Student developer recoups 70% of reclad costs from contractors

Aaron Morby 4 months ago
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Student accommodation specialist Unite has set itself the target of recouping up to 75% of its building safety recladding costs from contractors.

£147m Paddington student scheme at former Travis Perkins forms part of a record development pipeline
£147m Paddington student scheme at former Travis Perkins forms part of a record development pipeline

This morning the student rooms developer and operator revealed it expected to spend around £107m on cladding refits across its estate in the next 12-36 months. This followed a review of the use of high-pressure laminate (HPL) cladding on its properties.

Richard Smith, chief executive of Unite Students, said the firm was committed to making any required investment to ensure its buildings were compliant and remained safe to occupy as more stringent fire safety regulations were introduced.

He said that where appropriate Unite was aiming to claw back from contractors 50-75% of replacement costs over time.

Smith said: “The Government has proposed a Building Safety Bill, covering building standards, which is likely to result in more stringent fire safety regulations.

“We will ensure we remain aligned to fire safety regulations as they evolve and will continue to make any required investment to ensure our buildings are compliant and remain safe to occupy.

“We are seeking to mitigate the costs of cladding replacement through claims from contractors under build contracts, where appropriate.”

He added: “To date, we have recovered £10m from completed claims, representing 70% of the costs of remediation on those buildings.

“We expect to recover 50-75% of total replacement costs over time, but this is not reflected in our balance sheet.”

Last year, Unite completed remedial works on four buildings and is now on site at a further eight, spending a total of £38m (Unite share: £18m)

Reporting a strong rebound in financial performance last year, Unite delivered a £343m pre-tax profit last year following a £120m loss in 2020.

It is also seeking to invest in projects focused on 8-10 cities, including London and prime regional markets with the strongest demand outlook.

The development pipeline is now at a record level, totaling around.6,000 beds and £967m in total development cost.

Smith said: “The outlook for the business and the UK higher education sector is strong, driven by rising participation rates, increased demand for our product from returning students, significant and sustained demographic growth and Government support for growth in international student numbers.

“We have our biggest ever development pipeline and the balance sheet capacity to pursue new growth opportunities through university partnerships and targeted acquisitions.”

 

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