(Reuters) - Unite Students, the student accommodation unit of Unite Group Plc (UTG.L), and Singapore sovereign wealth fund GIC have bought Birmingham-based student housing provider Aston Student Village for 227 million pounds.
Property investors have been buying into student flats, health centres and care homes, favouring their long leases and steady tenants over retail and offices, which have been hit by Britain’s vote to leave the European Union.
“This is the largest single student property asset to have ever transacted. It is a demonstration of the weight of capital looking to access a sector which has a resilience to the general economic cycle,” James Pullan, Knight Frank’s Head of Student Property, told Reuters.
“The PBSA sector continues to attract equity from across the globe,” he added, referring to the purpose-built student accommodation sector.
Property was among the sectors hit hardest by Brexit. Within weeks of the referendum, seven commercial property funds worth a collective 18 billion pounds froze trading after panicked retail investors asked for their money back.
The London Student Accommodation Vehicle, a 50:50 joint venture between Unite and GIC, is funding the deal with 40 percent equity and 60 percent debt, Unite Students said.
Aston Student Village (ASV) comprises 3,067 beds across five properties on the Aston University campus.
The deal would expand Unite’s presence to up to 5,000 beds in Birmingham, the second-largest student city in the UK after London, with over 70,000 students during term time.
ASV will generate gross annual income of around 17 million pounds for the 2017/18 academic year and immediately add to earnings and NAV, Unite said.
The purchase is expected to add 1-2 pence to the Unite Group’s earnings per share going forward, Unite Students said.
Reporting by Sanjeeban Sarkar in Bengaluru; Editing by Gopakumar Warrier and Martina D'Couto