Unite buys new 800-bed development in Paddington from Travis Perkins
Student accommodation manager and developer Unite Group said on Friday that it has bought a new 800-bed development site in Paddington, central London, from Travis Perkins.
The acquisition is subject to planning and total development costs are estimated at around £150m. This will be funded from the proceeds of Unite’s recent equity issue.
The scheme is targeted for delivery for the 2023/24 academic year, subject to planning approval, and will deliver a development yield "in line with the company's enhanced targets for university partnerships in central London".
Unite said talks are already underway with university partners to support the scheme through planning, with a view to agreeing a long-term nomination agreement.
The company also provided a brief update on check-in performance for the 2020/21 academic year. It said that as previously disclosed, it has let 88% of bed spaces across the whole portfolio for the year, compared to 98% in 2019/20.
Checked-in occupancy has risen to 80% from 70% on 8 October, reflecting those students who have now checked in to their accommodation and nomination agreements where Unite receives rent directly from universities. Customers making up the remaining 8% of occupancy are expected to check in in January and rental arrears for the first term are broadly in line with previous years, Unite said.
Unite said its check-in performance and rent collection to date is expected to result in rental income reduction of up to 20% compared to last year.
The company maintained its guidance for EPRA earnings of 22-25 pence for FY2020 but said that given current uncertainty, it is too early to commit to the reinstatement of dividends.
Chief executive Richard Smith said: "Our latest land acquisition means we have now secured circa £175m of new development opportunities since our recent placing. This is a rare opportunity to acquire a zone 1 central London site in an excellent location, which will help to meet the growing accommodation needs of our London-based University partners.
"We have continued to welcome students to our properties over the past month, reflecting the value they place on the learning, socialising and independence that University provides. We know from our recent student survey that the majority of students are committed to continuing their studies and returning to their current student accommodation in the New Year and we look forward to welcoming them back in January."