Investec Bank Structured Property Finance has provided a £26 million stretch senior loan to infrastructure group Balfour Beatty to finance the development of a student accommodation scheme in Glasgow.
The short-term loan will fund the construction of the scheme on Kennedy Street in central Glasgow. The development is Balfour Beatty’s first for the direct-let student accommodation market.
The total development cost of the property is £37 million, putting the loan-to-cost ratio of the financing at around 70 percent.
The scheme will feature 536 bedrooms, split over two blocks around a central courtyard containing 149 self-contained studios and 387 bedrooms, plus retail on the ground floor. Construction work began last November and completion is targeted for July 2017.
Investec Bank’s Structured Property Finance team lends to the student accommodation market as well as residential, mixed-use and commercial property, offering senior, stretched senior debt, and equity.
“As one of the leading developer/contractors in the student accommodation market, we are delighted to have arranged the optimum funding package to carry out this development in Glasgow. From our wide ranging experience of working in this sector, we believe there is a good demand for high quality, purpose built cluster flats and studios in this part of Glasgow,” said Ian Woosey, investment director for the student accommodation sector at Balfour Beatty Investments.
“We were attracted to work with Balfour Beatty given their size, profile and track record as a contractor. Notwithstanding signs of yield compression, we still like the student accommodation market and our appetite remains strong to provide stretched senior development finance for the right deals such as this,” added Mark Bladon at Investec Structured Property Finance.