With growth prospects at Unite (UTG) looking robust, the student landlord is issuing 24.5m new shares in order to raise £100m (gross) of fresh funding. Specifically, it plans to raise £69m though an open offer, with the remainder coming from a placing. The move follows last June's share placing that raised £51m.
Management says that half the funds will be used to support the "highly targeted" regional development of student accommodation in around 10 university towns and cities - returns of 9.5-10 per cent are being targeted here. The other half will be used to invest in the group's USAF fund, which owns a geographically diverse portfolio of income-generating student accommodation assets. USAF's average net yield at the end of December reached 6.6 per cent. According to chief executive Mark Allan, the fundraising will build "on a period of sustained strong performance".
The strength of that performance was on display with group's full-year figures, which were announced alongside the fundraising. Adjust for 2012's boost from property sales and rental income rose 2 per cent to £81m, while valuation gains helped lift adjusted net asset value (NAV) by 9 per cent to 382p a share. On top of this, there's a secured development pipeline that's expected to add 39p to NAV and 13p to earnings per share by 2017, assuming expected returns are achieved. In fact, Oriel Securities expects adjusted NAV for 2014 of 410p.
