VELO Fund Targets Plymouth

A consortium of global investors has revealed plans to invest a significant sum of money into the UK purpose-built student accommodation sector over the next 12 months.

Despite the downturn caused by Covid-19, VELO Fund, which represents a syndicate of high-net-worth individuals is gearing up to spend £150m on PBSA assets.

The fund's first acquisition is due to complete on October 1st and consists of a 90-bed property in Plymouth called St Augustine's House. The site is to be acquired from NCH Capital for £3.75m, reflecting an 8.19% net initial yield.

Once live, the portfolio will operate under the name VELO Student Living.

Commenting on the deal, VELO Student Living founder Bilal Ahmed said: "At a time of social and economic turmoil, students turn to higher education. VELO Fund believes PBSA is a resilient asset class and will continue to outperform despite the turbulent economic times. This deal marks the first in a series of acquisitions we aim to make in the student sector over the next 12 months."

Whilst the UK higher education market has historically shown itself to be countercyclical, the market in Plymouth still faces significant challenges, in particular a long-term decline in full-time students. Whilst the deal does not represent additional supply, the city still has more than 1,000 beds in the pipeline, which if delivered will exacerbate the challenge operators already face in Plymouth.