UNITE acquires project in Newcastle city centre

14th Jan 2014 08:26

Student accommodation company UNITE has acquired a project in Newcastle city centre, which it plans to transform into a home for around 600 students. The site, which covers 200,000 square foot, is close to the city's two universities and is expected to open in 2016. The total development cost is expected to be £31m with a yield of 9.5-10% on cost, in line with the group's target returns. The transaction is being funded using around 25% of proceeds of the company's share placing carried out in June.Managing Director of Property, Richard Simpson, said: "This acquisition marks good progress with UNITE's selective regional development programme and is a prime example of how we are investing the proceeds from our 2013 share placing; it is in an excellent central location, well positioned for both Newcastle's universities and in a market we expect to experience continued growth. "The fundamentals of the student accommodation market remain strong and will potentially be bolstered further by the government's plans to remove the student number cap in 2015, which could itself lead to an increase in enrolments of up to 12%. UNITE is well positioned for continued growth both through its existing, strong portfolio and new regional developments." The group also said it was in "exclusive negotiations" to acquire three further projects, which are expected to exchange later in the first quarter of 2014 and if they go ahead will account for the remainder of the placing proceeds. NR