LaSalle Investment Management has completed on a deal to purchase and fund the construction of Watkin Jones's 328 student bedroom development known as The Quadrant. LaSalle is buying the scheme for £32 million (approx. 38 million) on behalf of an institutional client. The purchase price reflects a net initial yield of 6.27%.
The scheme, designed by TP Bennett, will total 258 en-suite cluster bedrooms and 70 studio units along with approximately 17,000 ft² (approx. 1,500 m²) of commercial space.
The University of the Arts, London has taken a 21-year lease with a break at year 15 across all the en-suite cluster bedrooms, whilst the remaining studios will be leased to Watkin Jones on similar terms. The student accommodation will be managed by Fresh Student Living. ACME has taken a lease on an element of the commercial space which will provide affordable studios for fine artists. The net income for the property will be £2,138,242 per annum and will be subject to fixed annual uplifts at 2.50%.
Construction has started on site and the scheme is due to be delivered for the start of the 2013/14 academic year.
The transaction follows recent student investments by LaSalle in Cambridge and Newcastle.
John Yeend, Director of LaSalle Investment Management, said: "This funding demonstrates our interest in the student sector, which can provide a secure, predictable income stream for our investors and is underpinned by strong occupier demand and a shortage of quality new accommodation. It also shows our ability to enter into complex funding agreements to provide capital to finance developments."
Jones Lang LaSalle advised Watkin Jones, while Lawson & Partners represented LaSalle.
Source: Citigate Dewe Rogerson