Investec provides Stelling Properties with £12 million loan to fund Southampton modular PBSA development

By Bridging Loan Directory 6th November 2023

Investec Real Estate (“Investec”) announces that it has provided Stelling Properties Group (“Stelling”), the modular development specialists, with an £11.85 million loan to finance the construction of a modular purpose-built student accommodation (PBSA) scheme in Southampton.

The 122-studio scheme, which will be operated by Unilife, is due to complete in time for the 2024/25 academic year.

Located in Southampton City Centre, it is being constructed on a former Bank of England site where the high street frontage, which is Grade II-listed, will be retained as part of the development.

Features will include communal socialising and amenity areas across its five storeys, as well as a restaurant and bar on the ground floor.

Specialists in modular construction, Stelling will be manufacturing the property offsite at their state-of-the-art factory in Hampshire.

Funded by the loan, the development will deliver vast sustainable advantages over a traditional build by reducing the overall environmental impact of the project from start to finish, while the improved build quality will deliver significant operational cost savings.

Southampton has a significant undersupply of PBSA, with rising student numbers across two universities putting pressure on existing stock, combined with a relatively limited pipeline of additional schemes to meet this increasing demand.

According to data from StudentCrowd, Southampton, alongside Durham and Glasgow, has the lowest PBSA availability for the 2023/24 year.

This is Investec’s second transaction with Stelling, having previously supported them with a £11 million senior facility to fund the development of Riverside House, a 99-studio student scheme in Guildford.

Investec’s financing of modular schemes aligns with its approach to supporting the delivery of buildings with strong sustainability credentials.

Earlier this month, Investec published its third Future Living report, revealing global institutional investors attitudes towards the UK Living sector.

PBSA saw the biggest shift in sentiment in the past two years, rising from tenth to first in terms of investor appeal with over half (59%) of respondents optimistic about the prospects for the sector.

Last year, Investec passed the £1 billion lending milestone in student accommodation, having funded 22,000 beds across 55 schemes in 23 cities since 2011.

Ian Burdett, Investec Real Estate, commented:

“Our latest Future Living report highlighted the strong prospects for the UK student accommodation sector and this transaction builds on our market leading track record in this space, in what is a critically undersupplied market.

Working with repeat borrowers has been key to our loan book resilience, and Stelling’s innovative utilisation of modular construction methods ensures they deliver high quality schemes in an efficient and sustainable manner.”

Jose Ignacio Alvarez, at Stelling Properties, added:

“We are thrilled to be partnering with Investec once again, following the success of Riverside House in Guilford.

This project will not only provide much needed quality purpose-built student accommodation in the area but utilising modular construction it will also bring an historic building back to its original glory and help to revive a busy city centre high street.