The Unite Group, the UK's largest provider of student accommodation, has completed the planned £171.3m sale of assets to its Unite UK Student Accommodation Fund.

The assets sold comprise 2,625 bed spaces across 13 properties in prime locations in the key student markets of London, Reading, Manchester, Liverpool, Sheffield, Bristol, Exeter, Plymouth, Leicester, Coventry and Nottingham.

The properties, which were valued by CB Richard Ellis, are 99% let for the 2008/09 academic year.

The deal represents a net initial yield of 6.15% and is 3.7% higher than the carrying value of the assets in the group’s interim financial statement in June.

However, using international financial reporting standards some of the assets sold to the fund were carried at cost on the group’s June balance sheet, rather than at open market value.

When compared to the open market value and the adjusted net asset value, the agreed price reflects a fall in value of 5.3% since 30 June.

The completion of the deal in cash will be used to repay senior debt and release equity capital of £36m of Unite's further co-investment in the fund .

Unite said it will use this capital to strengthen its balance sheet and reinvest into its development activities as appropriate when markets recover. Unite's co-investment stake in the fund is now around 19%.

Joe Lister, Unite’s chief financial officer, said: 'This planned sale of stabilised assets supports Unite’s ongoing strategy to be a developer and co-investing fund manager.

'The sale demonstrates both the continued appetite amongst investors for student accommodation and the sector’s resilient characteristics within this period of wider economic decline.'