Oxford & Legal & General, the real estate play

  1. A Plymouth student property proposition
  2. Educational exports: the story so far
  3. How Lloyds got burnt by a for-profit education deal
  4. A casualty in the education marketplace
  5. Connecting an Australian private equity buyout to Swansea University
  6. How a £100m student accommodation scheme went wrong
  7. Alpha Plus is still losing money
  8. Students as a commodity, Sino-US trade war edition
  9. What the bond market thinks about the prospect of a university crisis
  10. How the forces of finance fund MBAs
  11. Introducing the shadow education sector
  12. Why US investors are betting on European student accommodation
  13. The Alpha Plus pension problem
  14. The rise of educational forgery
  15. For sale: one luxury Georgian townhouse
  16. Canada's educational exposure to China
  17. University graduates and the means of financial production
  18. A business model fit to educate royalty
  19. American education and the rise of philanthropic capital
  20. The financial plumbing of university education
  21. Bailing out the universities
  22. The temptations of student real estate
  23. The Egyptian campus that wasn't
  24. The real student politics
  25. Cambridge University’s £1bn bet on housing
  26. University accommodation deals: it's a wrap
  27. Saudi Arabia vs. Canada, the education angle
  28. When is a loss not a loss?
  29. Taking education into account
  30. On the genealogy of moral hazard
  31. Student flows with Chinese characteristics
  32. The great balance sheet shift of British universities
  33. Spare a thought for the music halls
  34. Universities and the allure of capital markets
  35. The strange economics of the university strikes
  36. Higher education and the new doctrine of vocation
  37. The financing of student accommodation
  38. The many problems with a market for higher education
  39. The questionable credit-worthiness of student loans

Back in September, we delved into Cambridge university's ambitious attempt to build a small town, pretty much from scratch.

The project, which aimed to ease housing affordability in the city by providing new stock, ran into cost overruns in 2015 and an internal inquiry was launched.

Today, Oxford has announced a scheme with some similarities. As with Cambridge, it is planning to build thousands of homes, including subsidised properties for its own staff.

The difference is that Oxford has partnered with Legal & General, the insurance firm that manages £1tn of assets. The latter will provide the money; Oxford will provide the land.

The plan has echoes of a Manchester project we covered at some length this month. In both cases, the partnership revolves around university-owned land. This is a blueprint informed by a US trend where universities work with the private sector.

The logic is simple: universities bring people in to study, and their graduates then work in companies that pay commercial rents to a joint venture which the university, completing the circle, has an equity stake in. To complete the circle even further, the companies might draw on research from the university.

Even further, the graduates might also live in accommodation the university owns, paying rents to their alma mater.

This is all part of a wider move towards concentrated urban real estate with proximity to higher education. But for L&G, an important part of the context is also the bond market.

Recall that, just two days ago, Austria began movements towards its second 100-year bond in the space of two years. The last one is trading at just over 1 per cent, while the German 10-year hit record lows this week.

Alphaville spoke to Nigel Wilson, L&G's chief executive, this morning, who pointed to the conditions in markets.

“If I said 'please give me £100,000 and I’ll give you back £95,000' . . . that’s what’s happening at a global level,” he said.

“We manage over a trillion pounds, and the UK has this unique asset called long term liabilities in DB pension schemes,” he added. “It’s much better if we can create long term assets that really helps the economy rather than buying a whole load of gilts”.

This all amounts to a rotation from fixed income in bond markets to an attempt at fixed income in rental markets.

People in the industry expect more of these deals. Saul Western, a partner at Bidwells, the property consultancy, says that “investors increasingly understand that universities are set for a boom as they provide a great location for tech companies”. He adds that such companies drive up population, leading to a need for more housing. Bidwells notes a sharp rise in Oxford house prices over recent years.

Housing is already a deeply politicised issue in the UK, partly because of clustering in urban centres. The politics here are doubly complex, because the commercial flows into higher education must be balanced against the fact that this is a highly unionised sector, as the pension strikes of 2018 demonstrated.

Whatever happens with the scheme, it seems likely that some of its most strident critics will be working or studying at the university.

Related links:
Cambridge's £1bn bet on housing — FT Alphaville
The Manchester model — Financial Times

  1. A Plymouth student property proposition
  2. Educational exports: the story so far
  3. How Lloyds got burnt by a for-profit education deal
  4. A casualty in the education marketplace
  5. Connecting an Australian private equity buyout to Swansea University
  6. How a £100m student accommodation scheme went wrong
  7. Alpha Plus is still losing money
  8. Students as a commodity, Sino-US trade war edition
  9. What the bond market thinks about the prospect of a university crisis
  10. How the forces of finance fund MBAs
  11. Introducing the shadow education sector
  12. Why US investors are betting on European student accommodation
  13. The Alpha Plus pension problem
  14. The rise of educational forgery
  15. For sale: one luxury Georgian townhouse
  16. Canada's educational exposure to China
  17. University graduates and the means of financial production
  18. A business model fit to educate royalty
  19. American education and the rise of philanthropic capital
  20. The financial plumbing of university education
  21. Bailing out the universities
  22. The temptations of student real estate
  23. The Egyptian campus that wasn't
  24. The real student politics
  25. Cambridge University’s £1bn bet on housing
  26. University accommodation deals: it's a wrap
  27. Saudi Arabia vs. Canada, the education angle
  28. When is a loss not a loss?
  29. Taking education into account
  30. On the genealogy of moral hazard
  31. Student flows with Chinese characteristics
  32. The great balance sheet shift of British universities
  33. Spare a thought for the music halls
  34. Universities and the allure of capital markets
  35. The strange economics of the university strikes
  36. Higher education and the new doctrine of vocation
  37. The financing of student accommodation
  38. The many problems with a market for higher education
  39. The questionable credit-worthiness of student loans
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