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£8m Investec loan to fund new student development

Investec Structured Property Finance announces that it has agreed to provide Surrey based PBSA & PRS specialists, Osborne, with an £8 million, 3-year loan, to fund the development of 135 purpose-built student accommodation (‘PBSA’) beds in Colchester, Essex.

The loan also includes an investment term providing certainty for the borrower and helps reduce refinance costs.

The direct let scheme, to be known as Elmstead Place, will serve the 15,000 student University of Essex and is adjacent to the main campus. Scheduled to open for the start of the 2020/21 academic year, it will cater primarily to second and third year students. 15 townhouses will deliver 123 beds, a mixture of studios and clusters, with an additional studio block containing a further 12 beds. The scheme also benefit from a common room, reception area, laundry and a bike store. 

The University of Essex is one of the top ten fastest growing universities in the UK and 29% of the intake are international students.

Ian Burdett, at Investec Structured Property Finance, commented: “This high quality PBSA development should be well sought after by the underserved second and third year student population and will provide a great alternative to the traditional HMO offering. The defensive characteristics of the PBSA sector, coupled with our successful track record and global relationships, has allowed us to continue to grow our loan book exposure to the asset class, having provided nearly £700 million of funding since 2015. 

“We are pleased to be working with Osborne for the first time, a well-established and respected property developer. Osborne crucially use their own in house self build specialist and bring an impressive track record, delivering every student accommodation project on time for new term entrants to move into their new homes. We hope this is the start of a strong working relationship together.”

Osborne is one of the UK’s leading, privately owned development, construction and property maintenance companies. Established over 50 years ago, the company has a turnover in excess of nearly £350m and employs more than 1000 people.

David Sarson, managing director at Osborne, added: “Investec has a deep understanding of the student accommodation sector and has built a reputation as a market leading provider of development finance for schemes across the UK, which is why they were the obvious choice to work with on this project. We look forward to working with them again.”

Brotherton Real Estate arranged the development facility. Tanya Wolfe, director of Brotherton, commented: “We are delighted to have assisted Osborne and Investec with arranging and closing the debt finance on this exciting PBSA development in Colchester. Osborne are an excellent Sponsor with a proven track record as both developer and contractor, and we are confident Investec will be a great lending partner for them on this transaction.” 

Earlier this year, Investec published Future Living: How global investors will transform UK beds for rent, a global survey of more than 50 institutional investors, representing £338 billion in global assets under management. It revealed that investors are increasingly looking at replicating the US approach and taking a blended approach to the UK ‘beds for rent’ sector as one asset class, a shift being driven by structural trends impacting home ownership numbers, the growing maturity of the beds for rent asset classes as well as the attraction of the low but stable income characteristics they offer.

Ashleigh Smith
Article by Ashleigh Smith
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