Unite Group’s £1.4bn deal with Liberty Living will expand Yorkshire portfolio

Student housing provider Unite is to acquire rival Liberty Living Group in a £1.4bn cash and shares deal which it says will add scale to meet growing student demand in established markets, including key Yorkshire cities.

Canada’s Pension Plan Investment Board will take a 20 per cent stake in the enlarged group, which will operate 20 student accommodation buildings in Leeds and Sheffield.

Unite also proposed a placing of 26,353,664 new ordinary shares yesterday to help finance the acquisition.

Sign up to our Business newsletter

Sign up to our Business newsletter

Unite currently provides accommodation for almost 50,000 students in about 130 properties across 22 university towns and cities in England and Scotland, including 17 buildings in Leeds and Sheffield.

Morning Leeds.

It also has a strong development pipeline, which will deliver more than 6,000 beds in the next three years.

Liberty Living has over 24,000 beds under management across 51 residences, including two buildings in Leeds and one in Sheffield. It was independently valued at £2.2bn at the end of May.

On completion, the combined group will manage a total of over 73,000 beds across 173 properties in 27 UK towns and cities.

Richard Smith, chief executive of Unite, said: “By combining two highly complementary portfolios, the enlarged group will be well positioned to meet the growing need for affordable, high quality student accommodation in university towns and cities where demand is strong.”

Approximately £240m of the net proceeds of placing will be used to part fund the cash consideration of the deal, while a further £310m will be drawn from Unite’s existing financing facilities and cash resources.

Liberty Living’s properties in Cardiff will be sold to the Unite Student Accommodation Fund for £253m as part of the transaction.

Paul Mullins, chief executive of Liberty Living, which was founded in 2000 and acquired by CPPIB in 2015, said: “(This) announcement is testament to the hard work of the Liberty Living team, over the last four years.

“Since the business was acquired by CPPIB, we have grown beds under management and net assets.

“We have also substantially driven our performance by enhancing operational efficiency and improving capex deployment, while maintaining excellent student service quality.

“In addition to this we have also invested heavily in health and safety initiatives across the estate, remediating all ACM cladding and achieving the first accreditation for PAS7 in the student accommodation sector and the first PAS7 national accreditation of any business”.

Unite’s Yorkshire portfolio includes Broadcasting Tower and Sky Plaza in Leeds plus The Forge, Exchange Works in Sheffield. Liberty Living has Liberty Dock and Liberty Park in Leeds plus Liberty Hall in Sheffield.

Thomas Jackson, managing director, real estate investments at CPPIB, said: “Through this transaction, we are able to continue our investment in the student housing sector within the UK across a broader, more diverse and stable portfolio and with additional development exposure, which fits well within our global real estate strategy.”