Investec extends London PBSA footprint with development loan for 397-bed Stratford scheme

By Bridging Loan Directory 20th August 2024

20 August 2024: Investec Real Estate (“Investec”) has provided a joint venture between Watkin Jones plc, the UK’s leading developer and manager of residential for rent, and Housing Growth Partnership, the Lloyds-backed equity investor, with a development loan to fund the construction of a purpose-built student accommodation (PBSA) scheme in Stratford, East London, with a GDV of c. £120 million.

It takes Investec’s provision of PBSA finance since 2011 to over £1.1 billion, in what is a highly defensive sector underpinned by compelling demographic trends and where there remains a critical shortage of modern, well-connected and sustainable space.

According to CBRE and QX Global, the gap between demand for PBSA and available supply in London, which has the highest density of leading universities of any global city, currently stands at c. 105,000 full-time students.

Targeting completion in time for the start of the 2026/27 academic year, the development will comprise 397 rooms and circa 2,000 sqm of commercial space.

It is conveniently located to cater for the nearly 14,000 students studying at UCL East and UAL’s London College of Fashion campuses in the Queen Elizabeth Olympic Park, as well as the nearby Birkbeck College and UEL University Square Stratford campus.

In addition, the asset’s micro location, being only a short walk from Stratford station, offers an easy commute to campuses across the Capital via the train, tube and DLR.

In line with Investec’s commitment to supporting the delivery of fit-for-purpose real estate that meets future minimum energy efficiency requirements, the development is targeting a BREEAM ‘Excellent’ certification.

Alice Harman, Originator at Investec Real Estate, commented:

“The investment case for UK PBSA remains highly compelling, underpinned by supportive structural and demographic trends.

London in particular, with its concentration of leading higher education institutions and enduring global appeal, coupled with higher land costs and high private sector rents, continues to witness strong capital and rental growth.

Importantly, the scheme’s environmental and social credentials align with both our own lending strategy and the demands of today’s students, whilst future proofing it from potential obsolescence.

Working with existing partners who are sector leaders remains central to our growth strategy and we look forward to delivering much needed future schemes alongside Watkin Jones and the Housing Growth Partnership.”

George Dyer, Group Investment Director at Watkin Jones, added:

“We are delighted to continue our longstanding relationship with Investec Real Estate.

Following the successful establishment of our joint venture with HGP, this development debt facility will enable delivery of Grove Crescent Road, Stratford in time for the 2026/27 academic year.

Once complete, the scheme will deliver much needed high quality student accommodation, offering strong ESG credentials, into one of London’s fastest growing sub-markets.”