Arlington Investors issue £94m of bonds to support student accommodation acquisitions

The transaction builds on Arlington’s successful partnership with Campus Living Villages (“CLV”), one of the world’s largest owners and operators of student accommodation.

The two portfolios, which were acquired from Spectrum Housing Association and Sanctuary Housing Association, part of Sanctuary Group, comprise seven assets totalling 1,450 beds across Birmingham, Cheltenham, Exeter and Gloucester.  The acquisition also includes a development site in Birmingham, which has consent for the delivery of a 492-bed development.  Arlington expects the development to be complete and operational in time for the start of the 2018/19 academic year.

The transaction is the first capital markets financing of a student accommodation portfolio that is mainly direct let properties and includes a significant element of construction.

The 32 year unrated bond follows on from debut £210m issuance from CLV and Arlington in March 2014 and a £50.2m issuance in September 2015, both also arranged by TradeRisks.

The bond was 59% index-linked and 41% fixed with a coupon of 1.28% for the indexed tranche and 4.81% for the fixed tranche.  It is structured with deferred drawdowns to match milestone payments under the Birmingham construction contract. The bonds were placed with insurance company and pension fund investors who require assets to match underlying pension liabilities.

TradeRisks acted as arranger and dealer for the bond issue and was advised by Morgan Lewis LLP with McGuire Woods (legal), DWPF (financial), Savills, Knight Frank and Operis also advising Arlington and Osborne Clarke advising CLV.

For further information please contact Ben Fry +44(0) 20 7382 0918