"Given that it's an office conversion and constrained by the building's existing envelope, we had to come up with some interesting accommodation configurations to not only make the best of the available space but also provide the layouts that the current market was demanding"
- Richard Stott - Kexgill Group
Avamore Capital, in collaboration with Kexgill Group and University Quarter, has completed a £5m development loan, its first PBSA facility, a significant milestone since its entry into the PBSA sector in late ’23.
The property, located in Nottingham, is a semi-detached office building, granted full planning permission for conversion into 67 lettable bed spaces.
Kexgill Group, an experienced PBSA Developer and Operator currently operating in nine cities across the UK and Germany, was the perfect partner for Avamore.
Richard Stott, (pictured) MD of Kexgill Group, explained that they specialise in the medium rental, affordable student accommodation, which aligns perfectly with Avamore's PBSA business model.
He added: "We often look at refurbishment and conversion projects as new build can be expensive and require rents to be north of £200 a week which can be problematic in some locations”.
The property in this development has an interesting history. Richard explains: “You kind of fall in love with a building and Raleigh House, I’ve kind of fallen in love with it. We liked this deal as it’s a smaller office conversion of a landmark building, very close to Nottingham Trent University. The development is called Raleigh House because the site is the original headquarters of the bike company, Raleigh Bikes.
"Given that it's an office conversion and constrained by the building's existing envelope, we had to come up with some interesting accommodation configurations to not only make the best of the available space but also provide the layouts that the current market was demanding.
"Many new build developments are made up of quite large cluster sizes or studios, but here we have been able to provide 3 to 4-bed ensuite clusters which the data shows are very much in demand and undersupplied.
"And so far, it has worked well. We released them to the market three weeks ago, which is quite late in the forward letting market, and they've all rented.”
Richard continues by saying how much he enjoyed working with Avamore Capital on this deal.
He said: “Avamore has been great throughout, it’s been a pleasure dealing with the team. You have to partner with people who trust. We worked on this together and Phil was as excited as we were, that's a huge plus. This is our first deal with Avamore. It’s been a great deal. I'm delighted. We trusted Avamore and they delivered.”
Philip Gould, Chief Lending Officer of Avamore Capital, adds: “It has been an absolute pleasure working with Richard and the Kexgill team. I can’t wait to see the finished product. It is certainly a development that I would have been thrilled to stay at when I was at university.
"Going forward, the issues around affordability in the PBSA space make it clear there is a growing requirement for small-scale, low-amenity student housing like Raleigh House.
"Our extensive experience in heavy refurbishments and office-to-resi PD conversions makes us an ideal partner, and I look forward to increasing our presence in the sector. We have ambitious plans and will continue to innovate our product set to give our brokers and borrowers the support they need.”
