Bristol-headquartered Unite Group today announced a share placing in an attempt to raise £115 million. The student accommodation developer and manager said it hopes to place up to 20.1 million new shares, equating to 9.99 percent of the business.
Half of the money raised from the placing will be used to acquire new units currently under consideration in the Unite Student Accommodation Fund (USAF). The USAF is also raising its own equity of up to £275 million.
The other half of the proceeds raised from the share placing will be used to fund Unite’s own acquisition of a 2018 regional development, picked from a large selection of potential development opportunities in various university cities like Glasgow, Leeds, Birmingham and Aberdeen.
Unite Group believes that the funds raised will be fully committed within 12 months and by that time acquisitions will be in the advanced stages of negotiations.
Significantly, from the start of the 2015 academic year, universities will no longer be capped with regard to the number of student places they may offer. Thus the Government predicts that there will be an increase of 60,000 students enrolling in courses throughout the UK, meaning that demand for student specific accommodation is set to increase dramatically. Commenting on the future of the sector, Unite Group said:
“The student intake for 2014/15 was the highest ever and with the removal of the student number cap, there is likely to be sustained growth in student numbers in the longer term, while the supply of new accommodation is still struggling to keep pace with this growing demand.”
In investment terms, the outlook for student accommodation remains positive. Unite Group currently possesses quite a number of student accommodation developments, spread out across 23 of the UK’s most popular university cities. With the announcement of its share placing and its intent to expand further into the sector, it is obvious that the company agrees with many analysts regarding the investment potential of the student accommodation market.