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Urbanest refinances £640m London operational portfolio


Central London student accommodation operator and developer Urbanest has refinanced its five-asset, £640m operational portfolio in one of the year’s biggest real estate transactions, CoStar News can reveal.

Urbanest has reached a bilateral agreement with funds managed by M&G Investments and Aviva Investors Real Estate Finance for a £350m senior facility secured against Urbanest’s 2,520-bed portfolio of purpose built student accommodation.

The refinancing represents a loan-to-value ratio of 55% which implies a valuation on the whole portfolio of £636.36m and the facility matures in mid-2027. The transaction completed on 21 July and both lenders hold a 50% position.

The deal sees Urbanest consolidating its existing lending facilities into a single club deal from three loans with LaSalle, Bank of China, and GIC and MetLife behind Laxfield Capital. The agreements with Aviva and M&G represents each lender’s first financing with Urbanest.

With Zone 1 locations including Hoxton, King’s Cross, Tower Bridge and St Pancras, the portfolio is anchored by a landmark 1,140-bed Westminster Bridge scheme.

The SE1 development opened in 2015 and was 99% occupied in the first year of operations.

Urbanest was founded in 2009 by London-based M3 Capital Partners, a group which has played a significant role in the creation of PBSA as an institutional asset class in the UK and Australian markets.

The refinancing includes all of Urbanest’s built assets but excludes its development pipeline, including its site in Vauxhall which has planning permission for a 454-room, 30 storey student building.

Urbanest’s strategy is to deliver a premium student accommodation experience to residents, and occupationally it blends direct-lets with nominations agreements, partnering with leading London-based universities.

Vicky Skinner, Finance Director at Urbanest, said: “This transaction consolidates the existing lending position of the business, replacing three loans with a single 11.5-year bilateral facility. Securing long-dated, fixed-rate finance at an attractive point in the market cycle was a core objective of Urbanest, as the business continues to invest in the existing portfolio and explore opportunities for expansion.”

Barry Fowler, Managing Director, Alternative Income Solutions at Aviva Investors, said: “PBSA has matured as an asset class in recent years and as a long-term oriented lender we are fully aligned with Urbanest in seeing the strength of the sector. The combination of high-specification assets, prime locations and a specialist operator was highly attractive, and we are delighted to have completed this transaction alongside M&G.”

Lynn Gilbert, Head of Senior Commercial Mortgages at M&G Investments, said: “This was a rare opportunity to gain exposure to institutional-quality Zone 1 London assets backed by a class-leading operator with a similar long-term investment outlook to our own. In a market where demand for university places and student housing continues to outstrip supply, this deal underlines investors’ confidence in the long-term prospects for student housing in central London.”

Urbanest was advised by Nabarro, WSP Parsons Brinckerhoff and EY. Allen and Overy and JLL advised M&G and Aviva. Mount Street is appointed as facility agent on behalf of the lenders.

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