Barclays Plc sold a 60 percent share of the U.K.’s second-largest student-housing operator to Dutch pension-fund manager PGGM NV in a deal valued at about 840 million pounds ($1.4 billion).
PGGM purchased the stake in UPP Group Holdings Ltd. from infrastructure funds managed by Barclays, according to a statement today. The London-based asset manager is weighing the sale of all or part of the remaining shares, three people with knowledge of the transaction said. They declined to be identified because the matter is private.
The deal is the largest ever in Europe and means the industry will surpass last year’s record 1.18 billion pounds of college-dormitory sales in the U.K., according to data from Jones Lang LaSalle Inc. Transactions in the continent’s largest market totaled about 800 million pounds in the first half as steady returns and prospects for rent increases lured investors.
“The inflation-linked, stable cash flows are an excellent match with our clients’ liabilities,” Henk Huizing, PGGM’s head of infrastructure, said in the statement.
PGGM, based in Zeist, Netherlands, said the estimated value of the dormitory company is 1.4 billion pounds, including debt. It didn’t disclose the price.
Aurelie Leonard, a Barclays spokeswoman, declined to comment about the possible sale of the remaining stake.
Unite Plc, the U.K.’s largest college dormitory operator, predicts rents at its residences will rise by 3 percent to 4 percent in its fiscal 2013 year, and even more in supply-constrained London.
Barclays Infrastructure Funds Management hired UBS AG two years ago to sell all or part of its investment in UPP. It entered into exclusive talks with PGGM 12 months ago.
UPP manages dormitories for 13 U.K. universities, housing 26,406 students and generating annual rental income of 104 million pounds. The company plans to invest 1 billion pounds in the next two years to build and renovate college facilities, which would increase its yearly rental revenue to 133 million pounds, according to the statement.
For fiscal 2012, UPP had earnings before interest, taxes, depreciation and amortization of 46 million pounds.
PGGM manages 125 billion euros ($160 billion) of assets on behalf of six pension funds, including Pensioen Fonds Zorg en Welzijn, the second-largest retirement savings institution in the Netherlands.