Back to school- Investment in student accommodation

I was very interested to read this article in Property Week:

http://www.propertyweek.com/news/lg-cements-£91m-student-accommodation-deal/5049713.article

The article covers Legal and General's (LG) £91m investment in student accommodation due to be let to Southampton University. The deal involves a 38 year Lease with no breaks and fixed inflation linked rent increases. This is the fourth deal that LG has made into the student accommodation sector.

Gordon Aitchison, Director of Investment and Development at LG, stated that the 'sector offers our funds an attractive opportunity to invest in index-linked income on very long leases to strong covenants...our focus remains on funding high quality developments that are backed by premium universities and located in first class locations.'

Why is this important? It further highlights the importance of student accommodation as an attractive asset class in which to invest. As stated before, Institutional and (increasingly) International investors seek stable currencies, sound economies and favourable political regimes in which to invest. Student applicants have remained steady. International students are attracted to the UK's world class universities. When you factor this in (along with long Leases, reputable university Tenants and index linked rental income) it is no small wonder why investors are opting to go back to school!

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