London Student Accommodation Investment Opportunitypdf.savills.com/documents/Victoria Hall, Wembley...
Transcript of London Student Accommodation Investment Opportunitypdf.savills.com/documents/Victoria Hall, Wembley...
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London Student Accommodation Investment Opportunity
WEMBLEYNorth ENd road, WEmblEy, loNdoN ha9 0UU
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London student accommodation investment
Mixed-Use Regeneration Area• Wembleyisundergoingavibrantredevelopmentthatisdirectlybenefitting
theproperty
• Newfacilitiesincludeanhotel,a660roomstudentaccommodationbuildingand500residentialunits.TheLondonDesignerOutlet,a350,000squarefootretailandleisurehub,iscurrentlyunderconstructionandthereisconsentforafurther1,300residentialunits
Transaction Structure• Thenetincomefiguresoutlinedbelowwillbeguaranteedbythevendorfor
threeyears,throughtheprovisionofanescrowaccount,andwillprovidethepurchaserwiththefollowingminimumnetincome:
2013/2014:£2,879,823
2014/2015:£3,005,167
2015/2016:£3,135,778
• Duringthesethreeyears,thepropertywillcontinuetobeletandmanagedbyVictoriaHallManagementLtdand,asaresultoftheguarantees,thepurchaserwillhavenolettingoroperationalrisk,whileenjoying100%ofalladditionalincomereceivedabovetheguaranteedlevels
Financing• Assuminganinterestonlyloanof£22.5million(50%LTV)andamargin
of3.00%over3-monthLIBOR,theinvestmentwillgenerateacash-on-cashyieldof8.8%in2013/2014,risingto9.4%in2014/2015and9.9%in2015/2016
Proposal• Offersinexcessof£45,000,000 (forty five million pounds) subjectto
contractandexclusiveofVAT.Thisreflectsalowcapitalvalueof£103,500perbedandaninitialyieldof6.3%,risingtoaminimumof6.6% in 2014/2015andaminimumof6.8%in2015/2016basedonacompanyshareacquisition
Strong Operating Performance • Freeholdbuilding,completedin2011
• 435bedsinanattractive20storeytoweracross83,928squarefeetNIA
• 242clusterrooms,172studiosand21penthousestudios
• Sinceopening,thepropertyhasreached99%occupancyforbothacademicyears2011/2012and2012/2013
• Thepropertyisprojectedtogenerate£3.8millionofrevenueand£2.9millionofnetoperatingincomeinthe2013/2014academicyear
Structural Under-Supply and Stable Demand• 60%ofthestudentresidentsattend8highereducationinstitutions,
includingtheUniversityofWestminster,MiddlesexUniversity,UniversityCollegeLondon,andCityUniversity
• GrowthinLondonfulltimestudentnumbersof19%overthepastfiveyears
• Thereare303,100fulltimestudentsinLondonbutonly62,000studentaccommodationbeds,withthedevelopmentpipelineconstrainedbyrecentplanningregulationchanges
High Quality Affordable Accommodation• Maximumuniversitytuitionfeesarenow£9,000perannummaking
studentsmorepricesensitivetotheiraccommodation
• WembleyoffersamoreaffordableoptiontoliveinLondon,hometothelargestnumberofhighereducationinstitutionsintheworld,atadiscountofaround25%toZone1rents
Best-in-Class Management Operator• VictoriaHallisamulti-awardwinningstudentaccommodationmanager
offeringhighqualitystudentaccommodationacrosstheUKaswellasinIreland,SpainandGermany,managingover7,000beds
• VictoriaHallhasmanagedthepropertysincecompletion,delivering99%occupancy
ExEcutivE SuMMarY
Thefreeholdinterestinaprime,20storey,435bedstudentaccommodationpropertyinWembley,London.Currently99%let,the2011-builtpropertyissituatedadjacenttoWembleyParkUndergroundStationprovidingeasyaccesstotheWestEndinonly12minutes.Thepropertybenefitsfromexcellentsurroundingamenitiesandisadjacenttothe87acreWembleyCitydevelopment.
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London student accommodation investment
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tHE PrOPErtY
WembleyPark
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London student accommodation investment
LOcaL LaNDMarKS
1.WembleyStadium
2.HiltonHotel(361Bedrooms)
3.LondonDesignerOutlet(350,000squarefeet)
4.QuintainStudentAccommodation
5.WembleyPlazaHotel(306Bedrooms)
6.QuadrantCourt&ForumHouse(Residential)
7.WembleyArena
8.BrentCivicCentre
9.StadiumRetailPark
10.WembleyParkBusinessCentre
11.WembleyRetailPark
12.DexionHouse-PlanningforStudentAccommodation
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WembleyStadiumStation
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London student accommodation investment
LOcatiON
Affordable Vibrant London Living • SuperblylocatedintheheartofWembley,the
propertyistheclosesttothetubeofthestudentaccommodationhallsinthearea.
• WembleyParkUndergroundstationislessthanaminute’swalkawayprovidingaccesstoboththeJubileeandMetropolitanLines.
• WembleyParkisonlytwostopsawayfromBakerStreetontheMetropolitanline,withajourneytimeof12minutes,andBondStreetontheJubileeLine,onlyhasajourneytimeof18minutes.
Source:TransportforLondon NottoScale-ForIdentificationPurposesOnly.
