Press releases

Legal & General Property completes forward funding of c. £91 million student accommodation development.

06 February 2013

Legal & General Property (LGP) announces that it has completed the forward funding of a 1,104 unit student accommodation scheme in Southampton city centre. The development will have a completed value of approximately £91 million and follows the conditional exchange of contracts in October last year. The scheme has been pre-let in its entirety to the University of Southampton on a 38 year lease without breaks and with RPI linked rental uplifts. Construction has already started on site with handover to the university programmed for August 2014.

Terrace Hill is developing the project in joint venture with Osborne Group, which is also the building contractor. Once complete, the development will comprise three towers, ranging in height from 8 to 16 storeys and positioned around a central piazza. In addition to the student accommodation, the scheme includes a shop, gym and learning centre at ground floor level.

Gordon Aitchison, Director of Investment and Development at Legal & General Property, comments: “This represents one of four significant student accommodation fundings, backed by major universities, that have been undertaken by LGP in the last 18 months, with similar deals secured with the University of Arts London, Imperial College and the University of Greenwich. We continue to believe that this sector offers our funds an attractive opportunity to invest in index-linked income on very long leases to strong covenants, whilst also providing relatively higher yields than the traditional real estate sectors. As illustrated by Southampton and the three London deals, our focus remains on funding high quality developments that are backed by premium universities and located in first class locations.”

Philip Leech, Chief Executive of Terrace Hill, adds: “The completion of this substantial and prestigious sale and forward funding agreement with Legal & General Property represents significant progress for Terrace Hill and for this project. We have used part of the proceeds of the sale to immediately reduce the debt secured against a number of our development sites, and the balance will be earmarked for investment in new developments in the foodstore and Central London sectors, where we continue to see low risk and high margin opportunities. The completion of this transaction allows us to substantially reduce our gearing and puts us in a very strong position to exploit our core development strengths in some extremely attractive areas.”

Notes to editors

Legal & General Property (LGP) is a wholly-owned subsidiary of Legal & General Investment Management (LGIM), one of Europe’s largest institutional asset managers and a major global investor. LGIM manages approximately £391bn of assets on behalf of more than 3,300 clients (30 September 2012) and provides products and solutions spanning all asset classes. LGP is the third largest institutional property fund manager in the UK, managing or co-managing 16 separate funds or vehicles and two segregated mandates with an aggregate asset value of £10.4bn as at 30 September 2012. 

These funds include:

Specialist Pooled Funds
The Leisure Fund Limited Partnership; Industrial Property Investment Fund; Arlington Business Parks Partnership; and the English Cities Fund

Single Asset Vehicles
Bracknell Regeneration Partnership; Central Saint Giles Partnership; Performance Retail Limited Partnership and Warrington Retail Limited Partnership

Balanced Funds
Life Fund; Linked Pensions; Linked Life; Managed Fund; Property Unit Trust; UK Property Income Fund; LPI Income Property Fund and the Hybrid Property Fund

LGP’s UK-focused fund management platform has built and retained a strong track record of out-performance across the sector. Owing to its size, diversity and penetration, it benefits from best in class banking and property industry contacts which, along with its wealth of in-house skill and expertise, have enabled it to continue to attract and secure high quality market opportunities. Taking a client-centric approach, the business places the highest priority upon integrity and transparency, leveraging upon the significant resources provided by the wider LGIM platform. Sector specialists cover each sphere of the market and are supported by LGP’s market-leading research capability.

LGP’s sector specialisms cross all facets of the real estate market. In particular, the Company has a major development platform, responsible for delivering West End landmark building, Central Saint Giles, and Agar Street, its high profile Covent Garden office scheme, amongst others, and is currently involved in bringing forward a number of significant town-centre retail and leisure regeneration projects, including Bracknell, Trowbridge, Milton Keynes, Northampton, Hounslow and Eastbourne.

For more information please contact:

Olivia Goodall
PR Manager, Legal & General Capital and Real Assets, LGIM (Property, infrastructure and alternative finance)

t: + 44 (0) 203 124 2777
m: + 44 (0) 7718 395 279

About Legal & General

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Registered address:
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Registered in England 2091897.