/ Author: SPF

SPF has successfully secured a £7.16 million finance package for a UK based client with a student accommodation portfolio. The financing will play a pivotal role in the client’s objective to consolidate funding partners whilst also supporting their expansion plans with the acquisition of another localised portfolio.

Gary O’Neill, Head of SPF’s Real Estate Debt Advisory proposition who structured and arranged the deal, outlines the transaction and how SPF was able to negotiate a package which delivered multiple benefits to the client:

Client Background

The underlying client owns a portfolio of student accommodation assets in the UK funded, over the years, across multiple lenders which presented certain challenges in terms of the client’s financial management and growth aspirations. Presented with the opportunity to acquire a further student accommodation portfolio, and looking to streamline their operations and support expansion plans, the client approached SPF for a comprehensive financing solution.

The Financing Package

Taking care to understand the client’s needs, both current and future, and given its whole of market lender network, SPF was able to identify the ideal funding partner which is both active within this specialist sector whilst also keen to support our client’s growth aspirations.

SPF was able to facilitate a loan package which refinanced the existing borrowings spread across multiple lenders whilst also financing 100% of the acquisition cost of the new portfolio. As well as consolidating various borrowings with one lender and streamlining our client’s operational processes, the restructure also delivered economic benefits with lower interest margins being achieved relative to existing debt packages. SPF successfully arranged a five-year committed term facility, with soft amortisation, through a UK lender.

This financing solution accomplished several key objectives:

Consolidation of Funding: some of the existing funders had lending caps. Whilst the caps were sufficient to accommodate existing debt levels, and an element of growth, they were not adequate to support our client’s acquisition strategy of which this is only one phase. The refinance not only supported the purchase of a new portfolio of properties but consolidating borrowings with a single institution simplified our client’s financial landscape and enhances their ability to manage their assets effectively.

Support for Ongoing Growth: our client is now partnered with a lender that both understands and has the desire/ability to support their growth aspirations. Such a strategic partnership will empower our client to continue to actively expand their property portfolio and capitalise on opportunities in the market.

Cost Savings : the initial Loan-to-Value (LTV) ratio is 65%, providing a solid financial foundation. The package includes a soft amortisation programme with capital reductions of just 2% per annum, reducing our client’s outgoings and allowing them to invest surplus rental income into the acquisition of further assets. We were also able to negotiate a blended interest margin of 190 basis points further improving their financial position.

The Road Ahead

This successful financing deal signifies more than just securing £7.16 million; it represents a strategic move towards a more efficient, growth-focused future for our client.

At SPF, we understand that every financing need is unique, and our team is passionate about crafting solutions that align perfectly with our clients’ objectives. If you have any questions or are interested in exploring financing solutions tailored to your specific needs, please do not hesitate to reach out to us. Our dedicated team is here to assist you every step of the way.