Type of finance
Development, converting at completion
to term debt
A £46m student housing site with strong projected income required development lending,
but had limited mainstream lender interest due to university ranking
- £46m student housing development
- First legal charge
- Rental income, proven demand
- £30m development finance converting to term debt
- 50+ rank on UK university list
- Location away from comparable developments
- 2 year development, 5 year term
- 65% LTC, 65% LTGDV term
- Pension fund
A Middle Eastern property fund sought to expand its UK property interest into the student housing market.
The Yorkshire site was chosen for yield which reflected the lower rating of the university (above number 50 in the UK ratings table). Recent surveys had shown 61% of students seeking student accommodation in the chosen city were unable to secure it, showing healthy demand, however the university rating did limit the funding sources available.
The team fully modelled, stress tested and filmed the proposed investment site and comparable developments to support the credit paper.
A 2 year development facility, converting to 5 year term debt was secured at an average of sub 220 bps margin (over UK Gilt rate), with a pension fund.