Unite Makes £710M Offer For Rival As Lone Star Buys Into Student Sector

Unite, the UK’s largest owner of student accommodation, has made a takeover offer for smaller listed rival Empiric Student Property that values the company at about £710M.

Unite has offered £1.07 a share for Empiric, the latter said in a statement on 5 June. That is a 10% premium to Empiric’s share price before the offer was announced, and a discount of the same amount to Empiric’s net asset value. 

Empiric said that it had entered into due diligence with Unite, though there was no guarantee a bid would be forthcoming. 

Before the Unite bid was announced, former Times journalist Dominic Walsh reported on X that private equity firms were also considering a bid for Empiric and that the price could rise to as much as £1.25 a share. 

Empiric owns 75 student schemes across 23 cities in the UK totalling 7,685 beds. Its largest concentration of units is in Manchester, followed by Glasgow, Cardiff and Liverpool. 

For the academic years 2024-2025, 40% of its total customer base is from China, 31% is domestic and 29% is from other countries. 

In a trading update this week, Empiric said that its schemes were leasing up more slowly than last year but put that down to “normalisation” compared to a very fast leasing rate last year. It said it still expected to meet its usual occupancy rate of 97%. Its portfolio is valued at £1.1B.

Unite is the sector’s giant, with a market capitalisation of £4B and a portfolio that comprised 153 schemes in 23 cities, totalling 68,000 beds prior to Wednesday. 

Just before the bid for Empiric was announced, Unite said it had sold a portfolio of nine properties with 3,656 beds to an affiliate of Lone Star Funds for £212M.

The portfolio includes assets in Aberdeen, Leicester, Leeds, Nottingham and Sheffield and has nomination agreements covering 11% of beds for the 2024-25 academic year.

The portfolio was sold at a 1% discount to December book value. The price represents a yield of 6.4%. 

The disposal is part of the group's strategy to increase alignment to high- and mid-ranked universities and those properties with the strongest prospects for sustainable long-term rental growth, Unite said. With the deal, Unite will fully exit the Aberdeen market.