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23/11/2009 - UPP Completes £115 Million Transaction with the University of Nottingham
UPP Completes £115 Million Transaction with the University of Nottingham
UPP has today closed on a £115 million transaction with the University of Nottingham, in a further demonstration of the confidence that the financial community has in the company’s unique funding model. The deal, one of the largest transactions to have taken place this quarter, was financed by Barclays, RBS and the Bank of Scotland, who have worked closely with UPP on a number of previous schemes. The agreement will see UPP extend its long-term partnership with the University by an additional 10 years for a revised concession period of 45 years and will deliver an even higher quality of affordable student accommodation at the Broadgate Park campus.
This major deal follows UPP’s recent £133 million transaction with the University of Exeter, backed by Barclays and RBS, which closed in September 2009. Through these two transactions UPP has drawn almost quarter of a billion pounds of new private investment into the Higher Education sector in less than six weeks. The banks involved have been attracted by the secure, long-term income streams, delivered through UPP’s unique model, which is based on rental income rather than property values.
Under the deal with the University of Nottingham, UPP has committed to investing in and refurbishing 850 rooms, providing students with affordable accommodation of a higher standard and thereby improving the experience of students studying at the University. The contractor for these works is Mansell who have worked with UPP on a number of previous projects.
UPP’s partnership with the University of Nottingham began in 2003 and the University is now ranked in the UK's Top 10 and the World's Top 100 universities by the Shanghai Jiao Tong (SJTU) and the Times Higher Education-QS World University Rankings. Described by The Times as 'Britain's only truly global university', it has invested continuously in award-winning campuses in the United Kingdom, China and Malaysia. The extended partnership between UPP and the University of Nottingham will run until 2047/48, when the accommodation will be transferred back to the University.
Graham Ward, Commercial Director at the University of Nottingham said: “We're pleased with the successful completion of this deal and the investment in a high-quality student experience that it represents. We look forward to working with UPP to further enhance the affordable accommodation offered to students living at Broadgate Park.”
Sean O’Shea, Chief Executive of UPP, commented: “This transaction with the University of Nottingham demonstrates the confidence the financial community has in UPP’s unique model and student accommodation as an investment class. I’m delighted that, following this transaction, UPP has successfully drawn almost a quarter of a billion pounds of new private investment into the Higher Education sector in less than six weeks. The University of Nottingham are focused on improving still further the quality of the student experience and this transaction – along with the extra investment in the accommodation - will further these ends. This provides an example of how the UPP model can help institutions release funds in both the short and long term which can in turn be used to fund core activities.”
Mark Quigley, Director, Structured Property Finance Team, Barclays Commercial Bank, said: “During the past couple of months, Barclays (which has been UPP’s main funder for over a decade now) has provided senior debt facilities of almost £100m for two transactions. Our appetite for funding schemes of this nature and indeed generally across the student accommodation sector remains undiminished, further reinforcing our desire to remain the market leading provider of student accommodation finance. We are delighted to be involved with UPP and also the University of Nottingham, which is part of the prestigious Russell Group.”
Miles Pool, Associate Director, RBS UK Corporate Banking, said: "The £115m UPP Nottingham transaction, in which RBS is Joint Mandated Arranger, delivers investment secured on forecast long-term revenue streams. This major deal involves a world class university and, as a long standing investor in UPP’s partnership business model, we are looking forward to working with UPP again in the future.”
Allan MacKenzie, Relationship Director, Bank of Scotland’s Large Corporate Real Estate Team in the West of Scotland, said: “Bank of Scotland is delighted to be able to continue supporting UPP. It’s clear that with the University population on the rise, demand for the quality of student accommodation, provided by the company, will remain high. Through our commitment to UPP, alongside our syndicate partners, we want to do everything possible to ensure a successful future for the business and the sector as a whole."
Elaine Lydon, Director of Structured Finance at DWPF, who arranged the finance and provided modelling services, said: “This transaction extends the current relationship between UPP and the University of Nottingham by 10 years, renewing the concession for a further 39 years. The support that UPP's key funding partners have shown in providing additional debt facilities for this transaction shows the confidence that the banks have in the UPP business model that delivers secure long-term income streams. This is demonstrated by the achievement of fully occupied schemes, with 2009/10 being a record year. UPP's strong funding partnerships will be a key asset in taking the business forward in 2010 and beyond.”
ENDS
For more information, please contact:
Fran O’Leary, Ian Lindsley or Ben Russell,
Jefferson Communications
Tel: +44 (0)20 7256 8912
Email:
Tim Utton, Deputy Director, Communications, University of Nottingham
Tel +44 (0)115 84 68092 / 07825 753 953
Email:
Notes to Editors
- 1.University Partnerships Programme (UPP) is the trading name of the UPP Group of companies. It specialises in funding, developing and operating student accommodation schemes. It has invested almost £1 billion in the higher education sector and plans to invest a further £1 billion over the next two years.
- 2.The University of Nottingham is one of the UK’s most popular universities with approximately 36,932 students, of which 28,647 are undergraduates. The University is a global player in Higher Education with two overseas campuses in China and Malaysia where a further 6,500 students are enrolled. The University is a member of the Russell Group of institutions – the association of 20 major research-intensive universities of the United Kingdom.
- 3.UPP established a long-term partnership with the University of Nottingham in June 2003 in a deal which involved a transfer of a total of 1,386 student rooms. The deal saw UPP undertake the continued operation of approximately 1,100 of these student rooms and provide a further 1,100 new build en-suite single and studio units. The initial concession period was for 35 years, at which point the accommodation would have been transferred back to the University. The new transaction involves a ten year extension to this relationship, which will see the relationship between University and UPP run until 2047/48, when the accommodation will be transferred back to the University.
- 4.For the University of Nottingham the transaction will ensure:
- An investment of c£6m into the refurbishment of the stock transferred as part of the original transaction in 2003, improving the quality of accommodation for students.
- The transfer of demand and operational risks for the term of the concession.
- 5.The Student Accommodation Team at Barclays is the main provider of funding in the sector. Barclays knowledge and expertise covers different structures for direct let/nomination agreement/university lease models.
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