Laxfield has provided a £90m (€113m) loan to UK student housing group Urbanest, funded by sovereign wealth fund GIC.
The Laxfield Lending Programme, set up for the Government of Singapore Investment Corporation, provided the five-year facility at a 70% loan-to-value ratio.
The facility is Laxfield’s third in the student accommodation sector this year. Last month, Laxfield, on behalf of MetLife, financed Greystar’s acquisition of three student accommodation assets. The lending programme can write whole loans of up to £185m.
Urbanest was founded by Nick Porter in 2008 and is focused on the development, acquisition, ownership and operation of student accommodation in cities in Australia and core ‘zone one’ central London locations in the UK.
Adam Slater, Laxfield managing director, said the latest facility took total debt it had originated in 2014 to more than £330m.
GIC and Laxfield announced the £1bn lending programme for 2014 and 2015 in January last year, targeting the office, retail and warehouse sectors. The scheme is typically lending at a maximum 75% loan-to-value for five to seven year terms.
Urbanest’s facility will be secured against its 221-bed Hoxton scheme in London as well as an ongoing, 310-bed canalside development in St Pancras. Laxfield said the loan will be made available in two tranches.
UK student housing has attracted investors following improved returns. Total returns from the sector in the 12 months to September last year were 9.95%, according to CBRE’s Student Accommodation Index. The figure was higher than IPD’s total returns on offices, industrial and retail property over the same period.
”The UK market is increasingly mature and institutional investors are now comfortable with this as an asset class,” according to law firm Osborne Clarke.
The firm’s 2014 real estate predictions paper said an increase in international students – as well as government support for higher education, including measures to reform visa processes – had contributed to the growth of the sector.
”The continued increase in student numbers worldwide means that there is still room for growth in the UK market,” it noted.
This week, St. Modwen, developer of the new £450m Swansea University Bay Campus, signed a development agreement to deliver £50m of accommodation, including 545 apartments.
Empiric Student Property raised £85m this week in its stock market flotation as it looks to become a UK real investment trust (REIT). The company, which has identified a portfolio of student accommodation properties for investment, will invest in modern, high-end assets.