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Case Study

Student accommodation development required a 7-year 'develop and hold' loan



A 500+ bed student accommodation build required development and operational finance. Research into comparables and in-depth financial modelling was vital.
  • Loan Value £28m
  • Term 2 + 5 Years
  • GDV £47m+

Deal Outline

Assets

  • Site with permission for 500+ bed student accommodation development

Security

  • First legal charge

Income

  • None proven - from rental upon completion

Requirements

  • £28m development finance at 65% LTC
  • £26m operational finance at 55% LTC

Challenges

  • New build and new business with no track record
  • Conversion loan required

Facility Secured

  • 2 year development term
  • 5 year operational term

Summary


A property company, was seeking finance to develop a 500+ bed purpose-built student accommodation block in regional UK. The client intended to hold the asset for operation post development, so was seeking a lender who would provide development finance initially, converting to an investment loan on completion of the works.

 

The quantum sought was £28m with interest roll-up required for the two year development period (at 65% LTC). Upon completion of the GAV £47m+ accommodation development, they then would require £26m for a five year term at 55% LTV. The preference was a single lender to provide cost savings and longer term security for the newly operating business.


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