£1bn UK student accommodation fund

Fund launched to track IPD index

Housing demand resilient despite interest rate hikes

£1bn UK student accommodation fund

Commercial provider of student accommodation, the UNITE Group, has formed a £1bn Student Accommodation Fund.

Investors have already contributed almost £300m to the fund. Approximately 51% of these commitments have been drawn to fund the acquisition of the properties
contributed to the Fund by UNITE, resulting in third party investors and UNITE
having interests in the Fund of 61% and 39% respectively. 

The remaining 49% of equity commitments will be available to fund the
purchase of future assets. The Fund is expected to own student accommodation
property worth over £1bn when fully invested.

UNITE is also in advanced discussions with a number of other investors who have
made non-binding indications of interest to invest in the Fund.  Based on the
continuing level of interest in the Fund, UNITE is considering selling
additional units in the Fund during 2007, thereby reducing its interest in the
Fund and releasing additional cash proceeds.

Commenting on the Transaction, Mark Allan, UNITE's chief executive, said: “We are delighted to have successfully completed the formation of the UNITE UK
Student Accommodation Fund following overwhelming support from our shareholders
for the transaction.

“The formation of the Fund has demonstrated the strong demand from leading
institutional equity and debt investors for well managed student accommodation
properties, and firmly establishes student accommodation as an institutionally
recognised property asset class.”

Fund launched to track IPD index

Investment boutique Bespoke Financial Consulting (BFC) has launched the first-ever fund which tracks returns on the benchmark Investment Property Databank ( IPD) All-Property index and is backed by the country's commercial property derivatives market.

Bespoke said its IPD UK Monthly Index Tracker Fund was an open-ended fund aimed at both institutional and retail investors, providing exposure to property worth almost £50bn, and a mechanism to get in and out of the fund on a daily basis.

In a first for UK private investors, the BFC fund shadows the performance of the IPD, which comprises more than 3,500 retail, industrial and office properties from all over the UK.

“Our product effectively reduces volatility, as the Fund simply tracks the performance of UK commercial property, reflecting the capital values and income from a large number of properties held by a range of investment companies and fund managers”, said Gilbert.

The Fund pays income half yearly, reflecting the rental payments made in respect of the property portfolio. Income is paid as interest rather than a dividend payment - if investors do not pay tax or invest through an ISA, all of the tax deducted at source can potentially be reclaimed.

A spokesman for Bespoke said the fund had raised £8m so far but was targeting more than £100m by the end of next year.

Housing demand resilient despite interest rate hikes

House price inflation reached a plateau in November but market conditions remain strong, according to the latest RICS' UK housing market survey.

In November, 47.4% more chartered surveyors reported a rise than a fall in house prices, down from 47.7% in October, but still more than double the long run average of 21%.

The market absorbed last month's interest rate rise, especially in London and the southeast, which was boosted by expected strong returns in the financial services sector. Northern Ireland and Scotland continue to experience buoyant conditions but price rises have slowed. The laggard markets of the Midlands and the North of England rose at a firm pace but there is little indication that either of these regions will experience a property boom.

New buyer enquiries stagnated in November but still remain strong throughout the country with demand boosted by rising incomes, a strong economic outlook and a healthy employment market.

Completed property sales rose by 20% year on year, the biggest gain since March 2002 while stocks of unsold property remain at the lowest level since August 2004. The ratio of completed sales compared to the stock of available property rose to 42.5% from 41%. This is the highest ratio in two years and a strong indicator of a still buoyant market.

RICS spokesman, Jeremy Leaf, said: "Strong employment conditions and a robust economy continue to shield the market from any dip. While concerns remain about high consumer debt levels, households still view their finances as strong. A further interest rate rise in the new-year may have a mid-term effect. We expect house prices to rise by 7% following a 9% jump in 2006.”