UPP eyes a 40 per cent boost in rent roll

8 February 2012

Student accommodation specialist University Partnerships Programme (UPP) has targeted up to a 42 per cent rise in rent roll (income) within two years.

The hike is based on an increase in its residential stock, from 26,000 to 35,000 units, and maintaining a high occupancy ratio across its portfolio.

The rate stands at 99.8 per cent, said Duncan Palmer, chief operating officer for UPP Residential Services, the FM delivery arm of UPP.

But there is no guarantee that the occupancy rate will remain high just because UPP’s on-campus accommodation business model means the residential units are directly linked to a university.

It’s a competitive market and will remain so, Palmer said in an exclusive interview with FM World.

UPP has partnerships with 12 universities,such as the University of Exeter, where a £133 million development is under construction. Contract lengths are typically between 35 and 50 years.

However, a recent win at the University of Reading created a new benchmark with a £230.1 million contract to manage student accommodation for 125 years. 
The deal involves £186.5 million of senior debt provided by Aviva.



The “pioneering deal” has UPP operating 4,321 rooms for the university as well as managing the university accommodation office. UPP will also build 649 rooms as part of the current Whiteknights Campus accommodation project.

 UPP will be providing hard and soft facilities management across the portfolio. The university will retain responsibility for student welfare and pastoral matters, grounds maintenance, security and IT, as well as running catering throughout the university, including in halls and bars.

The UPP brand was created by a management buyout from Jarvis in 2004, in which Palmer and Jon Wakeford, UPP’s group director for strategy, participated.

The UPP model is based on a long-term partnership with a university, backed by UPP’s private sector investors and funders. UPP offers a range of services, including the construction of student accommodation and academic facilities, full or partial estate transfers, specialist asset management and refurbishment of existing premises.

UPP Group is made up of UPP Projects and asset manager UPP Residential Services, which self-delivers almost all its services, such as cleaning, warden provision, security and building maintenance, with the exception of fire alarm systems and maintenance.

Palmer said UPP is flexible in its delivery and is looking at the stand-alone FM market, such as with its win last year for Imperial College in London. UPP’s residential arm began delivering FM services only – no estate transfer – to Imperial’s Griffon Studios, a new student accommodation development in Battersea, south London.

The economic value for money in the main UPP business model comes from a university unloading its non-core activity along with risk to the residential provider, meaning it can focus on its core academic and research work.

“But I also tell my staff that we’re not just taking care of a student residence,” said Palmer. “We’re running a hotel.

"It’s an important point because there are now a lot of speculative student accommodation landlords who build close to universities, but are not attached to the institutions. Students have a choice, and they know it," he said. “This is where the FM provision side become important and adds value for money.”

Many UPP frontline staff have TUPED over at the start of contracts, bringing with them valuable knowledge of buildings, college culture and process, as well as an understanding of the types of students and problems they may face. This is invaluable for UPP, said Palmer. Good FM is what makes students want to return to the accommodation.

Both Palmer and Wakeford are aware of the “softly, softly” FM services side of managing student accommodation. Wakeford, who studied politics at the University of London, worked part-time during his course as a warden in the residences. He later worked full-time as a warden at Goldsmiths College.

Palmer did not attend a university, but gained experience of the problems students of all ages face – especially when just arriving at university, and also foreign students away from their cultural milieu – when he worked for companies that took care of American teenage students spending time at colleges in the UK.