Student housing firm Unite Group has raised £300m through a share placing.
Unite said the cash would enable it to “continue to invest in its market-leading platform and enhance future earnings growth”.
Specifically, the fundraise will allow it to commit to two new PBSA development schemes in Bristol and London, adding 1,566 beds to its portfolio and boosting its committed development pipeline to £600m, which includes the 705-bed Morriss House (pictured) in Nottingham. The scheme is due to be ready for occupation for the 2023/24 academic year.
Some £50m of the raise will also be used to “accelerate asset management initiatives”.
Unite said the current market environment offered a “compelling multi-year opportunity” to accelerate its growth.
It said its confidence in the market was underpinned by growing demand for higher education driven by UK demographic growth, increasing international student numbers and a chronic lack of supply. New purpose-built student accommodation supply is down by 60% on pre-pandemic levels and is failing to keep pace with record student demand.
Chief executive Richard Smith said: “The need for new student homes is the greatest we have seen for several years. The outlook for the UK higher education sector is strong with demand underpinned by demographic growth, high application rates and rising international student numbers.”
He added: “At the same time, the private rental sector is in retreat and a supply crunch is building. This supports a positive outlook for our business for a number of years and creates a range of compelling investment opportunities. The capital raise will enable us to accelerate investment to development and asset management opportunities in our strongest markets.”
The capital raise comes as Unite reported an 11% increase in rental income for the six months ended 30 June to £197m. Pretax profit was down from £334m in H1 2022 to £116.9m in H1 2023, with last year’s figures skewed by a circa £200m valuation gain.
Demand remains high across the portfolio, with reservations for the 2023/24 year at a record 98% and rental growth at 7% – up from 92% and 3.5% for the same period last year.
“We continue to invest in our portfolio and customer offer and our rental increases have tracked the rise in our costs, said Smith. “Our all-inclusive, fixed-price offer, which allows students to benefit from our buying power on utilities, compares very favourably to HMOs and, in many cases, we remain cheaper.”
He added: “We expect market conditions and our alignment to the UK’s strongest universities to support a positive outlook for our business for a number of years. This creates a range of compelling investment opportunities, which we will balance with ongoing capital discipline. We remain confident in our continued growth.”
To send feedback, e-mail samantha.mcclary@eg.co.uk or tweet @samanthamcclary or @EGPropertyNews
