Student Accommodation Sector Gets Its First Dedicated Lender
Two of the best-known names in the student accommodation sector have set up the first-ever lender dedicated solely to the sector.
Nick Porter and Steven Grant have set up Kinetic Capital, which will have an initial £100M to lend to the sector. Grant will be chief executive and Porter chairman.
Porter founded listed student company Unite in 1991, and ran the business before also leading the growth of Urbanest and GSA. Grant has worked in the student sector for 20 years at the same three firms, and the duo have a history of building up student firms before selling to institutional investors.
The student accommodation sector is in a tricky position, with students and universities unsure how the 2020/2021 academic year will play out given rules on social distancing. But the best companies have retained the faith of investors: In June, Unite raised £300M to try and buy sites and schemes at low prices.
Kinetic will initially focus on the UK and Ireland, before looking to expand internationally. It will lend to development schemes or standing investments and look at loan sizes of £10M to £50M. Those loans will be up to 90% of the cost of a development project or 80% of the value of an investment, and it is willing to provide whole loans, senior debt, mezzanine loans and bridge finance.
“The resilience of higher education continues to underpin the PBSA [purpose-built student accommodation] market, providing for strong demand and growth in the sector,” Grant said in a release. “Investor appetite for secure, high-yielding revenue streams supported by the growing global student population, translates to a positive outlook.”
“Market conditions combined with the robust nature of PBSA present a clear opportunity for our strong team to scale the business, using its unique position to deliver significant value to both borrowers and investors.”