Legal & General Investment Management’s (LGIM’s) dedicated UK and European Real Estate Debt division has completed a £150m senior loan with Unite, secured against 10 Purpose Built Student Accommodation (PBSA) assets across key UK cities.
The loan will be used to refinance an existing bank facility for its flagship Unite UK Student Accommodation Fund (USAF), which matured in Q1 2024. The funding builds on the strong relationship between Unite Group and LGIM, and follows on from LGIM’s £400m senior loan in July 2023 which was used to refinance a public bond for USAF.
The Unite Group is the largest UK purpose-built student accommodation (PBSA) operator and USAF is the UK’s largest specialist student accommodation fund with 28,000 beds under management. Established in 2006, USAF sits within the MSCI UK Specialist Fund Index. The Unite Group is the largest shareholder of USAF and acts as asset and fund manager, and all USAF assets benefit from Unite branding.
LGIM believes that the student accommodation sector will benefit from a relative lack of new speculative development, which should support rental growth while supply issues in conventional buy to let residential – which would normally offer an option for students – will drive demand towards fit for purpose accommodation. It sees fundamental support from an increase in international student numbers over the long term, together with growth in younger age cohorts domestically. Selectivity based on the strength of the university will remain vital as we see increasing differentiation in higher education as a long-term trend.
Unite were advised by Eversheds and Simmons & Simmons acted for LGIM.
Investing globally, LGIM Private Credit manages around £18.6bn1 of investments on behalf of institutional clients globally. Its investment capabilities extend across real estate debt, infrastructure debt, corporate debt and alternative debt.
James Spencer-Jones, Head of Real Estate Debt Europe, LGIM: “We are delighted to continue building on our long-standing relationship with Unite Group. We see continued resilience within the PBSA sector, driven by strong investment and occupational fundamentals. This funding delivers both flexibility for USAF whilst retaining strong structural capabilities and investment characteristics for our investors. The financing continues our pivot into high conviction subsectors and further growth of LGIM Real Estate Debt’s loan book.
Gary Leadbeater, Director of Group Treasury and FP&A, Unite Group: “This transaction is a further endorsement of the leadership credentials of both parties within the sector, further demonstrating the strength of our relationship with LGIM.”
“This transaction is a further endorsement of the leadership credentials of both parties within the sector, further demonstrating the strength of our relationship with LGIM.”
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