Investec to fund CA Ventures’ UK student accommodation with record £64m loan

10 Sep 2019

Investec to fund CA Ventures’ UK student accommodation debut with record £64 million loan. Glasgow, Edinburgh and Sheffield schemes will deliver nearly 900 beds.

Investec Structured Property Finance (“Investec”) announces that it has agreed to provide CA Ventures, the North American investor, developer and operator of student housing assets, with a £64 million senior loan to fund the development of 888 purpose built student accommodation (‘PBSA’) beds in the established university cities of Glasgow, Edinburgh and Sheffield.
 
The transaction represents Investec’s largest PBSA loan to date, a sector in which it has provided more than £650 million of finance, across over 16,000 beds in 41 schemes.
 
The three developments, all a mix of studios and en-suite clusters, will feature state of the art amenity space, premium fit out and elevated, concierge-style service levels and are due to practically complete for the start of the 2020/2021 academic year:
 
  • The Glasgow scheme, which will deliver 422 beds, is adjacent to the University of Strathclyde, a five-minute walk from Glasgow Caledonian University and two miles from the University of Glasgow.
  • Edinburgh is one of the UK’s most undersupplied university locations, with a current student to bed ratio of 3:1, an imbalance which is forecast to increase [1]. The 216 room scheme benefits from its close proximity to Edinburgh Napier University and the University of Edinburgh, with Haymarket train station within a ten minute walk.
  • In Sheffield, the 250 bed development is less than 400 metres from Sheffield University Campus and a short walk from the city centre and Sheffield Hallam University.  Sheffield is one of the UK’s fastest growing PBSA hotspots, recently listed by Cushman & Wakefield at number seven in its global list of PBSA investment destinations.[2]
 
Since 2008 CA Ventures has delivered almost 50,000 beds of student accommodation across 40 major university markets, making CA Ventures the third largest student housing developer and tenth largest student housing owner in the United States.
 
Shivani Goolab, at Investec Structured Property Finance, commented: “We are very excited to be working alongside a leading student living provider with an enviable track record in the USA, as it looks to break into the UK market. We believe that our experience funding a range of market-leading developers across 41 schemes positions us to play a valuable role in supporting CA Ventures’ overseas expansion strategy.”
 
Despite its relative maturity versus other alternative use classes, we continue to view the sector very favourably. There remain significant pockets of the UK where there is a chronic undersupply of student beds, a trend we expect to continue being supported by favourable economic factors including a weak pound and low interest rates. At the same time, the long-term, visible income streams and covenant strength offered is extremely appealing to institutional investors.
 
Carlo Matta at CA Ventures, added: “It has been a pleasure working with the team at Investec, a lender that has demonstrated an intimate knowledge of the UK’s PBSA landscape. This is the start of what we hope will be a long and fruitful relationship, as we look to leverage our near 15 year track record of developing and operating high quality student accommodation portfolios in the USA in establishing our footprint in the UK; a market which is home to a high number of world-leading universities.
 
Watkin Jones will be responsible for the development phase of the Glasgow scheme and Robertsons for the Sheffield scheme.
 
In June, 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 viewing the UK ‘beds for rent’ sector as one blended asset class, a strategic 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. To see the full report click here.
 
[1] Knight Frank, Global Student Property 2019
[2] Cushman & Wakefield, Winning in Growth Cities