Unite Buys Student Landlord Liberty Living for $1.8 Billion

(Bloomberg) -- Unite Group Plc agreed to buy fellow U.K. student-housing provider Liberty Living Group Plc for 1.4 billion pounds ($1.8 billion) in cash and shares.

Unite is buying the assets from the Canada Pension Plan Investment Board, which will have a 20% stake in the group when the deal is completed in the third quarter, according to a company statement on Wednesday. Unite proposed selling about 26.4 million new shares to help fund the purchase.

The acquisition will give Unite “an improved portfolio quality with higher exposure to larger cities,” Moody's Investors Service said in a note. It raised its outlook for Liberty Living to positive from stable on the news. Unite shares rose as much as 2.7% on Wednesday in London. Liberty Living's bonds rose to a record.

Global investors are pouring capital into niche European real estate markets, including student, senior and rental housing, lured by bigger returns than traditional sectors such as offices and warehouses where prices are near record highs. Alternative real estate assets also appeal to pension and sovereign wealth funds seeking properties that are less impacted by the ups and downs of a traditional economic cycle.

The newly enlarged Unite group will have 73,000 beds under management across 173 properties in more than 27 U.K. university towns and cities, according to the statement. The Liberty Living portfolio consists of about 24,000 beds, and was valued at 2.2 billion pounds as of May 31. The pension fund has nominated its Managing Director Thomas Jackson to sit on the Unite board as a non-executive director.

--With assistance from Jack Sidders.

To contact the reporter on this story: Lucca de Paoli in London at gdepaoli1@bloomberg.net

To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Patrick Henry

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