LGIM furthers Unite relationship with £150m funding

Legal & General Investment Management (LGIM) completes a £150m senior loan with Unite Group to refinance an existing bank facility for the Unite UK Student Accommodation Fund (USAF).

Unite Students' Morriss House PBSA scheme in Nottingham | PBSA News
Unite Students' Morriss House PBSA scheme in Nottingham.

Legal & General Investment Management (LGIM)’s dedicated UK and European Real Estate Debt division completes a £150m senior loan with purpose-built student accommodation (PBSA) operator Unite Group, secured against ten PBSA developments across key UK cities. Unite were advised by Eversheds and Simmons & Simmons acted for LGIM.

The loan will be used to refinance an existing bank facility for its flagship Unite UK Student Accommodation Fund (USAF), which matured in Q1 2024. The funding builds on the strong relationship between Unite and LGIM and follows on from its £400m senior loan in July 2023, which was used to refinance a public bond for USAF.

Established in 2006, USAF sits within the MSCI UK Specialist Fund Index. The Unite Group is the largest shareholder of USAF and acts as asset and fund manager, and all USAF assets benefit from Unite branding.

“We are delighted to continue building on our long-standing relationship with Unite Group. We see continued resilience within the PBSA sector, driven by strong investment and occupational fundamentals. This funding delivers both flexibility for USAF, whilst retaining strong structural capabilities and investment characteristics for our investors. The financing continues our pivot into high conviction subsectors and further growth of LGIM Real Estate Debt’s loan book.”

James Spencer-Jones, Head of Real Estate Debt Europe, LGIM

LGIM believes that the student accommodation sector will benefit from a relative lack of new speculative development, which should support rental growth while supply issues in conventional buy to let residential – which would normally offer an option for students – will drive demand towards fit for purpose accommodation.

LGIM predicts an influx of fundamental support from an increase in international student numbers over the long term, together with growth in younger age cohorts domestically. Selectivity based on the strength of the university will remain vital as we see increasing differentiation in higher education as a long-term trend.

“This transaction is a further endorsement of the leadership credentials of both parties within the sector, further demonstrating the strength of our relationship with LGIM.”

Gary Leadbeater, Director of Group Treasury and FP&A, Unite Group

Investing globally, LGIM Private Credit manages around £18.6bn of investments on behalf of institutional clients globally. Its investment capabilities extend across real estate debt, infrastructure debt, corporate debt and alternative debt.