London, UK – Ekistics Property Investors 1 Limited Partnership (also known as Ekistics Real Estate Partners I, “EREP I”), a real estate private equity fund focused on direct equity and intermediate capital value-add investments in Western Europe is pleased to announce EREP I’s sixth investment realization – the full repayment at maturity of its ca. £7.5million high-yield development loan, collateralized by a 186-bed student accommodation scheme in Luton, located ca. 30 miles north of London, delivering a gross IRR of 13.2% (the “Loan”).
The Loan was drawn by the borrower in March 2014 and provided the borrower with ca. 82.8% of the total development costs associated with a new student accommodation project located in Luton, Bedfordshire, UK (the “Development”). The borrower had previously acquired the land plot and been granted planning permission for the Development in late 2013. Construction of the Development began in early 2014 and works were completed in time for the start of the academic year 2014/15, underscoring the high quality of the borrower/developer.
At completion, the Development delivered 186 units to the Luton student accommodation market, of which 151 are independent studio flats and 35 so-called cluster units. Upon maturity of the Loan, the Development was valued by external appraisers resulting in a sub-50% loan-to-value (“LTV”) of Ekistics’ facility.
Over its contractual two-year period, Ekistics’ facility realised an average running yield of 7.5% p.a. and, given a payment-in-kind (“PIK”) component, a total gross IRR of 13.2%.
John Pedersen, Managing Partner of Ekistics Property Advisors LLP (“EPA LLP”), the sole advisor to EREP I, comments: We are pleased to have advised EREP I on the successful execution and monetization of this investment, the provision of a unique development loan in the student accommodation sector in the UK. We believe that the successful realization of this investment exemplifies Ekistics’ ability to underwrite investment opportunities across numerous asset classes as well as across the capital structure. Moreover, this investment highlights the team’s capability to originate opportunities with unique, value-add characteristics, in this case allowing the Fund’s investors to benefit from the existence of a sector- and situation-specific liquidity arbitrage window, backed by positive supply-demand fundamentals and a high-quality developer and operator.
For further information on this investment and/or Ekistics, please contact John Pedersen, Managing Partner of EPA LLP, on +44 (0) 20 7016 3082 (email: john.pedersen@ekisticsproperty.com).