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UPP Reach Financial Close with University of London on c.£105 million Student Development in East London
4 January 2017
UPP has successfully reached financial close on £104.7 million deal – strengthening its long-term partnership with University of London to enhance and increase the amount of high quality accommodation available to students at the University and its institutions. The investment will include £86.8 million of senior debt from Pension Insurance Corporation (“PIC”) and £17.9 million of subordinated debt and equity provided by UPP Group and its Shareholders. Assured Guaranty (Europe) Ltd. will provide a wrap to the 46-year index-linked loan, provided by PIC.
Located in Stratford, close to many national and international rail links, Duncan House responds to the growing demand from students for high quality, but competitively priced accommodation. The new development follows the successful completion – delivered in partnership between the University and UPP – of the flagship Garden Halls scheme located in Cartwright Gardens, Bloomsbury. The scheme which became operational in September 2016 was one of the largest transactions completed in the capital to date and involved a total investment of £140.7 million, with PIC again providing the senior tranche of bond debt.
The Duncan House deal is a further demonstration of the level of confidence the financial community has in UPP’s unique partnership approach, the University of London as an institution and the UK Higher Education sector as a long-term investment proposition. The development will be a mixed-use 33-storey landmark building providing in excess of 18,000m2 of new accommodation and will involve UPP operating 511 new study bedrooms and communal space for the length of the concession.
UPP’s second transaction with the University of London is a vital part of the institution’s investment programme to upgrade its intercollegiate accommodation offering. The University recognise that the capital has a historic shortfall in residential supply and is seeking to make best use of its resources to provide a wide variety of affordable accommodation options for students studying at its member institutions. By working in partnership with UPP and PIC, the University will be able to increase and improve accommodation options for students; free up capital to invest in teaching and research and continue its development as one of the leading academic institutions in the country.
Sean O’Shea, Group Chief Executive Officer of UPP said: “The University of London is a world-renowned institution and we are delighted to have reached financial close on this landmark transaction in East London. Located in the heart of Stratford, this exciting scheme will offer future generations of students’ competitively priced accommodation and facilities of the highest quality.”
Chris Cobb, Pro Vice-Chancellor (Operations), Chief Operating Officer and University Secretary of the University of London, said: “This is an exciting and significant investment for the University. It’s the first major property that we’ve acquired in 50 years and the first outside of central London. This investment continues our trajectory of offering students quality accommodation which balances affordability with low travel times to their place of study. It also continues our commitment to modernise and expand our property portfolio to meet the needs of future generations of students.”
Allen Twyning, Head of Debt Origination at Pension Insurance Corporation, said: “As PIC insures increasing amounts of defined benefit pension liabilities, partnerships such as we have with UPP ensure that we are able to invest in strong, secure, long-term cash flows to match our pension payments. We look forward to working with Sean and the team again.”