TH Real Estate funds Unite/GIC’s Birmingham student homes purchase

TH Real Estate has provided a circa £136 million loan to finance the purchase of a student accommodation complex in Birmingham by Unite Students and Singaporean sovereign wealth fund GIC.

The financing supports the acquisition for £227 million of Aston Student Village, through a 50/50 joint venture between the two buyers. The deal is Unite’s first major on-campus acquisition.

The 60 percent loan-to-value facility has been provided for a 10-year term.

Unite will initially fund its share of the acquisition through additional borrowings, with disposals planned for later in the year, off-setting the increase in net debt. Following the transaction, the joint venture’s LTV ratio is 39 percent and Unite’s see-through LTV is 38 percent on a pro-forma basis.

Aston Student Village contains 3,067 beds across five detached properties on the Aston University campus in central Birmingham. It is the only accommodation offered to the university’s students, which number 11,000 and is as such fully occupied.

The purchase price represents an acquisition yield of 5 percent. This yield will grow to more than 6 percent following investment into the portfolio and the implementation of the Unite Students platform. Aston Student Village will generate gross annual income of around £17 million for the 2017/2018 academic year, Unite said.

Unite plans to invest in the scheme over the summer to bring it in line with other properties operated under its brand. “By enhancing the experience and product for customers and integrating the buildings into our PRISM operating system, we will drive rental growth opportunities as well as cost and operational efficiencies,” Unite said in a statement.

“Birmingham is one of the top cities for students and this acquisition demonstrates the value of our strong relationships with Universities and also the benefit of our position as market leader, both by scale and efficiency and the service that we are able to offer to students as a result of our PRISM operating system,” said Richard Smith, Unite Students CEO.

“GIC is pleased to strengthen our partnership with Unite, a leading manager and developer of student accommodation in the UK, through this acquisition. ASV is a high-quality asset uniquely located both on-campus and in the city centre. We are confident in the long-term growth potential of this asset and the student housing sector which we find attractive for its resilient income streams,” added Madeleine Cosgrave, regional head, Europe, at GIC Real Estate.