Unite in £306m private fundraising

The student housing developer has raised an extra £306 million, including £100 million from Allianz Real Estate, for its real estate fund to make more acquisitions and reduce leverage.

FTSE-listed UK student housing developer The Unite Group has added a further £306 million (€425 million; $473 million) to its private Unite UK Student Accommodation Fund (USAF) to fund new acquisitions and reduce leverage.

The fund, which the London-based company established in 2006, is Europe’s largest non-listed real estate fund that is purely focused on student accommodation investment assets. It is an open-ended, infinite-life vehicle with a portfolio valued at £1.5 billion, comprising 24,820 beds in 68 properties across 22 UK towns and cities.

Among the investors was Allianz Real Estate which invested £100 million. Other existing unitholders, including Unite itself invested a total of £192 million. Within that number, there was £14 million raised from new institutional investors.

The new units in the fund will be priced at the quarterly net asset value at the time when capital is drawn, plus a premium of approximately 1.5 percent.

Unite will initially use the funds to reduce leverage from the fund’s current level of 40 percent loan to value and the firm intends to maintain the vehicle’s gearing below this level going forward. Unite is also looking at a number of acquisitions and expects to deploy the capital earmarked for investment by the end of the year.

“We are delighted to have successfully raised over £300 million of new capital into USAF providing the fund with capacity for acquisitions and the ability to further de-lever the balance sheet in line with our plans,” commented Joe Lister, Unite's chief financial officer.

“The strength of demand for USAF units together with the introduction of an investor of Allianz’s global standing is a real endorsement of USAF’s position as the leading fund in the sector, its historic performance and future strategy.”

Though a listed company, Unite has had plenty of experience raising capital via private, institutional channels. The firm also manages the Unite Capital Cities joint venture, which has several hundred million pounds worth of assets. That fund was created with Singapore sovereign wealth fund, GIC Private, back in 2005. The pair also structured a different partnership called the London Student Accommodation Joint Venture (LSAV), a 50:50 joint venture which has the right of first refusal on Unite’s London developments. The two entities, Unite Capital Cities and LSAV, merged last year.