Student housing developer Fusion Students has agreed a £100m funding deal with Alchemy, the European private equity and special situations fund.
The mezzanine funding facility and additional equity will enable Fusion, which has completed 3,000 bedrooms in three years, to expand its development pipeline.
Fusion Students has properties in Bristol, Cardiff and Newcastle, and is developing further sites in Cardiff, Nottingham and Hertfordshire. The firm holds and operates all its schemes under its operational jv Fusion Collegiate, making the company one of the largest privately owned developer-operators in the UK.
According to Knight Frank’s latest study, the current level of investment and construction activity in the sector indicates that by 2020, the value of all private and university maintained student accommodation will rise from its present level, £45.8bn, to a record £50bn.
The study highlighted that even when the total existing pipeline of 40,000 student beds has been delivered, more than 67% of students will still be unable to access purpose-built accommodation, provided either by the universities or the private sector.
James Pullan, head of student property at Knight Frank, said: “The value of privately-owned purpose-built student accommodation in the UK is expected to reach parity with the value of university-owned PBSA for the first time in 2017, with the delivery of 25,000 new student beds. Investor and occupier appetite for new, quality product continues to drive the sector forward, with 2.5% headline rental growth UK-wide being posted for the 2017-18 academic year.”
Warren Rosenberg, co-founder of Fusion Students, said: “This funding deal is testament to the strength of the requirement in the UK for design-led, high-quality, purpose-built student accommodation.”
Tom Boszko, partner at Alchemy, added: “We think we’ve backed a great team, with a differentiated product, in an exciting sector. We look forward to working together over the coming years to take Fusion to the next level of scale.”
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