Lloyds, Wells and PGIM in £169m financing of UK student homes developer

Lloyds Bank Commercial Banking, Wells Fargo and PGIM Real Estate have teamed up for a £169 million financing of the student accommodation arm of a Manchester-based property developer.

The five-year facility has been provided to Select Property Group to fund the proposed expansion of its student accommodation brand, Vita Student. The group is aiming to develop schemes in new cities with a build-and-hold strategy. Previously, the group has sold individual buildings to investors.

The financing is split between a senior and a junior loan. Lloyds and Wells Fargo have provided a £108 million senior development and investment loan on a 50/50 basis. A £61 million junior facility has been provided by PGIM, the recently-rebranded company formerly called Prudential Investment Management in America and Pramerica Investment Management elsewhere.

Select is headquartered in Manchester, but make its initial investments in the Dubai property market. Dubai Select was founded in 2004 and by April 2005 was marketing apartments in an 82-storey tower at Dubai Marina. Dubai Select became part of Select Property Group in September 2006 as it planned to expand into other countries, with a beach-front resort in Turkey to follow.

Developer Vita Ventures was launched in March 2012 and its first Vita Student project was The Chapel in Liverpool. Since then, the company has developed student schemes in Manchester, York, Sheffield, Newcastle, Bristol, Southampton, Exeter, Edinburgh and Glasgow.

Last August, it was reported that former Marks & Spencer executive chairman Stuart Rose and former BHS and Debenhams CEO Terry Green had invested in Select Property Group. Other retail industry figures to have invested in the company include former Matalan chief executive Angus Monro and former HMV and Jessops chief executive Trevor Moore.

“Vita Student currently operates ten buildings across eight cities but with high demand for our product we want to be represented in more university cities. Successfully securing this credit allows us to do that quickly, while crucially allowing us to retain the assets,” said Mark Stott, CEO of Select Property Group.

“We are pleased to be able to help support Select’s growth ambitions and, in turn, create new jobs and investment in more UK cities. Working closely with the management team and their advisors, we were at the forefront of developing a new type of funding model for the business that gives it both the firepower and agility it needs,” said Jonathan Monnickendam, director – developers at Lloyds Bank Commercial Real Estate.

“We are delighted to be supporting Select Property Group in the next phase of their Vita Student business, which has shown itself to be one of the market leading platforms in the sector. We look forward to working with them on these projects,” added Richard Craddock, director of Wells Fargo.