Owner, manager and developer of student accommodation – Unite Students – enters the Build to Rent sector with the acquisition of a 178-unit pilot Build to Rent scheme in Stratford, East London for £71m. 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.
The Group confirms that the acquisition enables them 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.
“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 Build to Rent investment offers the opportunity to test our operational capability in the sector and understand the potential synergies with our student business.”Richard Smith, Chief Executive Officer, Unite Students
The property opened in 2013 and is located on Stratford High Street. It includes 319 beds – a mix of one-, two- and three-bedroom homes, with 99% occupied at affordable average rents of £28 per sq ft. The scheme has 11,000 sq ft of commercial space and is a five-minute walk from Stratford station and a wide range of local amenities.
This property adds to the Group’s significant existing presence in the Stratford market, where Unite currently operates 1,700 student beds – and has two additional 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.
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 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.
“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.”Richard Smith, Chief Executive Officer, Unite Students