UPP reaches Financial Close with University of Hull on student accommodation deal worth £155 million

UPP has successfully reached financial close on its £155 million deal with University of Hull which, when complete, will see it operate 1,750 rooms on the campus.

The investment will include £127.6 million of index-linked bond financing with a tenor of 40 years from Allianz Global Investors and £27.4 million of subordinated debt and equity provided by UPP Group, its Shareholders and the University. The deal boosts UPP’s University partners to 15 and its portfolio under management or in construction to more than 32,000 student bedrooms.

The development responds to demand from students for high-quality on-campus accommodation and facilities. It will feature a range of 1,462 new single rooms and one bedroom apartments. They will comprise nine blocks, within the scale and context of the campus and neighbouring buildings. Alongside the accommodation, an urban green and avenue will offer a range of facilities including a café, convenience store, laundry facilities and formal and informal outdoor areas. UPP will also take over the operation of the existing 288 rooms at the University’s Taylor Court.

The project is one of several significant investments at the University as part of its commitment to offering the best student experience possible. The transaction represents the third large-scale investment from Allianz Global Investors into the Higher Education sector to date and takes the investment made by Allianz Global Investors and UPP Group to more than £300m, following similar joint investments in on-campus student infrastructure at the University of Exeter and Nottingham Trent University.

The 51-year partnership demonstrates the appetite of the financial community for long-term investment opportunities in the Higher Education sector. It is a further vote of confidence in Hull and the Humber on the back of ABP’s £50m investment in its Humber ports last month and the opening of a £310m wind turbine blade factory in Hull by Siemens last December.

The construction value of the project is more than £97 million. Top Tier contractor, Vinci, has been appointed as UPP’s construction partner for the project. Construction of the project starts on site in May 2017, with 478 new rooms available for the 2018 student intake and the remaining 984 available in September 2019.

Sean O’Shea, Group Chief Executive Officer of UPP said: “We are delighted to have supported the University of Hull’s plans to develop the multi-million-pound West Campus Residences Project. Our partnership will enable more students to live on campus at the heart of this fantastic institution. The scheme will facilitate the University’s ambitious plans and have a positive impact on the wider community.

“By investing further in exceptional infrastructure that enhances the distinctive features of the University’s campus and promotes sustainable living, the University will build on its market-leading position of delivering the very best student experience. To date this year, UPP has secured £155 million for the University of Hull, while it also reached financial close on a £104.7 million deal to enhance and increase accommodation at the University of London and its institutions.”

Glenn Burgess, Acting Vice-Chancellor at the University of Hull, said: “We are delighted to attract this investment to the region and move forward with this project. The West Campus Residences Project will contribute to the University’s commitment to offering the best student experience and help continue to attract high-calibre students and staff, who bring an exciting range of talent and cultures to the city and enhance the local area. We’re proud to be investing so significantly in making Hull a highly desirable place to live, work, study, visit and invest.”

Adrian Jones, Director of Infrastructure Debt at Allianz Global Investors, said: “That this transaction is our third investment on behalf of our clients into UK higher education in three years, reflects just how much the UK infrastructure debt market has matured.  We continue to see strong demand from our clients to invest in infrastructure assets that as well as offering them the long-term, stable cash flows they need also support regional economic competitiveness, providing an attractive investment opportunity as well as supporting our quality of life”.

Bruno Dupety, Chairman & Chief Executive officer, VINCI PLC and VINCI Construction UK Limited, said: “This will be the fifth student accommodation contract VINCI Construction UK has carried out for UPP.  Our experience and expertise in the student accommodation sector will ensure the highest quality facility that enhances the student experience of life on campus.”   

Andrew TC Smith, Partner at Cushman & Wakefield, lead advisers to the University commented: “This opportunity attracted strong interest with a number of very good proposals.  Bringing this to financial close has been the result of a genuine commitment to the project by both UPP and the University, which bodes well for the partnership in the future.  The quality of accommodation and scale of investment being made here will undoubtedly have a very positive impact on both the University and Hull as a city.  We look forward to seeing the scheme completed and welcoming its first students in September 2018.”

The scheme will enhance and expand high-quality on-campus accommodation at the University, following the opening of the £30-million Courtyard residences last December. The scheme will increase the total number of rooms available on-campus to 2,300, including Taylor Court.

The deal forms part of the University’s on-going strategy and builds on the University’s £200 million investment programme, as part of its commitment to provide an outstanding experience for its students, including new and refurbished buildings, IT infrastructure and student services.