St. Modwen has completed the sale of its 45-year leasehold interest in its purpose-built student accommodation at Swansea University Bay Campus for a total cash consideration of £87.3m to University Partnerships Programme (UPP Group Limited, “UPP”), a specialist provider of on-campus student accommodation infrastructure and support services. The assets that have been sold comprise St. Modwen’s interests in the completed student accommodation buildings, including ancillary commercial leases. The sale is by way of a disposal of the entire issued share capital of St. Modwen Properties VIII S.à.r.l. and St. Modwen (SAC 2) Limited and certain freehold interest.
The planned disposal follows a competitive sales process and was broadly in line with book value. The gross consideration for the 45-year leasehold asset is £139.3m, representing a yield of 5.7%, with a cash consideration of £87.3m reflecting the transfer of the associated finance lease creditor. The disposal will result in the reduction of £5.8m of net rental income compared to 2017, offset by the reduction of £2.1m in finance lease interest due to the sale.
Totalling 2,005 rooms, the student accommodation was built as part of a £450m development by St. Modwen, with the most recent units opening to new students in September 2017. The rolling programme of investment by St. Modwen into the 65-acre Bay Campus site has seen the Company deliver in total over 1m sq. ft. of student accommodation and state-of-the-art academic and research facilities.
Mark Allan, Chief Executive, St. Modwen, said:
“The sale of the latest phase of student accommodation at the Bay Campus is an important milestone and we are proud of all that we have achieved. The proceeds from the sale will be used to reduce group borrowings as well as fund new, higher growth projects, both within the campus and further afield, in line with our strategy. We continue to work in close partnership with Swansea University on future developments on the site.”
Sean O’Shea, Group Chief Executive Officer at UPP said:
“Our new partnership with Swansea University will help facilitate its ambitious plans and support its long-term vision to enhance its position as a world-class educational establishment for the benefit of students, staff and the local community for generations to come. We are delighted to have successfully reached financial close on the deal with St. Modwen and we are excited to be providing homes for the tech entrepreneurs, engineers and scientists of the future.”
Professor Iwan Davies, Senior Pro-Vice-Chancellor (Estate and Internationalisation) at Swansea University said:
“We are extremely grateful and thank St. Modwen for their excellent provision of the student accommodation at the Bay Campus since its opening in 2015. Swansea University is committed to providing first-class learning, living and social facilities so that we can offer a truly transformational campus student experience combined with a global outlook and we welcome our new partnership with UPP.”