University Partnerships Programme’s (UPP) student accommodation deal for the University of Hull reached financial close earlier this summer. The deal is being financed via AllianzGI’s issue of a 40-year Baa3 rated £127.6 million ($164.89 million) index-linked bond

The bond investors comprised Allianz Group companies as AllianzGI’s Fund 1  was almost fully-invested at the time of financial close and Fund 2 was not ready.

Debt and equity amounting to £27.4 million was also provided to the project by UPP Group, its shareholders and the University of Hull.

Advisers to the university were:

• Cushman and Wakefield - procurement
• Mills and Reeve - legal
• QMPF - financial

Meanwhile, other advisers on the deal included:

• Addleshaw Goddard - acting for UPP
• Ashurst - acting for AlllianzGI

The project comprises construction of 1,462 new single rooms and one-bedroom apartments within nine blocks. As part of the deal, UPP has also taken responsibility for operating 288 existing rooms at the university's Taylor Court.

The accommodation facilities will cost £97 million to build.  Vinci has been chosen as construction partner and will deliver 478 rooms for the September 2018 student intake, followed by a further 984 in 2019. The scheme will increase the total number of rooms to 2,300.

This deal follows the financial close in December 2016 of UPP’s £104.7 million Duncan House student accommodation transaction for the University of London, a deal that will lead to the construction of 511 new study bedrooms in a 33-storey block located in Stratford in East London.

However, unlike the Duncan House deal financing, the bonds used to finance the University of Hull project are unwrapped.

According to UPP, the unwrapped bonds enabled greater access to - and variety of - institutional lenders. However, another source suggested the University of Hull's position in the UK university league tables may have made it less appealing to monoline insurers!

According to the Complete University Guide (2018), the University of Hull is ranked 74^th in the UK, having slid six positions year-on-year. This compares to much higher rankings for many of the University of London’s 18 independent member institutions, including a ranking of 34^th for Queen Mary and 21^st for King’s College.

The University of Hull student accommodation transaction comes amid the closing of deals undertaken by other sponsors. In February, Equitix refinanced a student housing project for Essex University. Balfour Beatty reached financial close on a student halls project at the University of Sussex in April. And last month, a £61 million wrapped bond was launched for a greenfield student accommodation project at Essex University, with Equitix, Bouygues and Derwent Housing Association as its sponsors.

More student accommodation projects are in the pipeline. In March, UPP was awarded planning permission from Newcastle-under-Lyme Borough Council for a £160 million student accommodation project at Keele University.

Meanwhile, the University of Leicester is thought to have appointed legal counsel for a student accommodation project, a planning application has been submitted for a similar development at Brighton University, and a procurement process is said to be underway for a halls of residence project at Durham University. After that, other projects are expected at Kingston University, Exeter University, and Falmouth University.

* Image provided by UPP