Unite Group, the UK's largest developer and manager of student accommodation, has announced an extension of its existing joint (JV) with GIC Real Estate, the real estate arm of the government of Singapore Investment Corp. as well as the creation of a new partnership through which Unite will undertake its next phase of London development activity.
The life of the JV will be extended until September 2022 from its original maturity date of March 2013, and Unite will be able to increase its stake in the JV from 30% to 50% by the 2016 year-end.
Approximately £100m of the JV's existing assets, equivalent to around 25% of its total portfolio at June 30th 2012, will be sold over the next four years. The disposals will be targeted so as to focus it's remaining holdings on its highest quality London locations and the majority of proceeds will then be applied to de-leveraging in the JV.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The JV's existing senior debt facility of £236m, provided by a syndicate of lenders headed by HSH Nordbank, matures in September 2014 and will need to be replaced with a new facility. It is UNITE's intention to have the replacement facility arranged and in place during 2013.
A separate 50/50 JV between the two organisations will be established with the aim of investing £330m in development activity in London. As part of this, Unite will sell two of its existing London development projects to the new JV for cash consideration in line with previously disclosed valuations on completion.
The two JVs can be combined once Unite increases its stake in the original JV to 50%.
"From a strategic perspective the transaction allows Unite to accelerate its investment in London development activity at a time when potential returns are particularly compelling and the scale of opportunity is greater than Unite could fund alone," the firm said.
The share price rose 2.96% to 261p by 08:42.
NR
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
