TradeRisks Arranges Debt for Arlington Equitix Joint Venture to Acquire Student Bed Portfolio from Fusion Students as Part of a Deal Totalling £280M
Arlington Advisors (Arlington), the UK-based investment manager, on behalf of Arlington Investors, has acquired a portfolio of 2,458 purpose-built student accommodation (“PBSA”) beds for some £280m. The deal is part of a joint venture with Equitix, a market leading UK based investor and fund manager of infrastructure assets, specialising in long term partnerships.
The acquisition consisted of two separate transactions and, combined, is one of the largest UK student accommodation deals agreed during 2018, according to Knight Frank. The deal brings the total number of PBSA beds under Arlington’s umbrella to 12,700, making it the largest independently owned and 6th largest overall student accommodation platform in the UK.
The combined purchase features ‘The Stellar Portfolio’ bought from Fusion Students, the innovative, experience-led, student accommodation company, and ‘Merlin Heights’ in Leicester bought from a Private Investor. In total, the acquisition features five high-quality assets located in top 30 UK university cities.
‘The Stellar Portfolio’ features four best-in-class PBSA assets, the buildings, which include a total of 1,857 beds, are centrally located in the key Russell Group university cities of Newcastle, Nottingham, Cardiff and Bristol. The portfolio is currently operated by leading student accommodation operator Collegiate AC.
‘Merlin Heights’ in Leicester has been acquired from a Private Investor. The recently built asset comprises 601 beds developed to a high standard by Watkin Jones Plc in 2016 and is currently operated by Fresh Student Living, a leading student accommodation operator.
Sean McKeown, Managing Director at Arlington Advisors, said: “We are thrilled to bring 2018 to a close with this deal, which is one of the UK’s largest PSBA portfolio transactions of the year. This combined acquisition builds on Arlington’s track record within the student accommodation market, an asset class which continues to offer attractive investment opportunities for our investors. We remain committed to expanding our activity within the sector in 2019, and with a strong pipeline already in place, expect to continue acquiring high-quality assets in premier city locations.”
The transaction was financed by £199m in senior debt advanced by a single institutional investor with a 44-year maturity and is Arlington’s seventh long-dated debt issuance in four years, all arranged by TradeRisks. The senior debt benefitted from a strong project finance rating - making it the first direct-let student accommodation acquisition financing in the UK to have secured such a rating.
John Coleman, Director at TradeRisks, said: “We’re delighted to have supported Arlington and Equitix in this acquisition. The transaction shows that with a considered approach to structuring it is possible to finance direct let student accommodation portfolios with highly attractive terms.”
Arlington and Equitix were jointly advised by Osborne Clarke, McGuire Woods, Grant Thornton and TradeRisks. Knight Frank’s Student Property team acted for Fusion Students.