Investec Structured Property Finance has agreed to provide a joint venture between Scape UK and HG Construction with a £53.5m senior debt facility, to fund the development of 403 purpose built student accommodation beds and 113 co-living units in Guildford.
The scheme is scheduled to open for the 2020/21 academic year, with the co-living element following in 2021. Scape Surrey 1, directly adjacent to the new scheme, has achieved 100% occupancy across its 141 beds since opening for the start of the 2016/17 academic year, and it is the most oversubscribed property in Scape’s student portfolio.
Guildford is currently home to almost 17,000 students, including in excess of 4,480 from overseas. The student accommodation market in the town is considered undersupplied, with only enough beds for about 40% of the student population (Knight Frank).
Shane Ryan of Investec commented:
“We are pleased to be working alongside Scape UK again to deliver Scape Surrey 2. We are aware of the limited supply of Grade-A student accommodation in Guildford, particularly studios, and are encouraged by the excellent performance of Scape Surrey 1.
“Increasingly we are seeing more innovative developers delivering a mix of tenure types within the same scheme, which reflects the blurred lines that now exist between the different use classes that encompass the private beds for rent sector. Having built a reputation as a market leading provider of development finance for schemes across the UK, we continue to look at opportunities to grow our exposure across this sector.”
The University of Surrey has become increasingly popular, with applications rising 119%, from 14,645 in 2008 to 32,105 recorded in 2017. Guildford also has three other educational establishments.
Adam Brockley, at Scape UK, added:
“Investec have been an absolute pleasure to work with being proactive throughout the process. They have demonstrated a deep understanding of the sector and a commitment to concluding the transaction that has been invaluable given the short timescale. We look forward to working with them again in both the student and fast expanding co-living space.”
Investec last week published “Future Living: How global investors will transform UK beds for rent”, a global survey of more than 50 institutional investors, representing £338bn in global assets under management. It revealed that investors are increasingly looking at replicating the US approach and taking a blended approach to the UK ‘beds for rent’ sector as one asset class, a 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.