In our latest case study, we look at the challenges of securing development finance for student accommodation in Exeter.
A property developer approached us looking to build student accommodation in Exeter. They had spoken to a few lenders already, but they had declined as they did not lend on student accommodation. This is where some mortgage brokers in Exeter would have given up – but not Fox Davidson.
This was the first student accommodation development that the developer would undertake. Therefore, we needed a lender that could get confidence in the development itself but also in the developer (who had until then only built residential houses for sale on the open market). We had an idea. Exeter University is one of 24 Russell Group universities in the UK and therefore ticks the box of development funders that will lend on student accommodation. The Russell group states that ‘the university has invested heavily in science, engineering, mathematics, and medicine research, and has a world-class reputation in the humanities and social sciences.’ Looking into the activity of the local council and university, we saw that last year at a briefing on Exeter’s Future Development, chief executive of Exeter City Council Karime Hassan said that 10,000 student bed spaces will be available by 2020 – but double that would be required.
Using the above information, we put together a comprehensive development appraisal, highlighting the strengths of the city, the location of the site and a comprehensive overview of the developer. Funding was agreed for £1.4 million which was 74% of GDV.