Fiduciam lends £19.4m to student housing operators
Fiduciam, the institutionally funded lender to SMEs, provided £19.4 million of funding for student accommodation across Europe in the last month.
The two schemes will offer a total of 701 new or recently refurbished student rooms in the United Kingdom and the Netherlands. The average interest rate is 0.60% per month and the Loan to Values peak at 64%.
Fiduciam is increasingly active in the student space and is offering purchase, development and development exit funding for student housing schemes across its main markets; the United Kingdom, Germany, Ireland, Spain and the Netherlands.
The lender is filling the space vacated by traditional bank finance, which is often unable to meet borrower time frames and can be constrained to prime locations and mature schemes.
Fiduciam regularly assists the owners and developers of student accommodation schemes to achieve their planned exits, such as sale to pension funds and other institutional investors.
Strong and stable occupancy and accounts are frequently key to achieving these exits, but these require time to attain. Loan terms are typically between one and three years.
Throughout the COVID-19 pandemic Fiduciam’s outstanding loans in the student accommodation sector performed well, despite the inevitable operational challenges posed by lockdowns and frequently changing government policies.
Fiduciam’s relationship centred credit process puts an emphasis on meeting the principals and getting to know their business plan, and the lender considers this to have been a crucial component in the maintenance of loan book quality during the pandemic.
Borrowers’ ability to actively manage their assets, and be responsive to student needs, paid dividends.
Bardo van Hoogen, Country Manager – The Netherlands, commented:
“Fiduciam seeks to provide funding that allows small businesses and entrepreneurs to seize upon business opportunities not possible with traditional bank finance.
In the Netherlands, developers of affordable housing and student schemes frequently seek Fiduciam’s assistance when time is limited and there are planning or other complexities.
For example, developers may seek to sell their projects pre-build, utilising purchase-contractor agreements, or “koop-aannemingsovereenkomst”, which combine purchase and construction contracts.
Our latest student accommodation loan was completed in 10 days and before irrevocable planning consent was in place.”
Marc Morris, Underwriter at Fiduciam, added:
“Lending on large student accommodation or affordable housing schemes requires a strong understanding of local demand and supply dynamics as well as national trends.
Fiduciam’s detailed underwriting process provides an enhanced opportunity to consider individual assets and business plans on their merits.
A key strength of the scheme we funded in the United Kingdom was the property’s price-per-bed, which was significantly below new-build development viability.
This position accompanied by strong occupancy numbers highlighted the strength of a regional asset that other parties were hesitant to fund.”