Unite Group plc (LON:UTG) Unite Students, the UK’s leading owner, manager and developer of student accommodation, has announced that it has entered into a joint venture (‘JV’) framework agreement with Newcastle University for the development of 2,000 new student beds.
Highlights
· Long-term strategic partnership with a Russell Group university
· Total development costs of c.£250 million (Unite share: £128 million)
· Unite to act as development and asset manager to the JV with 51% ownership share
Unite Students and Newcastle University have contracted to form a JV to develop 2,000 beds at the University’s Castle Leazes site in Newcastle for delivery in 2027 and 2028. The Castle Leazes site currently provides c.1,250 beds and was built in 1969. Newcastle University has committed to close the existing accommodation on the site and commence demolition in the summer of 2024.
Joe Lister, Unite Students Chief Executive Officer, commented:
“Partnering with Newcastle University to redevelop Castle Leazes and deliver 2,000 beds of high-quality, affordable accommodation for students is a hugely exciting step for Unite Students. The partnership will provide further support to Newcastle University in meeting their accommodation needs at a time of real housing shortage, so that they can focus on providing a world-class experience for their students.
“Unite Students is uniquely positioned to help address the shortage of student homes through our long-standing and trusted university relationships, best-in-class operating platform and in-house development capability. There is a significant opportunity to become the partner-of-choice for universities as they seek to unlock the potential of their campuses to deliver new accommodation and access new funding.”
Nick Collins, Executive Director of Finance, Newcastle University, commented:
“We are delighted to partner with Unite Students to redevelop Castle Leazes. This joint venture will provide high-quality, affordable accommodation for our students and help us continue to attract students from across the UK and around the world to Newcastle University and our city.”
Joint venture framework agreement
Newcastle University is a founding member of the research-led Russell Group of Universities and was ranked 37th in the UK by the Times & Sunday Times Good University Guide in 2024 and 110th in the QS World University Rankings 2024. The JV deepens our existing 20-year relationship with Newcastle University. To support the University’s accommodation requirements during the development phase, the Company has separately entered into a four-year nomination agreement for 1,600 beds in other Unite Students properties in the city.
Total development costs are c.£250 million, with main construction expected to commence in early 2025. Newcastle University will own a 49% stake in the JV and contribute the Castle Leazes site on a 150-year lease. Unite’s equity commitment is expected to be c.£70 million for a 51% stake with the remaining funding coming from debt secured against the JV. The project is expected to deliver returns comparable with developments in regional cities. This also reflects the fees Unite will receive as development and asset manager to the JV.
Entry into the JV is subject to planning approval. Planning submission is expected by the end of Q1 2024, which would support formation of the JV before the end of 2024.
The Unite Group provides purpose built student accommodation across the United Kingdom.
