£75m Unite bond closes after ‘positive’ uptake

Unite accommodation in Edinburgh's Chalmers Street. Picture: Greg Macvean
Unite accommodation in Edinburgh's Chalmers Street. Picture: Greg Macvean
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Student accommodation provider Unite is to stop taking orders for its first retail bond ahead of schedule after an “extremely positive response” to the move which will raise at least £75 million.

The offer period for the bond, which will pay a fixed rate of 6.125 per cent a year until it matures in June 2020, was due to close on Wednesday but that deadline has been brought forward to Monday following strong investor demand.

Retail bonds are an increasingly popular option for companies looking to raise money, and the returns on offer are often much higher than those available through savings accounts, although investors would not be protected if the issuer went bust.

Haulage firm Stobart Group had hoped to launch its debut retail bond with the aim of raising £25m, but its plans – believed to be the first from a logistics company – were shelved earlier this week because a number of larger players have entered the market. Other firms to have tapped into the sector in recent months include Tesco Bank and business premises specialist Workspace.

Unite chief executive Mark Allan said: “The extremely positive response from investors demonstrates the attractiveness of Unite and its consistent income streams which provide stable returns. This issue will allow us to diversify our sources of finance.”

The group, which has a property portfolio worth some £1.3 billion, recently said occupancy across its 130-strong estate stood at 96 per cent for the 2012-13 academic year, boosted by a strong performance in Scotland, although some cities in northern England and the Midlands had been weaker than expected.

Along with raising funds through its bond, Unite has set itself a target of selling up to £150m of “non-core” properties by the end of this year.