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28/09/2009 - £133 Million Transaction Completed by UPP and the University of Exeter
UPP have successfully transacted a £133 million initiative (£112m of senior debt equally provided by Barclays Commercial Bank and RBS) with the University of Exeter establishing a long-term partnership to increase the amount of on-campus residential accommodation available to students. The deal is one of the largest transactions completed in the UK during this summer1, demonstrating the level of confidence the financial community has in the University of Exeter, UPP’s unique model and the Higher Education sector in general. The project will involve UPP designing, financing and operating new residential accommodation at three locations on the University of Exeter’s Streatham Campus and forms part of the University’s £450 million strategic investment programme.
The value of the construction contract is £77 million and construction will take place over three years from financial close, with the final phase due for completion in 2012/13. The transaction, the result of a competitive bidding process, will also generate a capital receipt for the University of Exeter for investment in the provision of its core teaching and research functions.
The University of Exeter is one of the most successful higher education institutions in the country and was named University of the Year by the Times Higher Education Supplement for 2007/08, and has recently achieved a top 10 ranking in The Times Good University Guide. UPP’s transaction with the University of Exeter is a vital part of the University’s on-going £450 million investment programme, which also includes a £48 million redevelopment of the centre of the Streatham Campus called the Forum Project, a £25 million investment in the Business School and £18 million for new facilities for Biosciences. The agreement with UPP will enable the University to concentrate its funds on academic investment whilst also being able to improve and increase its student accommodation stock.
1Research by CB Richard Ellis, ‘Average Deal Size Tumbles as Large Lot Size Deals Dry Up in European Commercial Property Market’, found that the average size of transaction agreed in the first half of 2009, within the European commercial real estate market, was €18.4 million.
Jeremy Lindley, Director of Corporate Services at the University of Exeter, said:
“The deal with UPP is critical to the University's future development because we require extra student accommodation if we are to expand and develop in the years ahead. UPP are providing very high quality units, which is what the market wants, so this development will help to enhance the offer we make to students. The work also complements other developments which are underway to expand our Bioscience and Business schools and provide a new student services building in the centre of our Streatham Campus.”
Mark Quigley, Director of Structured Finance, Barclays Commercial Bank, said:
“Barclays Commercial Bank has been UPP’s main funder for over a decade and we are delighted to have provided £55m in senior debt, alongside syndicated partners. With Barclays expertise in financing student accommodation and a strong appetite for similar deals, we are able to help improve the supply of on-campus student accommodation at a time when more students than ever before are applying to go to university. This project will be one of the largest new builds of its type this year. UPP has a robust business model and strategy, and we are looking forward to providing future support.”
Sean O’Shea, Chief Executive of UPP, added:
“The scale of this transaction with the University of Exeter shows that the higher education sector is bucking the recession trend and that university accommodation is an increasingly attractive and stable investment opportunity. We work in partnership with universities to provide high-quality accommodation, facilities and long-term financial solutions and, despite the credit crunch, we are finding the financial community has a growing appetite for this kind of investment opportunity, delivered through UPP’s unique model, and we are securing record levels of private sector funding for our university partners.”
Stuart Foster, Director, RBS UK Corporate Banking, said:
"RBS is a long standing investor in UPP's long term partnership business model and the Exeter transaction has raised capital investment (including Senior Debt, Sub Debt and Equity) of circa £133m secured on predictable long-term revenue streams. This deal will be one of the largest of its type this year and RBS expects to provide similar support to UPP for other transactions in the future. With UPP predicting 99.9% occupancy next year (2009/10) and with an average rental increase of 5.5% across the portfolio, RBS is confident that the University sector will be an important investment opportunity in the future."
The UPP scheme with the University of Exeter is expected to relieve pressure on the local rented housing market in the City and benefit the local economy by delivering approximately 300 construction jobs during the construction period, 60 permanent jobs providing facilities management services to students and £29.5 million of continuing total spending into the local economy from students living in the residences.
ENDS
For more information, please contact:
Ian Lindsley, Fran O’Leary or Ben Russell, Jefferson Communications
Tel: +44 (0)20 7256 8912
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