Investec provides £15.6 million development loan for 293-bed student scheme in Lincoln

By Bridging Loan Directory 14th December 2023

Investec Real Estate (“Investec”) announces that it has provided Moorfield Group (“Moorfield”), a UK-focused real estate fund manager, with a £15.6 million facility to fund the development of a 293-bed purpose-built student accommodation (“PBSA”) campus in Lincoln.

Located a short walk from the centre of Lincoln, the development is already under construction and due to complete ahead of the 2024/25 academic year.

Comprising four three-storey townhouses and a further five four-storey buildings, features will include an on-site reception and laundry facilities.

Investor sentiment towards the PBSA sector remains strong, with an acute shortage of stock – there are currently an estimated 95,000 new beds in the planning pipeline, significantly below the 263,000 additional full-time undergraduates anticipated between now and 2030 – expected to underpin 5% annual rental growth.

Investec’s third Future Living report, launched in September, echoed this sentiment. The student accommodation sector saw the biggest shift in investor appetite, rising from tenth to first in terms of investor appeal in just two years.

In 2022, Investec passed £1 billion of lending in the student accommodation sector, having funded 22,000 beds across 55 schemes in 23 UK cities since 2011.

This is Investec’s second student deal with Moorfield, having previously provided a £18,97 million loan for the development of a 282-bed PBSA scheme in Colchester.

Jonathan Long, Head of Corporate Lending at Investec Real Estate, commented:

“With UCAS expecting to receive one million applications annually by 2030, we remain bullish on the student accommodation sector’s compelling long-term outlook.

It has an attractive, inflation-protected income profile supported by deep-rooted demographic tailwinds.

Our 13-year track record providing a mix of domestic and international capital with a range of funding solutions means we are well placed to capitalise on the continued demand for new development.

Working with repeat borrowers is central to our longevity – in particular with businesses like Moorfield, who deliver high-quality specialist schemes that are key to supporting the UK’s growing student numbers.”

Charles Ferguson Davie, Chief Investment Officer at Moorfield Group, commented:

“We have been investing in student housing for over twenty years and investor confidence in the sector remains resilient, with domestic and international investors keen to increase their exposure to an undersupplied asset class offering risk-adjusted returns and long-term income streams.

We see a market opportunity in new-build development and refurbishment of existing stock, with both strategies responding to investor demand for high-quality assets with leading ESG credentials.”