Mayflower Plaza development to now be converted to student accomodation
Property developer Terrace Hill Group has agreed forward funding and sale contracts with Legal & General Property (LGP) of its 1,104 unit student accommodation development in Southampton city centre.
Glasgow-based Terrace Hill Group - in a joint venture with Osborne Developments - was awarded planning consent for the development from Southampton City Council in July.
The planned development at Mayflower Plaza is for three new student housing blocks ranging from eight to 16 storeys high, and is pre-let in its entirety to the University of Southampton on a 38 year lease.
Financial details have not been disclosed, though Terrace Hill said “further details will be provided when the transaction has completed”.
In addition to the student accommodation, the scheme also includes a shop, café, gym and learning centre at ground level.
Construction is scheduled for completion by the summer of 2014.
Philip Leech, chief executive of Terrace Hill, said:"Our student accommodation development at Mayflower Plaza is an extremely attractive, high quality scheme in a city with a large student population, let to a very strong tenant in the University of Southampton on a long lease.
“These factors underline the institutional quality of the asset, which has allowed us to secure the forward funding and sale of the property to Legal & General Property.”
Gordon Aitchison, Director of Investment and Development at Legal & General Property, added: "In line with our fund objective to acquire long let, index-linked assets with investment grade covenants, this transaction provides us with a secure long term income stream that is hedged against inflation.
“Furthermore, representing our third major funding of student accommodation this year, it demonstrates our growing appetite to look to alternative sectors as attractive investment opportunities and the increasing role that the private sector will play in funding critical social infrastructure.”
Terrace Hill Group acquired the Southampton site at the top of the market in 2007 and had planned a commercial development of offices and apartments and a hotel.
However, despite planning for that development being approved in 2008, the development stalled in the recession.
Terrace Hill has since shifted its focus away from residential developments, having sold its residential portfolio in March to Swedish property group Akelius in a deal worth £73.3 million.