UPP reaches financial close on c.£98m accommodation deal at Swansea

University Partnerships Programme (UPP), the leading provider of on-campus student accommodation infrastructure and support services in the UK, has successfully reached financial close on a c. £98 million deal with FTSE 250 developer St Modwen Properties PLC to establish a new, 45-year partnership with Swansea University.

Under the deal, UPP Group will acquire two companies from St Modwen Properties PLC, as well as a freehold property interest in further accommodation.

The transaction will include £63 million of index-linked bond debt from Pension Insurance Corporation (PIC), split across two debt tranches of £44.9 million and £18.1 million, with debt tenors of 44 years and 37 years respectively. UPP Group and its Shareholders will invest £34.8 million of subordinated debt and equity.

PIC’s latest investment takes the total it has invested in UPP schemes to over £300 million.

PIC previously provided £86.8 million of bond debt for UPP’s forward-funding of a £105 million deal with the University of London for the construction of Duncan House in Stratford, announced in January 2017. Over recent years PIC has invested in additional UPP schemes – at the University of London’s award-winning Garden Halls (£113.8 million) and the University of Kent’s Turing College (£40.5 million).

The new deal will see UPP acquiring and operating 2,021 study bedrooms on the Swansea University’s Bay Campus in South Wales. UPP will deliver a full facilities management service, drawing on its student experience expertise.

This further extends UPP’s portfolio to around 35,000 rooms (under management or in construction) and to 16 long-term partnerships with leading UK universities.

The deal demonstrates the innovative range of transaction types which UPP has recently completed, as well as the continued appetite of the financial community for long-term investment opportunities in the higher education sector.

The £450 million Bay Campus development responds to the University’s plans for growth and expansion, alongside its ambition to transform its estate into a research-driven exemplar of a 21stcentury University. It represents a significant investment in South Wales and will help to generate an extensive innovation environment that maximises the growth of collaborative research with industry in high-tech clusters where Swansea has established strengths.

Sean O’Shea, Group Chief Executive Officer at UPP, said: “Our new partnership with Swansea University will help facilitate its ambitious plans and support its long-term vision to enhance its position as a world-class educational establishment for the benefit of students, staff and the local community for generations to come. We are excited to be providing homes for the tech entrepreneurs, engineers and scientists of the future.”

Professor Iwan Davies, Senior Pro-Vice-Chancellor (Estate and Internationalisation) at Swansea University, said:

We are delighted to enter a new partnership with UPP the UK’s leading provider of student accommodation. Swansea University is committed to providing first-class learning, living and social facilities so that we can offer a truly transformational campus student experience combined with a global outlook.”

Mark Allan, Chief Executive, St. Modwen Properties PLC, said:

“We are pleased to have reached agreement with UPP on the sale of the latest phase of student accommodation at the Bay Campus.  It is an important milestone and we are proud of all that we have achieved, regenerating and transforming a former oil refinery site into a modern, internationally-acclaimed centre for academia.  We will continue to work in close partnership with Swansea University on future developments on the site.”

Florence Carasse, Debt Origination Manager at Pension Insurance Corporation, said:

“We are pleased to have worked closely with UPP to provide this tailored project financing structure. This long-term debt investment will support Swansea University in sustaining its rapid growth and its recent expansion with the flagship Bay Campus. We are proud to support the student population and local community in this way, while providing our policyholders with financial security.”