The developer Conygar has entered into a new facilities agreement with Barclays Bank PLC (“Barclays”) comprising a development facility and an investment facility (together the “Facilities”) up to £47.5 million in aggregate. The Facilities will enable the completion of the construction, targeted by the summer of 2024, and subsequent letting of the 693-bed student accommodation development at The Island Quarter site in Nottingham, and are secured solely against that development area.

The maximum term of the combined facilities is 3 years. This includes the development facility for up to 27 months, which, subject to the satisfaction of certain conditions prior to the expiry of the development facility, switches into the investment facility for the remainder of the 3-year term.  Interest on the development facility is payable on a Sonia-linked floating rate basis for each interest period plus a margin of 3.25%, and interest is payable on the investment facility at the same Sonia rate plus a margin of 1.90%.

The Company has provided cost overrun and interest shortfall guarantees of up to £5 million in connection with the development facility. A capital guarantee is also in place which could increase the Company’s guarantee by £2.5 million if certain covenants are not met in advance of drawing the investment facility or the development facility is not repaid when due.

The Company also announces that it proposes to raise a target of £30 million of additional capital through the issue of zero dividend preference shares (“ZDP Shares”) by way of a placing in early 2023 (the “Issue”). The ZDP Shares are expected to have a gross redemption yield equivalent to 7.5 per cent. per annum on the placing price and a term of five years. The net proceeds from the Issue are expected to be utilised to further continue the development of The Island Quarter site in Nottingham and may also be used for further acquisitions of investment properties and in realising value from the group’s other development projects.

Robert Ware, Chief Executive of the Company, commented: “We are delighted to have secured the facilities with Barclays which now enables both the completion and also the subsequent letting of the student accommodation development at The Island Quarter and the further progression of the opening up of this exciting and substantial mixed-use development.”