M&G completes 2,350 new student rooms
M&G Investments, the leading asset manager, announces the completion of 2,350 new student rooms, with more than half – 1,500 – having been built at Swansea University’s new Bay Campus.
Construction of the accommodation is the latest milestone in M&G’s programme of investment in the university sector which has so far totalled GBP380 million. Investment money has been sourced primarily from UK pension funds and institutions with similar long-term investment horizons.
Other accommodation under construction includes 417 beds for the Royal College of Music in London at a cost of GBP36.9 million, while 602 beds at Bangor University in Wales and 324 beds at the University of St Andrews in Scotland, costing GBP37.4 million and GBP26.8 million respectively, have been completed for the new academic year. M&G is now on course to provide accommodation for more than 6,000 students following its first investment in 392 beds in Bristol at a cost of GBP21.5 million in 2009.
Ben Jones, Head of Real Estate Income, M&G Investments, says: “Like corporates who previously relied on banks for financing, universities have also had to adjust to the new financing landscape that emerged following the 2008 crisis. Pension fund and institutional investors, who can provide long term financing in different forms, are increasingly investing in the sector.
“Traditionally, universities have accessed the capital markets via the bond or private placement markets but there has been a significant trend in universities using alternative financing structures in order to build new student accommodation.
“The most prominent new trend is investment in student accommodation through long-lease structures, which gives investors inflation-linked income over the long-term. It is an attractive option for universities to gain long term financing for the construction of student accommodation while retaining the freehold ownership of the land.”
Kris McPhail (pictured), Investment Director, M&G Real Estate, says: “There is an increasing emphasis on the university experience and quality accommodation, on or close to campus, is becoming a key aspect of this. Universities are embracing long-term institutional investment as a way to provide the standard of accommodation that students have come to expect.
The new campus at Swansea Bay will not only provide an excellent standard of teaching facilities, but will house almost 1,500 students in purpose built accommodation financed by pension fund clients. The long lease market has evolved considerably over the past 15 years and the investible universe now spans all sectors of the real estate market …