Cornerstone backs Empiric Student Property with £80m loan

Cornerstone Real Estate Advisers Europe has provided an £80 million loan to student accommodation provider Empiric Student Property to refinance a portfolio of UK operating assets.

The 12-year loan carries a fixed all-in rate of 3.24 percent, interest-only. The loan is fixed up to a loan-to-value (LTV) ratio of 55 percent.

The facility is secured by 20 student housing properties, which are held as a lending group through a subsidiary, Empiric Investments (Four) Limited.

Part of the facility will be used to refinance £37.2 million of outstanding debt from Santander and Royal Bank of Scotland, with the balance of £42.8 million to be used to fund further acquisitions by the group.

As part of the Cornerstone financing, an additional committed facility of up to £40 million is available to Empiric until 7 December 2016.

Following draw-down of the initial loan, Empiric’s estimated company LTV will be around 23.3 percent, from 20.3 percent at the end of 2015. Empiric targets an LTV of 35 percent and no more than 40 percent of the company’s gross asset value.

“This new attractive long term facility enables the group to reduce our overall cost of borrowing and extend our average unexpired loan term,” said Paul Hadaway, chief executive of Empiric Student Property. “The facility also provides the debt resource needed to help support our growth plans and business model. We are pleased to have formed a new relationship with Cornerstone, one of the largest global real estate investment managers and debt providers, and we look forward to working with Cornerstone over the long term.”

Last month, Empiric agreed to a £40 million long-term loan from Canada Life to finance a portfolio of four forward-committed properties. The facility is available for full draw-down from 27 July.

Cornerstone is a subsidiary of US insurer MassMutual Financial Group. Its European real estate debt platform was established in 2012 and focusses on senior fixed-rate UK loans. Last month, it provided an £87 million ten-year loan to PPHE Hotel Group to refinance the Park Plaza Victoria hotel in London.

J C Rathbone Associates advised Empiric.