Unite Group plc (LON:UNG) Unite Students, the UK’s leading owner, manager and developer of student accommodation, has acquired 180 Stratford, a 178-unit purpose-built build-to-rent (‘BTR’) property in Stratford, East London for £71m.
The acquisition will enable the Group to test its operational capability to extend its accommodation offer to young professionals and retain them as customers as they move on to the next stage in their lives. The property adds to the Group’s significant existing presence in the Stratford market, where Unite already operates 1,700 student beds and has two further student developments in its secured pipeline. The acquisition of 180 Stratford will increase Unite’s scale in the Stratford market to around 3,700 beds.
The property, which opened in 2013, is located on Stratford High Street approximately 5 minutes walking time to Stratford station as well as a wide range of local amenities. The property offers 319 beds across a mix of 1-bed, 2-bed and 3-bed units, as well as 11,000 sq ft of commercial space. The residential units are currently 99% occupied at affordable average rents of £28 per sq ft.
The property is expected to produce a yield on cost of 4.3% following a planned refurbishment starting in 2023. The refurbishment will incorporate a rolling upgrade of the existing residential units, the creation of new amenity space and the addition of seven new residential units.
180 Stratford will be integrated onto Unite’s operating platform and will leverage the Company’s existing operational capability for day-to-day management of the building and its development team for delivery of the planned refurbishment.
The acquisition and refurbishment will be funded from the proceeds of recent disposals and does not impact Unite’s 2022 earnings guidance of 40-41p.
Richard Smith, Unite Students Chief Executive Officer, commented:
“As previously outlined, we believe that there is an exciting opportunity to grow our platform in the wider living sector by catering to the growing number of young professional renters living in major UK cities. We already serve this market through the 9,000 postgraduate students who live with us each year. This pilot BTR investment offers the opportunity to test our operational capability in the sector and understand the potential synergies with our student business.
“This property has good redevelopment potential and benefits from Stratford’s growth as a major student, employment and leisure hub, as well as our significant local presence. These factors de-risk our investment and make it the ideal location to trial the extension of our Home for Success offer into young professional living.”
