Fiduciam has closed a £16m hybrid acquisition and refurbishment facility with a multi-national real estate asset management group, to assist with its prime London student accommodation project.
The opportunity comprised the acquisition of a vacant prime site in Farringdon.
The borrower secured a dynamic 5-year agreement with a highly ranked university to provide 110 beds during the academic year.
The agreement was executed simultaneously with the property purchase, and also allows the borrower to rent the units during the holiday periods to business and leisure travellers thereby maximising income.
The £16m Fiduciam loan provided funds to complete refurbishment works prior to university occupation and time to establish a track record of rental income.
The facility has a 30-month term and an interest rate of 0.90% per month, with no exit fees.
The borrower expects to achieve a significant value uplift once the property is occupied and generating income. The loan-to-value was 65%.
Marc Morris (pictured), underwriting manager (UK) at Fiduciam, said: “Fiduciam was delighted to support an experienced institutional borrower to deliver their latest project in central London.
“The borrower has efficiently matched an acquisition opportunity with end-user demand and will deliver additional sought after student accommodation.
“The property’s income potential will be maximised by providing beds for the university during term-time while deploying the asset for business and tourism accommodation during university holidays.
“Our flexible funding helps the borrower maximise the project IRR by reducing the required initial cash investment.
“The Fiduciam facility assists with acquisition and refurbishment costs whilst also providing interest coverage as property income is established.
“The borrower benefits from the comfort of a 30-month facility but can repay the loan after 12 months without early repayment charges if property performance allows a swifter exit.”
Carl Jabbour, COO at Fiduciam, said: “Fiduciam has close relationships with a series of family offices and institutional parties who we support in achieving their IRR aspirations across asset classes and risk segments.
“Increasingly, entrepreneurial parties look to Fiduciam as both a lever for their equity positions and a provider of private debt investment opportunities.
“We were delighted to support this established investment management group with their latest opportunistic real estate project in central London.”
