A UK student property developer and manager has secured a £405 million refinance deal, in the process creating a new debt funding platform for a student accommodation fund.

The UNITE Group secured the deal through HSBC and Lloyds Bank Commercial Banking, who both acted as lead arrangers, in order to provide a brand new funding facility for the UNITE UK Student Accommodation Fund (USAF).

USAF is an open-ended fund that focuses on acquiring and operating high quality student accommodation in the UK, funded largely by UNITE itself, which operates the properties held by the fund and retains a 16 per cent holding in it.

The new deal includes the provision of £380 million raised through a ten-year bond issue, an £8 million advance provided by HSBC and a £25 million Revolving Credit Facility financed by Lloyds.

The refinance means that USAF can pay off a large amount of bank debt, allowing it to extend terms and refresh a number of outstanding debt arrangements.

The Fund currently holds a portfolio of 63 properties with a value of over £1.3 billion, located in 20 locations across the UK and providing 21,000 students with a bed.

Joe Lister, UNITE’s Chief Financial Officer, said: “"We are delighted to announce the launch and pricing of the new bond to support USAF’s refinancing. Achieving a strong investment grade rating provides key benefits in giving access to longer term finance, at competitive rates, and diversifying USAF’s sources of capital beyond the banking market.”

HSBC’s Regional Head of Real Estate, Hugh Taylor, added: “Student accommodation is now an established asset class in its own right and generally demand continues to outweigh supply for university spaces.

“UNITE is a quality business, benefitting from an experienced management team, low gearing, modern residences in attractive locations and strong levels of demand for its product.”

John Feeney, Global Head of Corporate Real Estate at Lloyds Bank Commercial Banking, said. “We are delighted to complete this deal on behalf of an outstanding client with strong expertise in the student accommodation market. UNITE and USAF’s assets are among the highest quality in the sector, which itself has experienced significant growth and investment throughout the cycle.

“This deal typifies the role that Lloyds Bank looks to play, as we assist our clients in accessing diverse forms of capital, combined with support from our own balance sheet.”