Octopus funds 502-bed student digs with record €41m loan

Specialist property lender Octopus Property, part of the Octopus Group, has agreed to provide EREC Estates, a UK developer of student accommodation, with a £36 mln (€41 mln) senior loan for the development of a purpose built student accommodation (PBSA) scheme in Coventry. 

The loan represents the largest single development deal completed by Octopus Property.

The new scheme will comprise two buildings totaling 502 beds, plus communal facilities and retail offerings, within walking distance of the main Coventry University campus. The completed building will serve both Coventry and Warwick universities.

'Whilst we are seeing some geographical polarisation caused by oversupply, the student accommodation sector remains one of the most attractive asset classes for investors,' said Gavin Eustace, head of residential development at Octopus Property.

'It’s a sector that we like, and as long as the broader favourable supply demand dynamics remain in place for this type of innovative and high specification accommodation, we will continue to back schemes that require bespoke and efficient financing facilities,' Eustace added.

Octopus said that according to recent data, Coventry and nearby Warwick University are characterised by a large shortage of beds, with the current student to bed ratio of 2.85:1 equating to nearly 30,000 students unable to find PBSA each year.

The 27 month facility marks the third collaboration between Octopus Property and EREC Estates, following two smaller PBSA developments in Leicester and Coventry.

'We are extremely pleased to be working with Octopus on behalf of UNINN Investment Fund. This is the fourth property that UNINN has developed and owned in Coventry and underscores our belief in the potential of its Universities to continue to deliver a product that is respected internationally. We understand that the West Midlands has an ability to deliver returns to students and investors alike,' said Andrew Jamieson at EREC Estates.

The scheme was brought to Octopus Property by John Kerrigan, director at Arc & Co., who advised EREC Estates on the debt structure.


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