Student housing provider Unite is set to acquire rival Liberty Living Group in a £1.4 billion cash and shares deal. It will see Canada’s Pension Plan Investment Board take a 20 percent stake in the enlarged group, with Unite also proposing issuing a tranche of new ordinary shares to help finance the acquisition.
The Unite Group plc is the United Kingdom’s largest developer and operator of student accommodation (capitalised at 2.96bn) providing homes for over 50,000 students in approximately 140 properties in over 28 of England and Scotland’s University towns and cities. It rents its rooms both directly to students and to approximately 60 Universities across the United Kingdom.
Unite says it is confident over future rental growth as the Competition Markets Authority (CMA) starts its acquisition probe into the deal. The CMA is to evaluate whether the takeover may be expected to result in a substantial lessening of competition within the market. To assist it with this assessment, the CMA invites comments on the transaction from any interested party
The student accommodation provider Unite says it remains confident of delivering its rental growth targets for the next couple of years, as the CMA starts a phase 1 probe into its proposed £1.4bn acquisition of its rival.
The company says that student intake in 2019/20 is projected to be in-line with the record levels of the past few years, with the resultant continuing growth in the university cities where it operates.
In-line with its strategy of focusing on the mainly Russell Group university cities, Unite says it has continued to see the strongest growth in student numbers at these higher tariff universities, which have risen by 1.8% compared to last year.
The group says it remains confident in delivering rental growth of 3.0-3.5% for 2019/20 and 2020/21, including improved utilisation and cost synergies of £4m in 2020 and £15m a year from 2021. It says it is achieving strong accommodation performance across its estate, with a reported 98% of rooms fully let. This has resulted in a strong sales performance this summer, with revenue up around 40% on last year.
Chief executive Richard Smith has said:
“Demand for UK higher education remains robust, as reflected in the record share of 18-year olds choosing to attend University. Student demand also supports our strategic alignment to mid and higher tariff universities.
“Despite increased political and economic uncertainty, we maintain our positive outlook for the business, reflecting the strength of our operational and letting performance and opportunities to drive further improvements in utilisation and efficiency while investing in further value-added services for our students.”