UPP reaches financial close on £41m deal

University Partnerships Programme (UPP), the UK’s leading provider of on-campus residential and academic infrastructure, has successfully reached financial close on a £41.4 million deal to deliver 382 high-quality student residences for the University of Exeter.

The deal will see UPP design, build, fund and operate the residences through the redevelopment of the existing Moberly and Spreytonway sites on the University’s Streatham Campus.

UPP and the University have worked together since 2009, when a £133 million transaction saw the creation of a bespoke, long-term partnership – since which UPP has delivered and operated over 2,500 on-campus residences. The scheme subsequently acceded to the Group’s Irish Stock Exchange listed Bond programme in December 2014.

The new transaction will include £37.2 million of index-linked bond debt from Pension Insurance Corporation (PIC), with a debt tenor of 47 years. UPP Group and its shareholders will invest £4.2 million of subordinated debt and equity.

PIC’s latest investment is the fifth it has done on a bilateral basis, taking the total it has invested directly in UPP schemes to circa £350 million, and is further evidence that student accommodation remains a resilient asset class for investors.

The deal is a further boost for the Group following recent news in mid-June that the University of Exeter had selected UPP as Prefered Bidder to design, build, fund and operate a further 1,182 bedrooms as part of its East Park project.

On completion of the scheme UPP will operate well over 4,000 rooms on the University of Exeter campus. In what is the Company’s 20th anniversity year, the Group has a portfolio of approximately 37,000 rooms under management, in construction or at preferred bidder stage across 16 long-term partnerships with leading UK universities.

The announcement also follows the Group successfully reaching financial close on a circa £98 million deal to acquire and operate over 2,000 bedrooms at Swansea University, during the course of February. The deal was also funded by PIC, alongside UPP and its Shareholders.

Sean O’Shea, Group Chief Executive of UPP, said: “Following our recent selection by the University as its Preferred Bidder for the 1,182-room East Park project, this latest announcement is further testament to the strength of our existing bespoke, long-term partnership with the University. When our existing portfolio and the new schemes are combined, we will be operating over 4,000 on-campus residences in Exeter, in continued support of the University’s Capital Strategy and providing the very best student experience.”

Mike Shore-Nye, Registrar and Secretary at the University of Exeter, said: “We are delighted to be working with UPP to take forward the next stage of our accommodation development programme. The projects at Moberly and Spreytonway will add to our portfolio of on-campus accommodation providing a range of options for future students.”

Elizabeth Cain, Senior Debt Origination Manager at Pension Insurance Corporation, said: “We are delighted to again be working with one of our long-standing investment partners UPP in this latest round of funding for student accommodation, this time at the highly regarded University of Exeter. The quality and structure of the investment is a good match for PIC’s long-term pension liabilities, and backs the pensions of our policyholders.”

The existing Moberly accommodation is at the end of its usable life and no longer meets the aspirations of the University or student demand for modern housing. The existing halls of residence will be replaced by a high-quality modern development, providing an affordable offer to students and increasing the number of residences from 139 to around 251.

Meanwhile, Spreytonway House is currently derelict and has been disused for a number of years. The redevelopment will provide 131 high-quality, premium residences.

Redevelopment work is scheduled to start in earnest in the coming weeks and is scheduled for completion in 2020.