Type of finance

Development, converting at completion
to term debt

Investment

£16m equity
£30m credit

Lender

Pension fund

A £46m student housing site with strong projected income required development lending,

but had limited mainstream lender interest due to university ranking

The deal

Assets

  • £46m student housing development

Security

  • First legal charge

Income

  • Rental income, proven demand

Requirements

  • £30m development finance converting to term debt

Challenges

  • 50+ rank on UK university list
  • Location away from comparable developments

Facility Secured

  • 2 year development, 5 year term
  • 65% LTC, 65% LTGDV term
  • Pension fund

Summary

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.

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Colliers International Structured Finance
Second Floor, Weighbridge House, Liberation Place, St.Helier, JE2 3NA, Jersey.

+44 1534 767 600
structuredfinance@colliers.com

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