M&G Investments is providing GBP36.9 million of finance for the redevelopment of College Hall, the main student residence for the Royal College of Music (RCM).
The college is working in partnership with Campus Living Villages (CLV), who have invested the equity in the project and will manage the redevelopment on Goldhawk Road, London and will then operate the accommodation on completion.
M&G has acquired a 125-year long leasehold interest in the property. On completion of the development it will be leased to the RCM/CLV partnership for 45 years, with annual reviews linked to inflation. The majority of the rent is guaranteed by RCM and it has an option to acquire the residence on expiry of the 45-year lease.
The capital is provided by M&G’s pension fund clients seeking secure cash flows over the long-term linked to inflation. M&G Investments was advised by M&G Real Estate and Montagu Evans acted on their behalf.
Ben Jones, director of real estate income, M&G Investments, says: “This landmark transaction enables the development of state-of-the-art accommodation at a globally renowned music conservatoire. It demonstrates the willingness of institutional investors to invest in the growing student accommodation sector – this can be done using a wide range of structures. We are pleased to continue our relationship with CLV following on from our Bournemouth deal last year and look forward to working with them in the future. We certainly have significant capital to invest in comparable projects.”
Professor Colin Lawson, director of the Royal College of Music, says: “We are dedicated to setting up our students for future success, and have produced some of the world’s most distinguished performers, composers and conductors. With 750 students coming from more than 60 countries, we place great importance not only on the environment in which they learn, but also on the environment in which they live. For our new student accommodation, it was vital for us to find a partner with a reputation for excellence and consideration of all aspects on student life.”