Octopus Property has agreed to provide EREC Estates with a €41m (£36m) senior loan for the development of a major Purpose Built Student Accommodation (PBSA) scheme in Coventry. The scheme was brought to Octopus Property by John Kerrigan – Director at Arc and Co, who advised EREC Estates on the debt structure. This loan represents the largest single development deal completed by the team within Octopus Property.
Designed to a high specification, the modern development will comprise two buildings totalling 502 beds, a mix of clusters and studios, and will feature a range of high-quality communal facilities and retail offerings. Centrally located adjacent to the city ring road, the scheme is a short walk from the main Coventry University campus, whilst the city centre and its wide variety of national retailers and cafés, bars and restaurants are also nearby. The completed building will serve both Coventry and Warwick universities.
The 27-month facility marks the third collaboration between Octopus Property and EREC Estates, following two smaller PBSA developments in Leicester and Coventry. Winvic Construction will act as the main contractor to ensure the scheme is completed in time for the start of the 2019/20 academic year.
Gavin Eustace, Head of Residential Development at Octopus Property, commented: “Whilst we are seeing some geographical polarisation caused by oversupply, the student accommodation sector remains one of the most attractive asset classes for investors. It’s a sector that we like, and as long as the broader favourable supply-demand dynamics remain in place for this type of innovative and high specification accommodation, we will continue to back schemes that require bespoke and efficient financing facilities. Starting 2019 with our largest ever development facility is a significant milestone for the team and demonstrates our evolving maturity and ability to compete with major institutional lenders. Growing the development loan book is a key priority moving forward and working alongside our key partners should see us doing similar sized deals more regularly.”
Andrew Jamieson at EREC Estates, added: “We are extremely pleased to be working with Octopus on behalf of UNINN Investment Fund. This is the fourth property that UNINN has developed and owned in Coventry and underscores our belief in the potential of its Universities to continue to deliver a product that is respected internationally. We understand that the West Midlands has the ability to deliver returns to students and investors alike”.
John Kerrigan – Director at Arc and Co. stated: “The completion of the Parkside transaction is a real milestone for all those involved and is the culmination of 12 months of hard work, on what has been a very complex deal, both from a real estate and funding perspective. However, the underlying proposition was extremely strong and supported by a very high calibre sponsor and funder, both of whom were a pleasure to work with”