There’s been a lot of change in the institutional real estate portfolios in the last two decades. It used to 35-45% office and retail and the rest in industrial – all held directly in the UK. Welsh industrial was always used as the exemplar of the most obscure, unglamorous market. That world has largely gone. The investors have changed, the business models of the insurance companies and (some large) pension funds have changed and their investment portfolios have also changed. They invest abroad, invest in joint ventures, limited partnerships and other unlisted real estate funds and invest in alternative sectors such as infrastructure, residential and student accommodation.
The FT Lex column had a short but interesting piece on student housing last week. Costar reported this week on a recent refinancing deal.
Central London student accommodation operator and developer Urbanest has refinanced its five-asset, £640m operational portfolio in one of the year’s biggest real estate transactions, CoStar News can reveal.
Urbanest has reached a bilateral agreement with funds managed by M&G Investments and Aviva Investors Real Estate Finance for a £350m senior facility secured against Urbanest’s 2,520-bed portfolio of purpose built student accommodation.
The refinancing represents a loan-to-value ratio of 55% which implies a valuation on the whole portfolio of £636.36m and the facility matures in mid-2027. The transaction completed on 21 July and both lenders hold a 50% position.
The deal sees Urbanest consolidating its existing lending facilities into a single club deal from three loans with LaSalle, Bank of China, and GIC and MetLife behind Laxfield Capital. The agreements with Aviva and M&G represents each lender’s first financing with Urbanest.
With Zone 1 locations including Hoxton, King’s Cross, Tower Bridge and St Pancras, the portfolio is anchored by a landmark 1,140-bed Westminster Bridge scheme.
The SE1 development opened in 2015 and was 99% occupied in the first year of operations.
Urbanest was founded in 2009 by London-based M3 Capital Partners, a group which has played a significant role in the creation of PBSA as an institutional asset class in the UK and Australian markets
I’d never heard of Urbanest. A number of things jump out to me here. It’s become a big sector! The traditional institutions such as M&G and Aviva are investing in real estate debt (I’d forgotten about that above – they used to do it in the 1970s and 1980s but stopped and it’s “funds managed by them” rather than their own capital). Capital is being sourced internationally.
I suspect that we could be using more case studies etc. on student housing as a way of trying to grab our own students’ attention. They’re the ultimate drivers of a large real estate shift.