Unite’s funding update and quarterly fund valuations

Unite Students releases its funding update and quarterly fund valuations for its two funds at 31 December 2022.

Unite Students’ Hayloft Point PBSA development in London | PBSA News
Unite Students’ Hayloft Point PBSA development in London.

Unite Students, an owner, manager and developer of purpose-built student accommodation (PBSA) provides a funding update and the Group’s quarterly property valuations for the Unite UK Student Accommodation Fund (USAF) and the London Student Accommodation Joint Venture (LSAV) as at 31 December 2022.

Funding

Unite Students have observed a slight easing in funding market conditions over the past quarter and lenders remain supportive of the Group and the student accommodation sector. The Group has recently extended its Revolving Credit Facility (RCF) by £150m to £600m in total, at terms in line with the existing facility. At year-end, the wholly owned Group had £397m of cash and debt headroom, comprising £29m of cash balances and £368m of undrawn debt.

The £100m L&G loan facility in LSAV, which is due to mature in January 2023, will be repaid at maturity from existing reserves within LSAV. The Group continue to make good progress in refinancing the £380m June 2023 bond maturities in USAF (Unite share: £108m), with demand from a range of lenders.

Quarterly fund valuations

At 31 December 2022, USAF’s property portfolio was independently valued at £2,888m, reflecting a 1.4% decrease on a like-for-like basis during the quarter. Over the year as a whole, valuations for USAF increased by 4.6% on a like-for-like basis. The valuation decrease in the quarter was driven by an increase in property yields of 13bps to a weighted average of 5%, which more than offset the positive impact of rental growth. Over the past 12 months, valuation growth was driven by rental growth and a 7bps reduction in property yields on a like-for-like basis.

LSAV’s property portfolio was independently valued at £1,921m, reflecting a 2.8% decrease on a like-for-like basis during the quarter. Over the year as a whole, valuations for LSAV increased by 5.6% on a like-for-like basis. The valuation decrease in the quarter was driven by an increase in property yields of 18bps to a weighted average of 4.1%, which more than offset the positive impact of rental growth. Over the past 12 months, valuation growth was driven by rental growth with yields broadly stable.

Unite Students expect the valuation of its wholly owned portfolio at 31 December 2022 to reflect an increase in property yields comparable to the USAF portfolio in H2 2022. This is expected to support a total accounting return of around 8% for FY2022.