A 135-bed student accommodation development in central Bristol has secured a £40 million funding package structured by Arc & Co, combining senior debt from Downing LLP and equity investment from Hame Capital in a joint venture with sponsor Colico Living.
The financing comprises approximately £26 million in senior development debt from Downing, alongside a preferred equity investment from Hame Capital. The structure represents a 68% loan-to-gross development value ratio and 77% loan-to-cost, designed to support the project through to completion and stabilisation.
Complex transaction process
The transaction required over a year of advisory work, according to Corey Dennis, senior broker at Arc & Co. The process involved navigating a selective capital markets environment, managing valuation challenges, and facilitating a complete redraft of the planning application to address amenity space requirements before securing approval.
“This was a complex, multifaceted transaction given the scale of the project and the extensive planning process,” Dennis said. “We carefully structured the funding package to ensure the scheme was fully capitalised while supporting the sponsor’s overall strategy.”
Market conditions
Dennis noted a shift in developer behaviour in response to current market conditions. “We are seeing a market shift where developers are moving towards asset stabilisation over disposals, due to the slower sales market, which naturally impacts liquidity,” he said. This trend aligns with recent data showing a quarter of UK property sellers withdrawing from the market, reflecting broader challenges in transaction volumes.
Will Powell, investment director at Downing, confirmed the completion of the funding package. “We were delighted to close this significant funding package for an experienced and capable sponsor delivering a well-designed student scheme in central Bristol,” he said. “The financing came with a number of complexities concurrent with this type of deal.”
Development timeline
The scheme is positioned to serve Bristol’s two universities and is set to progress through Gateway 2, with construction expected to begin in early 2027. The funding provides 100% capitalisation aligned with the project’s 43-month build programme.
The transaction was completed with contributions from Scott Harvey at Hame Capital and Will Powell at Downing LLP. The slower sales environment referenced by Dennis has prompted developers to reconsider exit strategies, with more opting to hold assets through to stabilisation rather than pursuing immediate disposal.