Unite Group completes debt facilities for joint venture

7th Jan 2014 07:53

UK developer of student accommodation Unite Group has completed 226m pounds of new debt facilities for the Unite Capital Cities (UCC) joint venture. The joint venture between Unite and GIC holds a portfolio of 14 properties valued at £385m in London and Edinburgh. UNITE has a 30% stake in UCC.The funding is provided in two separate facilities, by Legal & General and the Royal Bank of Scotland (RBS). Legal & General has provided a £149m, nine-year loan which is at 55% loan-to-value and is fixed at 4.3% per year for its duration. The RBS facility for £77m is for five years at an initial loan-to-value of 68% and average cost of 3.3% per year.Unite said the transaction reduces UCC's cost of finance from 5.5% to 4.0% generating annual savings of approximately £3.5m.A performance-related fee of about £7m will be paid from UCC to Unite following completion of the transaction. The fee represents the net receivable by Unite that will be recognised as a one-off item in adjusted earnings in the group's 2013 results.It will used to increase Unite's stake in UCC this year as part of the strategy to consolidate the group's two joint ventures with GIC. Unite's stake in UCC is expected to rise to 34%.Joe Lister, Chief Financial Officer of Unite, said: "The completion of these new £226m facilities concludes a year in which we have made real progress extending debt maturities, reducing the cost of financing and securing high quality long-term funding partners. We are delighted to extend our relationship with Legal & General and RBS, and to have secured the long term financing for UCC."RD