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UPP converts to a REIT
1 March 2018
UPP Group (UPP), the leading provider of on-campus student accommodation infrastructure and support services in the UK, confirms that it has converted to a UK Real Estate Investment Trust (REIT) effective from 1 March 2018.
The REIT structure, which has been promoted by the UK government as an efficient vehicle for the long-term ownership of UK real estate interests, will allow the asset companies composing the Group’s property portfolio to benefit from the REIT exemption from corporation tax arising in its property rental business. To facilitate the conversion to a UK REIT, UPP has listed on The International Stock Exchange (TISE). UPP remains UK tax resident.
The move represents the next step in the long-term strategy of the Group to achieve controlled value accretive growth, enhancing resilience and improving the quality of returns to Shareholders. The key elements of this strategy have included a clear focus on its partnership model; strengthening the Group structure to ensure it is effective at building, operating and managing its assets over the life of each concession; placing its entire portfolio on cost-effective long-term borrowing, effectively removing all refinancing risk across the portfolio; and establishing its Irish Stock Exchange listed £5 billion bond programme (UPP Bond 1 Issuer PLC), purposely designed to allow for new assets to be included, at the point of becoming operational.
The successful completion of this project strengthens the ability of UPP to grow the portfolio and invest in building and operating accommodation that enhances the student experience. The new five year business plan targets continuing growth with new and existing partners in coming years located at the heart of campus.
The listing on TISE follows an intense 18 month period of transacting for UPP, which has seen room numbers under management increase by more than 4,000 rooms in partnerships with the University of London, the University of Hull and most recently with Swansea University. The total value of investment in these deals was circa £358m.
Sean O’Shea, Group Chief Executive, commented: “I am delighted that the Group has converted to a REIT, listed on The International Stock Exchange and reached another important milestone in the continued evolution of the business. The strategy of UPP Group has always been a simple one; namely bringing together the longevity of university business models, with cost-effective long dated borrowing, in long-term partnerships for the benefit of universities and investors alike. Whilst we have continued to grow our portfolio – which now has over 35,000 rooms with 16 university partners – we have always actively worked to enhance the resilience of the business.
“The Management team at UPP has always believed that the most effective way to do this is to remain true to the model that we developed two decades ago. In doing so, I am happy to say, the Group is undoubtedly in its strongest shape since we established the company in 1998.”