Last checked at 9 Jan 2009 07:00
Date: 9 January 2009
On behalf of: The UNITE Group plc ("UNITE")
Embargoed until: 0700
The UNITE Group plc ("UNITE" / "Group")
31 DECEMBER 2008 VALUATION OF THE UNITE UK STUDENT ACCOMMODATION FUND
The UNITE Group plc, the UK's leading commercial provider of student accommodation, today reports the estimated Net Asset Value as at 31 December 2008 of the UNITE UK Student Accommodation Fund ("USAF"/ the "Fund").
The Fund's estimated Net Asset Value as at 31 December 2008 was £0.753 per unit (30 September 2008: £1.012 per unit, 31 December 2007: £1.020 per unit). The reduction in Net Asset Value was 25.6% in the quarter and 26.2% in the 12 months to December 2008.
The principal components of the fall in the Net Asset Value of the units are as follows:
| Q4 | 2008 | |
| Reduction in property values (post gearing) | 9.7% | 10.5% |
| Movement in interest rate swaps | 8.5% | 8.0% |
| Provision for Landsbanki deposit | 6.8% | 6.8% |
| Other factors | 0.6% | 0.9% |
| 25.6% | 26.2% | |
| Reduction in underlying gross property values | 5.6% | 5.9% |
In arriving at the value of the Fund's units, its property portfolio was independently valued at £897 million. This represents a decrease of 5.6% in the underlying gross property values during the fourth quarter driven by 46 basis points of yield expansion partly offset by the recognition of further rental growth. During the full year 2008, the value of the property portfolio decreased by 5.9% as a result of 77 basis points of yield expansion partly offset by 6.4% of rental growth over the year. Following these movements and the acquisition of the £171 million portfolio of student accommodation in December, the average net initial yield was 6.43% at 31 December 2008.
In addition there has been an impact of 8.5% from the movement in interest rate swaps and, whilst work is ongoing to recover the cash deposit placed with Landsbanki in September 2008, a full provision has been made resulting in a further 6.8% reduction in estimated Net Asset Value.
Commenting on the Fund's unit valuation, Joe Lister, UNITE's Chief Financial Officer, said:
"Whilst it was a very challenging quarter with specific factors being reflected in the performance of the net asset value, valuations of student accommodation assets continue to outperform the wider real estate market. With the presence of consistent rental growth, a strong reservations performance and continued investment appetite, student accommodation remains well placed to continue to outperform and weather the present challenging economic conditions."
ENDS
For further details please contact:
| The UNITE Group plc Mark Allan Joe Lister | Tel: 0117 302 7004 |
| Financial Dynamics Stephanie Highett / Dido Laurimore / Rachel Drysdale / Laurence Jones | Tel: 020 7831 3113 |
About UNITE Group
UNITE Group is the UK's largest manager of branded student accommodation, with a business model that focuses on being a developer and co-investing asset manager. For the current academic year, UNITE Group operates accommodation for some 36,000 customers throughout 23 key university towns and cities. UNITE Group undertakes the planning, development and management of sites, often working closely with the universities and colleges, in order to deliver high quality, well-located student accommodation at affordable prices in strong higher education markets.
Together with its development pipeline, UNITE Group manages a property portfolio valued at c. £2.9 billion on completion. UNITE Group's strategy, set out at the beginning of 2007, aims to double the size of its UK business by 2012.
With student rents resilient to economic cycles, and the continued growth in student numbers, especially from overseas, UNITE Group developments typically show high occupancy levels in a market where there is a general shortage of quality supply.
Founded in 1991, UNITE Group is listed on the London Stock Exchange (UTG).
UNITE UK Student Accommodation Fund
UNITE Group established the UNITE UK Student Accommodation Fund ("USAF" / the "Fund") at the end of 2006. The Fund was initiated with the principal objectives:
to release capital that is tied up in mature, stabilised investment assets for investment into higher added value development activity;
to provide UNITE Group with more growth capital in the medium term;
to diversify UNITE Group's sources of income by providing a new, valuable revenue stream arising from management fees from the Fund; and
to provide financial returns to investors in the Fund.
The Fund helped transform UNITE Group's business model to that of a developer of new purpose-built student accommodation and manager of funds which own student accommodation properties operated by UNITE Group and in which the Company has a significant minority stake.
See our websites:
Investors and corporate: www.unite-group.co.uk
Students: www.unite-students.com
Graduates: www.livocity.com