UPP announces financial close on new £140m deal

University Partnerships Programme (UPP), the UK’s leading provider of on-campus residential and academic accommodation infrastructure, has successfully reached financial close on a £139.7 million deal with the University of Exeter on its East Park project.

The deal will see UPP design, build, fund and operate 1,182 high-quality bedrooms on the University’s Streatham Campus. The scheme will comprise a mixture of standard, en-suite and enhanced accessible bedrooms and will represent the largest build of on-campus accommodation at the University since 2012.

On completion, UPP will operate over 4,000 rooms on the University of Exeter campus. The deal boosts UPP’s portfolio to over 35,000 rooms in operation or under construction through long-term partnerships with 15 leading UK universities.

The investment will include £125.1 million of index-linked debt financing with a tenor of circa 48 years from Pension Insurance Corporation plc (PIC), the specialist insurer of defined benefit pension funds, and £14.6 million of subordinated debt and equity provided by UPP Group and its Shareholders.

PIC’s latest investment is the sixth it has completed with UPP on a bilateral basis, taking the total it has invested directly in UPP schemes to circa £530 million – further evidence that student accommodation remains a resilient asset class for investors.

UPP has appointed top-tier contractor Vinci Construction UK Limited to deliver the development, which has a construction value of £91 million.

Richard Bienfait, Chief Executive Officer of UPP, said: “This new project is a testament to the strength of our bespoke, long-term partnership with the University of Exeter, first formed in 2009. When complete, we will operate over 4,000 on-campus residences in Exeter, in continued support of the University’s strategy and providing the very best student experience. We are delighted once again to be working with PIC who are a reliable and flexible partner for us and have demonstrated a clear commitment to the higher education sector and its need for high-quality facilities.”

Mike Shore-Nye, Registrar and Secretary at the University, said: “East Park is a very exciting new project for the University of Exeter, which will enhance our facilities and increase the number of on-campus bedrooms we have available for future students. Reaching financial close is a key milestone for the project and we look forward to seeing the construction phase commence in the very near future.”

Florence Carasse, Debt Origination Manager at Pension Insurance Corporation, said: “This investment is another step in our long-term relationship with UPP, which has seen us invest in some of the leading universities in the UK. The emphasis we have in our portfolio is to ensure the cashflows are secure and will be there to meet our pension liabilities. We therefore always seek to invest in high-quality institutions and to work with knowledgable and experienced partners, like UPP.”

Construction of the East Park development is scheduled to commence in January 2019, with the rooms set to become operational over two phases in September 2020 and September 2021.

It is the third on-campus scheme currently underway between UPP and the University of Exeter, with the £41.4 million Moberly and Spreytonway projects – consisting of 250 and 131 beds respectively – already under construction and due for occupation by September 2020.