University accommodation developer Fusion Students has sold a portfolio of sites across Newcastle, Nottingham, Cardiff and Bristol for more than £232m in the latest sign of increased investor interest in the buoyant asset class.
The recently built Stellar Portfolio, which comprises 1,857 beds and generates around £16m in rent each year, has been bought by a joint venture between Arlington Advisors and investor Equitix.
In a separate transaction, the jv has bought Merlin Heights in Leicester, which comprises 601 student beds, from an unnamed private investor. It was developed by Watkin Jones in 2016 and is operated by Fresh Student Living.
The transactions bring the total number of student beds under Arlington’s management to 12,700, making it the largest independently owned – and sixth-largest overall – student accommodation platform in the UK.
The deals were financed by £200m senior debt, advanced by a single institutional investor with a 44-year maturity. It has become Arlington’s seventh long-dated debt issuance in the past four years.
Sean McKeown, managing director at Arlington, said: “This acquisition builds on Arlington’s track record in the student accommodation asset class, which continues to offer attractive investment opportunities for our investors.
“We remain committed to expanding our activity in the sector with a strong pipeline already in place for 2019, where we expect to continue acquiring high-quality assets in premier city locations.”
Fusion plans to use the sale proceeds to reinvest in its expansion plans in the PBSA and co-living rented housing markets, both in the UK and overseas.
Nigel Henry, co-founder and director of Fusion Students, said: “The sale of the Stellar Portfolio is a significant step forward in our corporate development.”
James Pullan, global head of student property at Knight Frank, which acted for Fusion, added: “The Stellar Portfolio is one of the highest quality portfolios ever to come to market. Investment appetite was ferocious, receiving bids from all over the world. Arlington Advisors was recognised for its ability to execute the deal and partnership it offers Fusion Students.”
Arlington and Equitix were jointly advised by Osborne Clarke, McGuireWoods, Grant Thornton and TradeRisks.
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