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Barclays to offload student housing stake to PGGM for $1.35bn

Barclays has inked an agreement with Dutch pension fund PGGM to dispose of its 60% stake in one of the UK’s largest student housing landowners, University Partnerships Programme (UPP) for approximately $1.35bn.

The UK lender has also carved a plan to sell the remaining stakes and it is believed that the bank is negotiating with a small group of institutional investors about a proposed deal.

PGGM has €125bn assets under management.

Commenting on the deal, PGGM head of infrastructure, Henk Huizing said, "The deal is a good example of implementing the fund’s direct investment strategy in stable social infrastructure sectors with a long term focus."

The surge in demand of student accommodation and related activities has attracted a lot of market players including Aviva and private equity firm Round Hill Capital, to invest in the booming market, as this segment is a source of stable income.

For the first six months of the year, investment in student housing more than doubled compared with the same period in 2011, to hit £800m (€1.1bn).

According to data from the UK’s Higher Education Statistics Agency, nearly 490,000 students were living in open market rented property in 2010-11, against with 335,000 in 2007-08, and this steady growth has opened a new door for financial firms to tap the present opportunities.

UPP manages a portfolio of 28,000 student rooms across the UK and has a rent roll of £133m, while its group turnover during the year 2011 stood at £104m.