London-based Student accommodation developer-operator Urbanest has agreed a £100 million refinancing with Aviva Investors and M&G Investments for its landmark purpose-built student accommodation (‘PBSA’) scheme in Vauxhall.
Each lender has provided £50 million, in an extension of their existing £350 million investment facility with Urbanest. The new lending is primarily against Urbanest’s newest operational building on Miles Street, which opened in September 2018.
The award winning 454-bed 32-storey red brick tower, built by Balfour Beatty for Urbanest in the style of New York’s iconic Flat Iron, looks out over the new U.S. Embassy and Battersea Power Station. It was designed by Glenn Howells Architects and has achieved BREEAM “Excellent”.
Fully let for its first year of operations, more than 400 of the beds at Urbanest Vauxhall are offered on an exclusive long-term basis to students of a leading London-based university under a nominations agreement.
The existing £350 million loan completed in 2016, secured on 2,520 PBSA beds between five prime operational Urbanest assets around Zone 1 London.
With properties in Hoxton, King’s Cross, Tower Bridge, St Pancras and Westminster Bridge, the addition of the Vauxhall property to the existing security pool has strong synergies and brings total beds to nearly 3,000.
The facility is a 50/50 bilateral agreement with funds managed by Aviva Investors and M&G Investments, maturing in mid-2027.
Unlike Urbanest’s 656-bed mixed use student scheme in Aldgate which is currently under construction with Balfour Beatty, Vauxhall is single-use student, and forms the PBSA component of the 1.5 million sq. ft. Vauxhall Square masterplan in the Vauxhall, Nine Elms, Battersea Opportunity Area.
This transaction will also see Urbanest progress a planning application to develop a series of nine railway arches adjacent to its existing Westminster Bridge asset as in excess of 30,000 sq. ft. of high-quality thermal envelope sealed commercial offices across ground and mezzanine floors.
Urbanest was founded in 2009 by London-based M3 Capital Partners (‘M3’), a group which has played a significant role in the creation of PBSA as an institutional asset class in the UK and Australian markets. Urbanest’s strategy is to deliver a premium student accommodation experience to residents, and occupationally it blends direct-lets with nominations agreements, partnering with leading London-based universities.
Johnny Manns, Head of Major Development at Urbanest, said:
“Since founding Urbanest alongside business partners and investors M3, we have seen institutional appetite for well-designed prime PBSA – particularly in London – go from strength to strength. Our team has been delighted to meaningfully grow an existing valued relationship with lenders Aviva and M&G on completion of our latest operationally stabilised scheme in Vauxhall.”
Gregor Bamert, Head of Real Estate Finance at Aviva Investors, said:
“Strong demand for university places and PBSA in central London make this an attractive sector that is aligned with our long-term investment strategy. We are pleased to build the relationship with both M&G and Urbanest, an existing borrower with a formidable track record in this sector.”
Adam Willis, Associate Director in M&G’s Real Estate Finance team, said:
“Urbanest is one of the leading operators and developers of high quality student housing. Its long-term investment outlook together with strong university relationships align well with our lending strategy.
“We are pleased to have partnered once more with Aviva and Urbanest, and to have grown our sector exposure to student housing, which remains an attractive asset class for our pension fund investors and other institutional clients.”
Urbanest was advised by CMS Cameron McKenna Nabarro Olswang LLP, Bedell Cristin and EY. Aviva Investors and M&G Investments were advised by Allen & Overy LLP, Carey Olsen, JLL, WSP and Aon.
