UK-based investment manager Arlington Advisors and joint venture partner Equitix have triumphed in buying a portfolio of purpose-built student accommodation (PBSA) which attracted bids from around the world and for which appetite was said to be ‘ferocious’.
The Stellar Portfolio features four PBSA assets and was sold by student accommodation specialist Fusion Students above the £232 mln (€256 mln) asking price. The buildings total 1,857 beds located in the university cities of Newcastle, Nottingham, Cardiff and Bristol. The assets are currently operated by student accommodation operator Collegiate AC.
James Pullan, global head of student property at Knight Frank, said in a statement: ‘The Stellar Portfolio is one of the highest-quality portfolios ever to come to market. Investment appetite was ferocious, receiving bids from all over the world. Arlington Advisors was recognised for its ability to execute the deal and partnership it offers Fusion Students.’
The Stellar Portfolio has been bought at the same time as Arlington and Equitix bought Merlin Heights in Leicester from a private investor. The recently built asset comprises 601 beds developed by Watkin Jones in 2016 and is currently operated by Fresh Student Living, a leading student accommodation operator.
Between the two portfolios, Arlington and Equitix have invested £280 mln for a total of 2,458 beds. The transaction was financed by £200 mln of senior debt advanced by a single institutional investor with a 44-year maturity.
Arlington said it has made the investment on behalf of Arlington Investors, a Jersey-based investment company which is now the largest independent owner of off-campus student accommodation in the UK not tied to a single operator. Arlington’s portfolio consists of over 12,700 beds across 9 portfolios in 14 cities, which are managed by Arlington Advisors Limited.
Sean McKeown, managing director at Arlington Advisors, said: ‘We are thrilled to bring 2018 to a close with this deal, which is one of the UK’s largest PBSA portfolio transactions of the year.’
Joint venture partner Equitix is a UK-based investor and fund manager of infrastructure assets, specialising in long term partnerships.
Fusion Students said it would reinvest the proceeds from the sale of The Stellar Portfolio in its ambitious expansion plans both in the UK and overseas which embrace both PBSA and co-living residential rented accommodation. Nigel Henry, co-founder and director of Fusion Students, said: ‘The sale of The Stellar Portfolio is a significant step forward in our corporate development.’
Knight Frank, in its Student Accommodation Survey, showed that some 30% of full-time first-year undergraduates across the UK live in purpose-built student accommodation owned or operated by private providers. This figure is up from 22% five years ago. A further 40% live in University halls, and the remaining 30% of first-years live in the private rented sector or at home with parents. Knight Frank also added that the key drivers for students choosing private PBSA are location, the option to live with friends and the quality of accommodation.
Knight Frank’s Student Property team acted for Fusion Students. Arlington and Equitix were jointly advised by Osborne Clarke, McGuireWoods, Grant Thornton and TradeRisks.
