Aviva Investors and M&G Investments complete a £350m refinance loan

Aviva investors Real Estate Finance and M & G Investments have provided £350m loan to Urbanest, a developer-operator of central London student accommodation, to refinance its five-asset operational portfolio in one of the year’s biggest real estate transactions.

The bilateral agreement with funds managed by Aviva Investors Real Estate Finance   and M&G Investments for a £350m senior facility is secured against Urbanest’s 2,520-bed portfolio of purpose built student accommodation (PBSA). It represents a loan-to-value ratio of 55 percent at closing and matures in mid-2027. The transaction completed on 21 July and both lenders hold a 50 percent position.

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 has achieved a BREEAM “Excellent” rating after opening in 2015 and was 99% occupied in the first year of operations. The award-winning property has exceptional amenity spaces, including a top-floor lounge with views across the River Thames to the Houses of Parliament, and integrated cinema facilities. Residents also benefit from a gym, health studio, swimming pool and sauna, as well as individual and communal study areas. The pool is also used by local schools.

Vicky Skinner, Finance Director at Urbanest, said:

“This transaction consolidates the existing lending position of the business, replacing three loans with a single 11.5-year bilateral facility. Securing long-dated, fixed-rate finance at an attractive point in the market cycle was a core objective of Urbanest, as the business continues to invest in the existing portfolio and explore opportunities for expansion.”

"PBSA has matured as an asset class in recent years and as a long-term oriented lender we are fully aligned with Urbanest in seeing the strength of the sector. The combination of high-specification assets, prime locations and a specialist operator was highly attractive, and we are delighted to have completed this transaction alongside M&G."

Barry Fowler, Managing Director, Alternative Income Solutions.

Lynn Gilbert, Head of Senior Commercial Mortgages at M&G Investments, said:

“This was a rare opportunity to gain exposure to institutional-quality Zone 1 London assets backed by a class-leading operator with a similar long-term investment outlook to our own. In a market where demand for university places and student housing continues to outstrip supply, this deal underlines investors’ confidence in the long-term prospects for student housing in central London.”

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