Wells Fargo has written a £45 million (€46.1 million) loan to finance the construction of Scape Brighton, a purpose-built, private accommodation scheme.
The re-drawable credit facility, with a prevailing margin of 1.85 percent above three-month Libor, was provided to GCP Student Living, the UK’s REIT focused on student residential assets.
The large-scale development, which will offer around 550 beds within the primary campus of the University of Brighton by the 2020/21 academic year, will provide GCP with access to “more flexible” debt finance compared with traditional long-term fixed-debt alternatives, the REIT said.
In addition to partially funding the acquisition and initial construction costs of Scape Brighton, the facility will be used to complete the construction of the group’s Circus Street asset – a property that will provide 450 beds in Brighton – as well as for general corporate purposes.
GCP has noted that Brighton has a “structural shortfall” of private, direct-let, purpose-built student accommodation, which illustrates the “strong supply-demand imbalance” for student residential accommodation in the UK.
“The acquisition of Scape Brighton should enable the company to secure a new asset at a yield which is expected to be more attractive than yields on acquiring comparable operational assets,” GCP said.
Following the acquisition of Scape Brighton, GCP will benefit from licensing fees, which will provide a circa 5.5 percent coupon through its construction phase.