University Partnerships Programme (UPP) has signed a £133m deal with the University of Exeter to develop and operate more on-campus residential student accommodation.

The deal is one of the largest transactions completed in the UK during this summer with £112m of senior debt being provided in a 50:50 transaction by Barclays Commercial Bank and Royal Bank of Scotland.

£450m strategic investment programme
The project will involve UPP designing, financing and operating new residential accommodation at three locations on the University of Exeter’s Streatham Campus and forms part of the University’s £450m strategic investment programme.

It will involve the transfer of 980 rooms of the University’s existing accommodation, of which 621 will be retained and operated by UPP and the remainder will be redeveloped to provide approximately 2,000 new en suite units of student accommodation on campus.

The value of the construction contract is £77m and will complete by 2012/13. It will also generate a capital receipt for the University of Exeter, which has 15,500 students, for investment in the provision of its core teaching and research functions. Specialists in the higher education team at King Sturge in Bristol advised the university.

Critical deal
Jeremy Lindley, director of corporate services at the University of Exeter, said: “The deal with UPP is critical to the University's future development because we require extra student accommodation if we are to expand and develop in the years ahead. UPP are providing very high quality units, which is what the market wants, so this development will help to enhance the offer we make to students. he work also complements other developments which are underway to expand our Bioscience and Business schools and provide a new student services building in the centre of our Streatham Campus.”

Mark Quigley, director of structured finance at Barclays Commercial Bank, said: “Barclays Commercial Bank has been UPP’s main funder for over a decade and we are delighted to have provided £55m in senior debt, alongside syndicated partners. With Barclays expertise in financing student accommodation and a strong appetite for similar deals, we are able to help improve the supply of on-campus student accommodation at a time when more students than ever before are applying to go to university. This project will be one of the largest new builds of its type this year.”

Sean O’Shea, chief executive of UPP, said: “The scale of this transaction with the University of Exeter shows that the higher education sector is bucking the recession trend and that university accommodation is an increasingly attractive and stable investment opportunity. We work in partnership with universities to provide high-quality accommodation, facilities and long-term financial solutions and, despite the credit crunch, we are finding the financial community has a growing appetite for this kind of investment opportunity.”

Stuart Foster, Director, RBS UK Corporate Banking, said: “This deal will be one of the largest of its type this year and RBS expects to provide similar support to UPP for other transactions in the future. With UPP predicting 99.9% occupancy next year and with an average rental increase of 5.5% across the portfolio, RBS is confident that the University sector will be an important investment opportunity in the future."