Unite may return to region after £50m share placing

Mark Allan, chief executive of Unite Group, said it was “certainly possible” the company would further invest in the region following a £50m share placing in June.

Unite, which operates over 7,500 beds in 15 student accommodation blocks across Leeds, Sheffield and Huddersfield, said the proceeds of the placing would be used to fund a “highly selective regional development programme”.

“We are looking for towns and cities where there is a demand and supply imbalance,” Mr Allan told the Yorkshire Post yesterday. “We haven’t yet secured any projects but it’s certainly possible we will invest more in Yorkshire.”

Unite is currently developing 378 rooms in Kingsmill Lane in Huddersfield, one of only a few of its projects happening outside London.

“Huddersfield is a strong university with strong prospects. It has received a lot of investment in recent years,” said Mr Allan. “It has a strong management team, a growing student population and an accommodation market that has been under-supplied.”

He added: “It fits our criteria because there is a clear requirement for purpose-built accommodation and it will continue to attract more students in the future. It’s also a cheap place to live and given the increasing cost of university education, that is a major factor.”

Yorkshire accounts for 20 per cent of Unite’s total stock, with Sheffield only second to London, and Leeds in fourth place. Between 1998 and 2006, there was a rapid growth in student numbers due to the expansion of the universities, leading to a dramatic increase in student accommodation, particularly in popular cities like Leeds and Sheffield.

Mr Allan said although the company was happy with its portfolio in both cities, it had not developed in either one recently.

Unite’s most high-profile scheme is Sky Plaza in Leeds. The 37-storey building, which has 533 rooms, is believed to be one of the tallest student accommodation buildings in the world.

“We haven’t developed in Leeds or Sheffield for a while,” Mr Allan said. “We are happy with what we have got. They are well-located and will continue to fill.

“Student reservations for the next year suggest we will fill out all of the rooms.”

Mr Allan was speaking to the Yorkshire Post as Unite reported a rise in pre-tax profits for the first half its financial year of £37.5m, compared to £33.5m a year ago.

The group revealed that reservations for the 2013/14 academic year are at 90 per cent, compared with 87 per cent the previous year.

Further growth is supported by an attractive development pipeline, the company said.

Unite said equity funding is also in place for a further £215m development programme, in addition to the secured pipeline.

Adjusted net asset value (NAV) per share rose 3.1 per cent to 361p, from 350p.

The group said its unaudited revenues for the six months to June 30 were £47.6m, compared with £65.7m a year ago.

Mr Allan said the company had become more cautious about which universities it targets in the future.

“I wouldn’t say we are concerned about the financial health of universities at this point,” he said. “But we are aware that there will be winners and losers as market forces come into play and it’s something we are keeping a close eye on.

“We can’t assume that all universities will be around in years to come.”

He added: “The business has continued to perform strongly in 2013 with solid growth in earnings and NAV and healthy demand for accommodation for the 2013/14 university year.

“We expect this positive performance to be sustained for the full year and the rental growth outlook for the remainder of 2013 and into 2014 is encouraging.”

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