The bank Investec is making a multi-million-pound loan into the UK student accommodation market in a further sign of increased investment to ‘alternative properties’.
Through the loan, the bank is supporting US property developer CA Ventures’ first property investment in the UK.
The £64 million (€71.7 million) transaction is also Investec’s largest purpose-built student accommodation loan to date. The bank says the outlook for the student accommodation sector is favourable despite the asset class’s maturity compared to other alternative property assets.
Investment in alternative properties – which includes hotels - has been observed to increase this year.
“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,” said Shivani Goolab, part of Investec’s structured property team.
“At the same time, the long-term, visible income streams and covenant strength offered is extremely appealing to institutional investors.”
The three developments in Glasgow, Edinburgh, and Sheffield will deliver nearly 900 beds.
To date, Investec has provided more than £650 million of finance across over 16,000 beds in 41 student accommodation schemes.
CA Ventures is the third largest student housing owner in the United States.
German asset manager DWS is another recent investor in UK student accommodation.
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