Allianz Global Investors, the London-based investment management arm of the German insurer, has facilitated a £127.6 million (€146.8 million) loan for a 1,462-room student housing development on the University of Hull campus.
The developer is University Partnerships Programme, the London-based student accommodation specialist, which already operates a 288-room block at the university.
The transaction represents the third large-scale student housing investment from Allianz Global Investors and takes the firm’s total investment in the sector beyond £300 million, following similar deals at the University of Exeter and Nottingham Trent University.
In addition to the Allianz financing, which has a tenor of 40 years, £27.4 million of subordinated debt and equity was provided by UPP, its shareholders and the university.
“That this transaction is our third investment on behalf of our clients into UK higher education in three years reflects just how much the UK infrastructure debt market has matured,” said Adrian Jones, director of infrastructure debt at Allianz Global Investors.
“We continue to see strong demand from our clients to invest in infrastructure assets that as well as offering them the long-term, stable cashflows they need also support regional economic competitiveness.”
UPP said the development comes in response to demand from students for high-quality accommodation and facilities. The project will feature 1,462 single rooms and one-bedroom apartments spread across nine blocks and will include shops and restaurants.
“Our partnership will enable more students to live on campus at the heart of this fantastic community. This scheme will facilitate the university’s ambitious plans and have a positive effect on the wider community,” said Sean O’Shea, chief executive of UPP.
Contractor Vinci has been appointed as UPP’s construction partner for the project, which is valued at more than £97 million. Construction is due to start this month, with 478 rooms available for the 2018 student intake and the remainder available in September 2019.
According to a De Montfort University report, published in April, commercial real estate debt lending is currently more modest than a decade ago. At the end of 2016 £209 billion of commercial property debt was outstanding, compared with £255 billion in 2008, the report said.