Student accommodation investor Unite (UTG) is taking another step in its strategy to add more beds to its portfolio in university towns.
The £1.4 billion cap has received conditional planning tobuild a 370-bed property in Coventry. If Unite receives the final nod to start construction the property will welcome its first resident at the start of the 2017 academic year.
The development takes the number of beds in its pipeline for that year to almost 3,000.
The total cost of the Coventry development, including buying the land, will be £24 million giving Unite a £10 million development profit in the deal, or an 8.5% yield on cost.
Unite has been targeting the demand supply imbalance in Coventry for some time and is scheduled to open a 286-bed property in the city by the start of term in September. When both of these developments are operational Unite will have 1,800 beds in Coventry.
Analysts at Numis say the outstanding development profits for its five national schemes that are scheduled to start admitting students for the 2017/18 academic year will be around £80 million. ‘The implied net rent roll is c.£17 million, which will start to positively impact on earnings towards the end of FY17.’
