THE QUOTED support services group Newcourt has agreed to spend £17 million (€23 million) on a site in London for development as student accommodation by its subsidiary Ely Property.

The deal with a privately held firm called Damianos Holdings is conditional on the granting of planning permission for a student residence on the site, which is adjacent to London Metropolitan University in the north of the city.

If approval is received, the transaction will be executed by way of a takeover of Damianos by Ely. The price will depend on the number of accommodation units approved in the planning permission.

"Ely estimates that the consideration would be £17 million based on planning permission for 500 units," the company said.

The deal with Damianos will not go ahead should planning permission be refused.

No money would change hands in that case.

Shares in Newcourt, which acquired Ely for €22 million in 2006, closed 4 cents weaker at 75 cents last night on the small-cap IEX market in Dublin.

The stock traded at €1.80 a year ago.

Ely chief Philip Marley said the London site had "excellent potential" for student accommodation and would represent a significant addition of beds under management.

"This acquisition reflects our commitment to further develop Ely's student accommodation business, in particular in the growing London market where we have recently strengthened our management team," Mr Marley said.

Ely operates a sale and leaseback business model. It is likely to sell the site to a developer upon completion of the deal and to lease the accommodation from the developer when it is built.

Mr Marley's strategy is to double the number of accommodation units under management to some 4,000 by the end of 2009 from about 2,000 late last year.

Ely started out with 70 units in Dublin in 2001.