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Sancho Panza

Student Housing Reit To Raise £110M In Ipo

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Telegraph 13/5/14

'An investment trust is aiming to take advantage of the booming student housing market by joining the rush of company flotations on the London Stock Exchange.

Empiric Student Property said on Tuesday it wants to raise over £110m via a share placing with investors.

The company, which will be classified as a real estate investment trust (REIT), already owns around £40m of student accommodation assets with a 100pc occupancy rate.

Empiric Student Propoerty said it expects to spend around £82m of the money raised to buy a portfolio of 11 assets.The assets include seven ready-to-let properties, including accommodation in Bristol, Exeter, Cardiff and Birmingham, and four development assets will create a portfolio of more than 1,100 bedrooms.

The business said that it is targeting student housing investments across the top 27 university cities in the UK. Over 85pc of the UK’s university population is outside London, a company spokesman commented.

UCAS, the UK’s university board, placed 495,600 people into higher education last year, a 6.6pc increase on the previous year, despite the increase in university tuition fees.

Increasingly, students are moving away from the ten-bedroom house conversions towards more purpose-built accommodation, which has been supported by local authorities.

“The modern student is increasingly demanding high quality, convenient, and cost effective accommodation. We have been developing and investing in such properties since 2008,” Paul Hadaway, chief executive of Empiric Student Property, said. “With the IPO of Empiric Student Property, we look forward to dedicating our investment and development skills to the Company as an integrated management team.”

The company is targeting a 13pc total shareholder return, once fully invested, which includes a 6pc dividend yield and a 7pc growth in net asset value per year.

Empiric Student Property is expected to publish its prospectus at the start of June.

REITs are able to additional shares after listing on the stock exchange and typically offer investors a highly liquid method of investing in real estate assets.'

So they're paying roughly £100k per room by the end of it?

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So seeking a bit of the debt pie from the student population.

I'm guessing the money will be made from buying more property, sitting back and just letting HPI do the rest to create an awesome return?

Just have to hope the HE bubble doesn't burst.

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The company is targeting a 13pc total shareholder return, once fully invested, which includes a 6pc dividend yield and a 7pc growth in net asset value per year.

Wow. Double your investment in 7 years.

Not a bubble, but let's float ASAP.

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The purpose of these things is to make money for the set up and float. Once you have unloaded the "investment" on the unwary it can be allowed to fail.

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Raising money to (among other things) build 1100 rooms worth of new accommodation, to a higher standard than old-fashioned student landlords.

So that'll be 1100 rooms-worth of HMOs returned to the market, either relieving pressure on low-end rentals or available to reclaim as family houses. And an 1100 extra students in modern halls of residence. What's not to like?

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