Allianz in £120m UK student refinance

Allianz Global Investors has invested £119.7m in the refinancing of a student accommodation project at the University of Exeter in south-west England, writes Real Estate Capital‘s sister title Infrastructure Investor.

The investment is the first from AllianzGI’s UK Infrastructure Debt Fund which was launched in July this year with a target of up to £500m. According to an AllianzGI statement, it is also the first investment in the student accommodation sector that it has undertaken on behalf of clients.

The deal is unusual in as far as Allianz’s real estate debt division, led by Roland Fuchs, does not lend in the UK as liabilities are Euro denominated. However, the infrastructure fund is a sterling vehicle.

The refinancing by University Partnerships Programme (UPP) involved a new tranche of £149.7m of index-linked senior secured notes advised by Macquarie Capital. In addition to AllianzGI’s investment, the UK’s Pension Insurance Corporation – a specialist insurer of defined benefit pension funds – invested £30m. The latest tranche is part of a note issuance programme by UPP which to date has been worth a total of £531.8m. The proceeds will be used to replace existing bank debt for the construction and maintenance of the accommodation which closed in 2009. UPP operates 2,569 student rooms for the University of Exeter and has a portfolio of approximately 29,000 student bedrooms in total.

“There is a significant undersupply of student accommodation in the UK and we are delighted to be working with UPP and the University of Exeter to help address this issue,” said Paul David, a director of infrastructure debt at AllianzGI. “We also look forward to participating in more deals like UPP’s Exeter facilities at the premium end of the market.”

When launching its fund, AllianzGI said it would target long-term, investment grade, core assets including roads, schools, hospitals, water and energy projects. Backers of the fund included Japanese insurer Nippon Life. Last week, AllianzGI said it was aiming to invest more than £3bn into UK infrastructure over the next three to five years.