M&G Real Estate has struck a deal to forward fund a 178-bed, purpose- built student block at Station Approach, Hereford.
The investor is putting up more than £19m through its Secured Lease Income Fund. The site will be operated by student halls specialist Cityheart, and Herefordshire Council will retain the freehold.
It will provide rooms for nearby Hereford College of Arts students, while there will also be the option to provide rooms for students of NMiTE, which is the UK’s first new greenfield university in 40 years, and is due to take its first intake of students in September this year.
Building work on the site has begun, and the scheme is planned to be completed and ready for students to move in for the beginning of the academic year starting September 2020.
M&G Real Estate head of UK long income investments, Shailendra Shah, said: “The strategy of our fund is to create high quality cash flows for pension scheme investors.
“In this instance the scheme has a nomination agreement with Hereford College of Arts and the scheme is fully underwritten by Herefordshire Council as the guarantor.”
There has been increased appetite for forward funding deals in prime UK regional cities. These deals accounted for 38% of January-July purpose-built student transactions by price, compared with 13% in 2018 over the same period, according to Cushman & Wakefield.
To date, M&G Real Estate has invested £624m in UK student accommodation.
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