodation and pressure on their own finances”.
Unite has committed to four development projects this year including Morriss House in Nottingham, which is due to open in September 2023; Lower Parliament Street, also in Nottingham; Abbey Lane, Edinburgh; and Jubilee House, E15, in Stratford.
The developer will also invest £30m-50m in refurbishing three of its PBSA schemes including Bridge House in Edinburgh, Station Court in London and Oak Brook Park in Birmingham.
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