The UNITE Group plc, the UK's leading commercial provider of student accommodation, today reports the estimated Net Asset Value as at 31 December 2008 of the UNITE UK Student Accommodation Fund ("USAF"/ the "Fund").
The Fund's estimated Net Asset Value as at 31 December 2008 was £0.753 per unit (30 September 2008: £1.012 per unit, 31 December 2007: £1.020 per unit). The reduction in Net Asset Value was 25.6% in the quarter and 26.2% in the 12 months to December 2008.
In arriving at the value of the Fund's units, its property portfolio was independently valued at £897 million (approx. €996 mln.). This represents a decrease of 5.6% in the underlying gross property values during the fourth quarter driven by 46 basis points of yield expansion partly offset by the recognition of further rental growth. During the full year 2008, the value of the property portfolio decreased by 5.9% as a result of 77 basis points of yield expansion partly offset by 6.4% of rental growth over the year. Following these movements and the acquisition of the £171 million portfolio of student accommodation in December, the average net initial yield was 6.43% at 31 December 2008.
In addition there has been an impact of 8.5% from the movement in interest rate swaps and, whilst work is ongoing to recover the cash deposit placed with Landsbanki in September 2008, a full provision has been made resulting in a further 6.8% reduction in estimated Net Asset Value.
Commenting on the Fund's unit valuation, Joe Lister, UNITE's Chief Financial Officer, said: "Whilst it was a very challenging quarter with specific factors being reflected in the performance of the net asset value, valuations of student accommodation assets continue to outperform the wider real estate market. With the presence of consistent rental growth, a strong reservations performance and continued investment appetite, student accommodation remains well placed to continue to outperform and weather the present challenging economic conditions."