Barclays Said to Be Talks to Sell UPP Stake to Chinese Firm
Barclays Plc (BARC) funds began exclusive talks to sell their 40 percent stake in the U.K.’s second- largest student-housing operator to a Chinese investment company, two people with knowledge of the discussions said.
Gingko Tree Investment Ltd. is negotiating the purchase of the funds’ remaining stake in UPP Group Holdings Ltd., owned by Barclays Infrastructure Funds Management, said the people, who declined to be identified because an agreement hasn’t been reached.
The Barclays funds sold 60 percent of UPP to Dutch pension- fund manager PGGM NV earlier this month in a deal that valued the company at about 1.4 billion pounds ($2.3 billion), including debt. UPP manages dormitories for 13 universities in the U.K., housing 26,406 students and generating annual rental income of 104 million pounds.
For fiscal 2012, UPP had earnings before interest, taxes, depreciation and amortization of 46 million pounds. The company plans to invest 1 billion pounds in the next two years to build and renovate college facilities, which would increase its yearly rental revenue to 133 million pounds.
U.K. student housing deals will exceed last year’s record 1.18 billion pounds, Jones Lang LaSalle Inc. predicts. The regular income returns generated by dormitories, prospects of rising rents and the industry’s growth potential are attracting investors, according to the Chicago-based broker.
Rental income from a typical student residence in the U.K. yielded about 6.3 percent last year, Savills Plc (SVS) estimates. That compares with 4.3 percent for other types of housing and 5.8 percent for commercial real estate, according to the London- based property broker.
Barclays Infrastructure Funds Management hired UBS AG two years ago to sell all or part of its investment in UPP.
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