Student accommodation investor Unite Students has acquired a build-to-rent property in Stratford, east London, for £71m as it looks to branch out into the residential sector.
It has purchased 180 Stratford, a 178-unit purpose-built build-to-rent property, which it says will enable it to” test its operational capability to extend its accommodation offer to young professionals and retain them as customers as they move on to the next stage in their lives”.
The property adds to the group’s significant existing presence in the Stratford market, where Unite already operates 1,700 student beds and has two further student developments in its secured pipeline.
The property, which opened in 2013, is located on Stratford High Street, close to Stratford station. It offers 319 beds across a mix of one-bed, two-bed and three-bed units, as well as 11,000 sq ft of commercial space. The residential units are currently 99% occupied at average rents of £28 per sq ft.
The property is expected to produce a yield on cost of 4.3% following a planned refurbishment starting in 2023. The refurbishment will incorporate a rolling upgrade of the existing residential units, the creation of new amenity space and the addition of seven new residential units.
Unite said 180 Stratford will be integrated onto its operating platform where it can leverage its existing operational capability for day-to-day management of the building and its development team for delivery of the planned refurbishment.
The acquisition and refurbishment will be funded from the proceeds of recent disposals and does not impact Unite’s 2022 earnings guidance of 40-41p.
Richard Smith, Unite Students chief executive, said: “As previously outlined, we believe that there is an exciting opportunity to grow our platform in the wider living sector by catering to the growing number of young professional renters living in major UK cities. We already serve this market through the 9,000 postgraduate students who live with us each year. This pilot BTR investment offers the opportunity to test our operational capability in the sector and understand the potential synergies with our student business.
“This property has good redevelopment potential and benefits from Stratford’s growth as a major student, employment and leisure hub, as well as our significant local presence. These factors de-risk our investment and make it the ideal location to trial the extension of our Home for Success offer into young professional living.”
UTG : Unite Students branches out into residential