Institution Acquires Completed Student Accommodation Development

LaSalle Investment Management has become the latest institution to acquire a student accommodation development in a £33.5 million off-market transaction.

Following yesterday’s news that student accommodation continues to be one of the UK’s leading investment markets, it has been confirmed that the global real estate investment manager has purchased a UK student accommodation development on behalf of a fund for £33.5 million. The acquisition of the student development represents an initial NET yield of 6.12% for the fund.

Completed in 2010, King Square Studios is home to 301 student studios and is located just 10 minutes from the main campus of Bristol University. The development’s facilities include a gym, cinema room and games room, in addition to 37 parking spaces.

Student Property Investments

The rise of student accommodation as a reliable and high yielding investment has generated a great deal of interest from institutions. Developments that have been operational for a number of years and are proven to be successful, such as King Square Studios, have become a target for institutions. These student properties are proven to generate a steady income for investors and therefore represent an excellent investment for institutions and funds.

Acquisitions such as these are becoming increasingly common as institutions look for the stable and consistent income that student accommodation provides. This creates an excellent opportunity for purchasers who invest in student properties off-plan. It allows investors to benefit from the higher yields that are often available at this initial stage, with the possibility of a larger buy out taking place a few years after completion once the development is proven.

Student Accommodation with Exit Strategies

Investors are increasingly looking towards student properties that include an exit strategy such as the purchase of the entire development by an institution.

Holmes Street Burnley features a developer option where each studio has to be sold if a minimum uplift of 30% on the purchase price can be achieved through the sale of the development to an institution. This option is active between the 5th and 7th year after completion allowing Holmes Street to become established in the marketplace and optimising the value of the development.

For investors in the recently completed Appleton Point development in Bradford, the exit strategy is based upon the resale of the building to an institutional or corporate investor. Investors have a call option between the 5th and 6th year after completion stipulating that the unit has to be sold if a minimum uplift of £18,000 is achieved on the purchase price.

For more information on Holmes Street, please click on the link or contact us.