Student Accommodation Research: The PBSA Premium
16th Aug 2019
Yesterday Legal and General (L&G), one of the largest UK property investors, published "Let's House Britain". Their CEO Nigel Wilson claimed that he and his generation have 'lived for free' as those who purchased properties during the 1970's and 1980's have enjoyed capital appreciation far-outweighing mortgage or interest costs. L&G's aim is to work with governments, local authorities and house builders to create greater supply to satisfy ongoing demand for home-ownership. The report identifies issues in the existing housing market, seeking a consensus on how to solve the supply and demand imbalance.
For a company as large as L&G their typical investment products are prime real estate sites such as the City of London or industrial parks that match their long-dated investment needs. L&G is in fact calling for a 'massive explosion' in housebuiling and would like to see reforms that encourage huge institutions such as itself to enter into industrial scale buy-to-let funds similar to a number of European countries such as Germany and Switzerland.
L&G have taken the first step by announcing a diversification into 25,000 new homes, which includes more than 17,000 student accommodation beds. There is a growing ambition to be more involved in the residential sector including urban regeneration and student housing. Totalling over £1.4bn, L&G's student accommodation deals have included involvement with Imperial College, University of the Arts London, University of Southampton, Greenwich University, Aberystwyth University, Newcastle University and Bournemouth University.
In March, L&G subscribed to a £210m, 50-year bond, enabling Campus Living Village (CLV), the student accommodation specialist, to acquire and manage a portfolio of eight student accommodation buildings of close to 5,000 beds across seven UK cities. L&G has also financed the University of Hertfordshire's 3,000-bedroom student accommodation scheme through an index-linked private bond placement and secured a £121m, 10-year debt facility to UNITE.
David Podestra at the University of Southampton said: "Sharing a forward-thinking long-term approach to investment, our partnership with L&G at Mayflower Halls has allowed us to secure a high quality, well connected, city centre student accommodation that we feel best supports the modern educational needs of generations to come."
The report concludes with a ten-point plan to 'fix the housing market' calling upon a marketplace in which older homeowners could release equity or borrow against their homes to pay for retirement care.
Image courtesy of Flickr
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