PRUPIM, the real estate fund management arm of M&G Investments, has acquired New Carnegie Court for £32.95 mln (approx. 40.5 mln), a block of student accommodation at University of Aberdeen, from UNITE, the UK's leading developer and manager of student accommodation.
The deal secures PRUPIM's clients a rising income stream for 25 years.
New Carnegie Court is a modern purpose built student accommodation scheme which is located on the University of Aberdeen's Hillhead Campus. The property comprises seven blocks arranged around a central courtyard and provides 520 beds arranged in cluster flats.
The Property is let to the University of Aberdeen on a 25-year full repairing and insuring lease at a rent of £1,914,158 per annum subject to annual rental increases to RPI (collar 1% -5%).
This type of transaction is known as an 'income strip' because the freehold is retained by the University of Aberdeen. At the end of the 25-year lease the leasehold rights will revert to the University for a nominal fee.
Kris McPhail, Director, Investment Management at PRUPIM, commented: 'Our clients have a strong demand for 'bond' like investments that provide a long term income. On behalf of our clients we are continuing to invest substantial amounts and we own over £3 billion (approx. 3.6 billion) of property with leases having these characteristics in the UK.
We have demand for investments with rents that are fixed for the duration of the lease, have pre agreed fixed uplifts, or have uplifts linked to inflation.'
Richard Simpson, Managing Director of Property at UNITE, commented: "This transaction is testament to the growing appeal of the student accommodation sector to a range of UK and international institutional investors, who are attracted by the annuity-type income stream. The deal was 'win, win, win' for all parties providing the University with a means of expanding and enhancing their estate without spending their own capital."
PRUPIM, part of the M&G Group, is one of the world's largest real estate fund managers, managing predominantly institutional investments for external clients and Prudential plc.
Source: Quill PR