Investor Deutsche Finance International (DFI) has stepped up its drive to acquire purpose-built student accommodation (PBSA) with a £35.6m purchase of a 462-bed development in Leicester.

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The London-based firm, which manages nearly €3bn in assets, has completed off-market with developers Watkin Jones on behalf of its pan-European Value Add Fund.

The deal represents DFI’s second foray into the UK PBSA market following the 2017 purchase of a 386-bed facility in Canterbury. It has also recently secured a 1,100-bed complex in Denmark.

Gavin Neilan, Co-Founder and Co-Managing Partner at DFI, said: “In line with our platform focus on delivering high quality operational real estate with the customer at its centre, we have been invested in the student accommodation sector since 2017 and have continued to increase our exposure in the UK and Europe.

“Its countercyclical nature has proven defensive against market challenges, while the success of UK’s vaccination programme will hopefully see relative normality return in time for the opening of this asset. The UK remains one of our conviction calls, with its status as a world-renowned centre of higher education continuing to attract students from all over the world.”

The Leicester property, which is scheduled to complete in time for the 2021/22 academic year, is made up of four-to-seven-bed clusters and studios of different sizes. Taking into account design learnings from the pandemic, around 3,875 sqft will be dedicated to spacious amenities including communal areas, study and meeting rooms, virtual gym space, a games room and a landscaped courtyard. The asset is a short walk to Leicester city centre and De Montfort University.

Alex Pease, Chief Investment Officer of Watkin Jones, said: “It’s brilliant to secure institutional investment for this superb scheme that only adds to the growing desirability of Leicester’s dynamic riverside area.

“What was a brownfield site in need of regeneration will shortly offer hundreds of residents a really attractive place to live with easy access to two respected universities, as well as the shops, bars and cafés of the city centre.

“The success of this second PBSA scheme alongside our upcoming BtR offer in Leicester showcases our ability to meet the very strong institutional and resident demand for UK residential for rent. The country’s growing market of renters increasingly value great homes with in-built lifestyle and welfare provision, while institutions are seeking high-quality assets that offer strong long-term returns.

“Working with DFI for the first time to complete this sale has been a real positive and the team look forward to continuing our relationship into the future.”

DFI was advised by CBRE, Allen & Overy, Deloitte and Hollis.

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