Helical, in collaboration with its joint venture partner Places for London, has successfully entered into a forward-funding agreement for a major purpose-built student accommodation (PBSA) development located above Southwark tube station. This strategic partnership highlights the growing demand for quality student housing in London, particularly in areas with limited availability.
Project Overview and Financial Details
The agreement involves the conditional exchange of contracts for the sale of the PBSA scheme to a vehicle fully owned by Places for London. Once completed, the overall value of this significant PBSA project is estimated to exceed £200 million, with the joint venture aiming for a return on equity that surpasses 3.0 times the initial investment. This ambitious goal is indicative of the high demand for student accommodation in the UK market, particularly in central London.
Design and Development Aspects
Designed by the renowned architectural firm AHMM, the Southwark scheme will feature 429 student studios, alongside new retail spaces and considerable enhancements to the public realm. This innovative design not only caters to the needs of students but also contributes positively to the local community, fostering a sense of place in a historically rich area. Furthermore, as part of the transaction, the joint venture partners have forward-sold a nine-storey affordable residential building adjacent to the PBSA to the London Borough of Southwark, demonstrating a commitment to addressing the housing crisis in the capital.
Financial Structuring and Next Steps
The joint venture retains responsibility for the delivery of both the PBSA and the affordable housing project. As stipulated in the agreement, the venture will receive an initial payment of £35.2 million, with Helical’s share amounting to £18 million. This payment will be disbursed upon receiving Gateway 2 approval, which is anticipated in the latter half of this year. This initial payment is particularly significant as it will return all committed equity and include an interim profit payment of £20 million, of which Helical’s share is £10.2 million. Such financial structuring illustrates how the project is designed to be equity efficient, reducing risk for investors.
Strategic Vision and Market Impact
Rob Sims, Chief Investment Officer at Helical, stated, “This complex transaction is the latest example of how Helical can deploy its equity light model to generate attractive returns through the Places for London joint venture. By leveraging our extensive Central London development expertise, we were able to quickly identify the best value use for this extremely well-located site in a highly supply-constrained PBSA submarket, achieving planning consent in March 2025.” This perspective underscores the strategic foresight required in navigating the competitive PBSA landscape.
Commitment to Quality and Future Opportunities
Martin Mohamad, Head of Investment at Places for London, emphasised the importance of collaboration with leading delivery partners, stating, “Working with market-leading delivery partners to unlock well-located, high-quality developments like Southwark is at the core of Places’ strategy and essential for London, helping the city’s growth and providing affordable homes the capital urgently needs.” The commitment to quality in the PBSA building is clear, as it will serve students from various London universities, thereby enhancing the educational landscape.
The completed PBSA will not only fulfil the urgent demand for student accommodation in London but will also generate sustainable income to support the transport network, which is vital for the city’s infrastructure. Helical and Places for London are committed to delivering outstanding projects that meet the evolving needs of London’s residents and students alike, while also exploring new opportunities for similar developments.