Retail bond to raise £75m for students’ digs

By GARETH MACKIE
Published on 22/11/2012 00:00

Student accommodation provider Unite has become the latest firm to tap into the burgeoning retail bond market by unveiling plans to raise up to £75 million through its first offering.

The group, which has a portfolio of properties worth some £1.3 billion, said its bond will mature in June 2020 and pay a fixed rate of 6.125 per cent a year, payable in twice-yearly instalments. The minimum investment is £2,000 and the offer period is expected to close on 5 December.

Last week haulage group Stobart said it planned to raise £25m by launching its first bond aimed at retail investors, paying a fixed rate of 5.5 per cent a year over a six-year term.

Other companies to have launched retail bonds in recent months include Tesco Bank and business premises firm Workspace.

Unite chief executive Mark Allan said: “This is an exciting market at the moment, as demonstrated by the significant private investor appetite for bonds issued by well-established companies with strong track records of cash generation and positive market fundamentals.”

The group recently said occupancy across its 130-strong property portfolio stood at 96 per cent for the 2012-13 academic year and rental growth was expected to be about 3 per cent. It said Scottish cities saw a strong performance, as had several English cities such as Bristol, Coventry and Newcastle, but some cities in northern England and the Midlands had been slightly weaker than expected.

GARETH MACKIE