MetLife has financed Greystar Real Estate Partners’ acquisition of three student accommodation properties in London from an Oasis Capital Bank (OCB) and UNITE joint venture with a five-year £122.8m combine acquisition finance and capex facility.
Greystar has secured the approximate £112.8m and a circa £10m capex line to finance the £174m purchase of three student halls comprised of the 230-bed complex on Great Suffolk Street in Southwark; the 573-bed Woodland Court near Caledonian Road in Islington; and the 332-bed Wedgwood Court on Holloway Road.
The acquisition financing, arranged by Laxfield Capital, reflects just under 65% LTV, not including the capex facility.
CoStar News understands that the senior margin pricing is around 230 basis points over three-month LIBOR, reflecting a premium for risk still associated with student accommodation lending given the sector’s status as a non-mainstream real estate asset class.
“This deal is a first in the United Kingdom for MetLife and Greystar, who have been working together for many years in the US real estate market,” said Paul Wilson, managing director of real estate for MetLife in the UK, in a prepared statement.
Adam Slater, managing director for Laxfield, said: “In this increasingly competitive lending environment, we are very pleased to be working with Greystar and MetLife. This high quality portfolio was an ideal transaction to cement further our relationship with MetLife, having arranged nine transactions since 2010 worth over £820m ($1.4bn).”
In the post-crisis period, however, inroads have been made in establishing student accommodation in the UK into the mainstream fold.
Annual transaction volumes since 2011 have risen year-on-year with £1bn in 2011 followed by £2.8bn in 2012, which includes the circa £800m UPP share sale to Dutch pension fund PGGM), according to JLL’s student accommodation research team.
Last year’s annual tally fell back to £2bn, but this year is forecast to beat 2013’s annual tally, with around £800m worth of transactions having already closed.
Furthermore, four student accommodation IPOs are currently in the planning. Last Tuesday, Empiric Student Property (EPS) announced its intention to raise more than £110m, which will be managed by London Cornwall Property Partners Limited.
EPS is targeting a 13% per annum total shareholder return comprising 6% dividend yield and 7% per annum average NAV growth.
Roundhill Capital is also seeking an exit from its three-strong Nido student accommodation portfolio acquired from Blackstone two years ago for £424m.
Last year, GCP Student Living was reportedly mulling an IPO, while the £1bn Brandeaux Student Accommodation Fund (Sterling) Limited confirmed in February that it was considering an IPO to repay investors.
The five-year OCB joint venture, owned 75% by OCB and 25% by UNITE, has completed the planned sell down of the joint venture fund established in August 2009 and the fund is now retired.
UNITE recycled its share of the net proceeds, at £18m, into its London-focused UNITE Capital Cities (UCC) joint venture with GIC, in order to increase its share to a 50:50 holding.