PBSA roundup – more student homes and a refinance deal

Property Investor Today focuses on two brand new purpose-built student accommodation (PBSA) schemes from Future Generations and a refinance deal for a PBSA scheme in Sheffield.

New student homes for Loughborough and Nottingham

Student accommodation specialist Future Generation has unveiled two PBSA schemes alongside a £55 million development facility from Maslow Capital.

The debt facility will fund the immediate construction of Luxurio in Loughborough and The Vantage in Nottingham, which between them will create 943 student beds close to top universities.

With a gross development value (GDV) of £45.3 million, Luxurio will be designed by London and Cardiff-based Rio Architects and will contain 458 bedrooms along with landscaped grounds, communal courtyards, roof terraces and green living walls on the outside of the building.

The development at Aumberry Gap will be one of the first PBSA schemes to be built in the town centre, ranging from three to seven storeys and containing 1,702 sq m of commercial and reception space.

Meanwhile, The Vantage in Traffic St, Nottingham will provide 485 bedrooms and has a GDV of £48.3 million. Designed by Axis Architecture, it is arranged over 12 storeys and will be one of the city’s tallest buildings.

It also boasts Future Generation’s signature Sky Lounge, which will make the most of the attractive views over Nottingham Castle.

Tenants of both schemes will benefit from Future Generation’s partnership with Samsung, which sees Samsung digital appliances, TVs and air conditioning installed in every room. This reflects what has been delivered in the firm’s existing schemes – Hythe Mills in Colchester and Steel City in Sheffield – where the strapline ‘Future Generation, powered by Samsung’ has raised the value proposition.

The two schemes follow the construction already underway on Guilden Park in Guilford. With a GDV of at least £102 million, Guilden Park boasts the same partners as the Loughborough and Nottingham projects, with construction being carried out by McAleer and Rushe and development funding provided by Maslow Capital.

This brings the total construction contract value with McAleer and Rushe to £100 million and the total borrowing from Maslow Capital to over £150 million across 2,029 student beds to date.

In 2017, Future Generation — a joint venture between London-based property developer Southern Grove and Bahrain-based Tadhamon Capital — embarked on a journey to build 10,000 student beds in five years, while simultaneously raising the quality of student living. To date, the firm has 553 operational beds, 1,476 under construction and around 2,000 in the pipeline.

Despite economic uncertainty over the past three years, the strength of the PBSA industry made waves at the end of February when Goldman Sachs announced the sale of student housing group iQ to Blackstone for £4.7 billion.

Andrew Southern, chairman of Southern Grove and Future Generation, comments: “Both these schemes will be hugely disruptive in their local markets as students come to realise that premium accommodation can be good value, and that’s a message we will deliver nationwide.”

“Student accommodation in the right location remains an incredibly strong, long-term proposition and we will continue to put other providers under immense pressure by raising the bar on the level of service and quality students should expect.”

Hesham Al Gassab, executive director of Bahraini investment manager Tadhamon Capital, adds: “We’ve been in the UK’s PBSA sector for the past 10 years and our investment outlook has not changed in that time and won’t change, no matter what direction Brexit takes.”

“No amount of uncertainty over the past few years has halted our ambition to deliver student schemes in key areas of the UK, where returns remain strong. This takes our current exposure to just over 2,000 beds in five key locations.”

A ‘Strait-forward’ refinance deal for PBSA in Sheffield

Private equity real estate fund manager Q Investment Partners (QIP) has agreed an £18 million refinance deal on a PBSA complex in Sheffield, known as Straits Manor.

Secure Trust Bank Real Estate Finance (STB REF) advanced the funds, allowing QIP to release capital to pursue its strategy of growing its student housing portfolio in the UK.

Close to Sheffield University and Sheffield Hallam, Straits Manor stands at 11-storeys at 52-54 West Street, fully let and comprising 284 units and amenity spaces. The development is managed by Prestige Student Living, one of the leading student accommodation managers in the UK.

QIP acquired the scheme in 2017 and currently owns close to 1,000 student beds in the UK, in Edinburgh, Nottingham and Sheffield.

Ben Hall, head of investment at QIP, comments: “We are heavily invested in the UK purpose-built student accommodation sector – it is an attractive and a high-performing yet defensive asset class. The facility from STB REF will enable us to pursue our ambitions to acquire more high-quality assets in the sector.” 

Straits Manor was developed in partnership with QIP’s local delivery management team, DML Development Managers Ltd. Rachel Warren, DML’s development director, says: “Qualifications gained at a UK university are held in high regard around the world and this is driving record numbers of international students coming here to study. The need for luxury accommodation is being driven by this growing market and we’re really proud of the quality of product we can now offer.”

The deal was led by Richard Lynn and John Griffin at STB Real Estate Finance.

Griffin says: “QIP has plans to double its PBSA portfolio in 2020 and we look forward to supporting them on this journey. STB REF has a track record of supporting developers and investors in the student living sector and a strong appetite and capacity for further transactions.”