Avamore Capital has marked a significant achievement by completing a £5 million refinance and remediation facility with a seasoned property investor and developer for a 157-bed purpose-built student accommodation (PBSA) project. This deal not only underscores Avamore’s expertise in the sector but also highlights the growing demand for high-quality student accommodation in the UK.
Acquisition and Initial Challenges
The borrower originally acquired the asset in 2024, at which point the property was rated with a B2 external wall classification. This rating indicated the necessity for substantial remediation work to comply with current fire safety regulations. The urgency of the situation was compounded by the fact that the property required significant upgrades to ensure the safety and comfort of its future occupants, which is crucial in today’s PBSA market where safety and compliance stand as top priorities.
Strategic Approach by Avamore Capital
Avamore Capital took a flexible and commercially focused approach to unlock this complex deal, facilitating a restructuring arrangement that permitted the existing lender to defer a portion of the outstanding debt, contingent upon an agreed development outline plan (DOP). This strategic move was essential for maintaining the financial viability of the project while ensuring that the remediation work could commence without undue delay. Given the time-sensitive nature of the transaction—compounded by a previous lender withdrawing during the legal process—Avamore expedited its underwriting process. The firm also agreed to reassess the existing valuation to keep the deal moving forward efficiently.
Financial Details and Future Prospects
The financing provided by Avamore not only refinanced the existing debt but also afforded the borrower full funding for the necessary works, which totalled £1,613,575. This financial backing is particularly significant considering the expected gross development value (GDV) of the scheme, estimated at £9.3 million upon completion. To ensure the successful execution of the remediation works, the borrower has enlisted a highly qualified professional team along with a specialist contractor, reflecting the increasing trend within the PBSA sector towards investing in quality and compliance.
Collaboration and Support
Ed Blundell, the head of underwriting at Avamore Capital, emphasised the collaborative nature of this deal, stating, “This deal required a genuinely collaborative approach and a willingness to engage with a specialist remediation strategy that fell outside the scope of a typical development loan. Our priority was to structure a facility that provided certainty, flexibility, and enough time for the borrower to navigate regulatory approvals without unnecessary pressure. It’s a strong example of how Avamore can support experienced developers through complex, time-sensitive situations while still maintaining a robust credit position.”
This refinancing arrangement exemplifies Avamore Capital’s commitment to supporting developers in the UK PBSA market, particularly as the sector adapts to increasing regulatory demands and the need for high-quality living conditions for students. The success of this project will likely serve as a benchmark for future financing efforts in the competitive landscape of student accommodation.