A 1,750-room student homes complex in the UK has reached a £155 million ($199.2 million; €178.6 million) financial close after receiving a debt injection from Allianz Global Investors.
The German insurer provided £127.6 million in 40-year tenor bond financing to the project at the University of Hull which will feature 1,462 new single rooms and the refurbishment of 288 existing rooms.
The bonds were rated Baa3 by Moody’s, which highlighted the stable revenues expected from the project and the track record of developer UPP. However, the ratings agency noted the declining student numbers in five of the six most recent academic years as a constraint to the rating.
Some £27.4 million of subordinated debt and equity was provided by the university itself and UPP, the student homes provider 60 percent-owned by Dutch pension fund PGGM, with the remainder possessed by Chinese state-owned fund Gingko Tree Investment since 2013.
The Hull-based project is the second time Allianz GI and UPP have teamed up, with Allianz’s £67.3 million contribution to a £78.5 million UPP project in Nottingham last year marking the initial tie-up between the pair. The latest investment shows “just how much the UK infrastructure debt market has matured”, according to Adrian Jones, director of infrastructure debt at Allianz GI.
“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,” he added.
Allianz GI recently unveiled a new infrastructure debt strategy which will target opportunities better suited to shorter investment horizons. The “Resilient Credit” strategy is set to be complementary to the firm’s existing approach.
For UPP, the deal is the second financial close it has reached this year after the Pension Insurance Corporation supplied £87 million for a £104.7 million student complex in London in January. The company has more than 32,000 student bedrooms under management or in construction.