JUBILEE LINEMETROPOLITAN LINECENTRAL LINENATIONAL RAIL
Maryleb
one
16 mins
Bond
Stree
t
18 m
ins
Lanc
aster G
ate
(Imperi
al Colle
ge London)
28 m
ins
Waterloo
(Kings Colle
ge London,
Southbank
Universi
ty) 26
mins
Eusto
n
(UCL, S
OAS, Birk
beck)
18 mins
Liverp
ool St
reet
(UEA
, City
Unive
rsity)
30 m
ins
Holborn
(LSE)
30 m
ins
Kings C
ross
(Unive
rsity
of the A
rts)
21 mins
Canary
Wharf
32 m
ins
London Bridge
28 mins
Stratford
42 mins
Wemble
y
Stadiu
m
Statio
n Bake
r Stre
et
(Unive
rsity
of Wes
tminste
r) 12 m
ins
Wemble
y Park
Northw
ick Pa
rk
(Unive
rsity
of Wes
tminste
r) 4 m
ins
• TheNorthwickParkCampusoftheUniversityofWestminsteris4minutesawayontheMetropolitanLine.
• ResidentshaveeasyaccesstoCentralLondon’sUniversities,Collegesandamenities.
Proximity To Extensive Wembley Amenities• WembleyStadium,theiconic90,000seatvenue
islocatedlessthanhalfamiletothesouthoftheproperty.AswellasbeingtheofficialnationalstadiumoftheEnglandfootballteam,thestadiumhostsover150majorsportingandmusiceventseveryyear,andisasignificantattractionforstudenttenants.
• WembleyArena,adjacenttotheStadium,holds12,500seatsandalsohostssportingandmusicevents,aswellasconferences.
• Brandnewamenitiesarecomingonstreamthisyearfromthe87acreWembleyCitydevelopment,includingthe350,000squarefootLondonDesignerOutletmall,turningWembleyintooneofLondon’smajorretailandleisuredestinations.
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London student accommodation investment
Green Parking
WembleyRetailPark
WembleyPlaza Hotel
Yellow Parking
Red Parking
Wembley Stadium StationMETROPOLITAN
JUBILEE
Wem
bley
Hill
Road
Empi
re W
ay
Wembley Park
Drive
South Way
South Way
Oly
mpi
c W
ay
O
lym
pic
Way
Wembley Park
Fulton Road
Fulton Road
Engineers Way Engineers Way
F
irst W
ay
First Way
Ruth
erfo
rd W
ay
Royal Route
Lakeside Way
North End Road
P
P
P
P
StadiumRetailPark
4* RadissonHotel
TescoExpress
ForumHouse
(Residential)
London DesignerOutlet (opens 2013)
QuadrantCourt
(Residential)Student
Accommodation4* Hilton
Hotel
Powerleague
Civic Centre(opens 2013)
NottoScale-ForIdentificationPurposesOnly.
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London student accommodation investment
HigH-SPEcificatiON accOMMODatiON
DescriptionThepropertyisapurpose-builtstudentaccommodationblock,totallingapproximately83,928squarefeetNIA,whichwascompletedinSeptember2011.Itisarrangedover20storeysandhasmetalcladdingwithfeatureareasofaluminiumglazingtotheexternalelevations.Itprovides435en-suitestudentbedroomswithamixofclusterrooms,studiosandpenthousestudios.Thestudiosarelocatedinthecentralcircularelementofthebuildingwiththeclusterroomsinthewings.ThereareimpressiveviewsfromthepropertyoverWembleyStadiumandCentralLondon.
Cluster RoomsClusterroomsaresituatedwithinclusterunits,eachcomprisingfiveen-suitebedrooms.Theseunitsbenefitfromamodernfully-fittedcommunalkitchenandalounge/diningareawithaflatscreentelevision.Thereisadirectdialtelephoneineveryflat,withbroadbandinternetprovidedfreeofchargeineverybedroom.
StudiosStudiosprovidestudentswiththesamefacilitiesasclusterrooms,butwiththeirownfullyfittedkitchenandflatscreentelevisionwithintheirroom.
Penthouse StudiosTheseluxuryapartmentsarelocatedonthetopthreefloorsoftheproperty.
BedroomsAllbedroomsareprovidedwith¾sizebedswithstorageatthebase,fittedwardrobes,afulllengthmirrorandalargedeskareawithbookshelvesandapin-board.Allbedroomsbenefitfromen-suitefacilitieswithashower,toiletandwashbasin,andeachhasanindividuallycontrolledheatingsystem.
KitchensEverykitchenisfullyfittedwithahob,cooker,microwave,fridge,freezer,toasterandafullcomplementofkitchenutensils,asstandard.
FacilitiesCCTV,doorintercomsystemsand24hourcaretakerpresenceensuresstudentsafetythroughouttheyear,andtheon-sitemanagementteamisavailableforstudents’daytodayenquiries.Anon-sitelaunderetteisavailableonpay-peruse,alongwithironsandironingboards.Cyclestorageisprovidedon-siteandtherearefouron-streetdisabledcarparkingspaces.
Specification Insummary,thepropertybenefitsfromthefollowingspecificationandamenities,allincludedwithintheweeklyrentalcharge:
• CCTVsurveillance
• Managementoffice(withboardroom,staffkitchenandstaffWC’s)
• Fullyequippedcontemporarykitchen
• CommunalTVlounges
• Communaldirectdialtelephone
• Phonelinerental
• 4MBBroadbandinternetaccess
• Contentsinsurance
• Allinclusiveutilitybills
• PremiumSkychannels
• 24houronsitesecurity
• 24houronsitemaintenance
• Hoover
• Cyclestorage
• On-sitelaunderette
• Lifts
• Communalgardenandpatioarea
Accommodation Thepropertyprovidesthefollowingmixofaccommodationtypes:
Room Type Number of Beds
Average room size (sq m)
Average room size (sq ft)
ClusterRooms 242 13.7 148
Studios 172 21.3 229
PenthouseStudios 21 22.6 243
TOTAL 435
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London student accommodation investment
fLOOr PLaNSCommon Areas
Reception
ManagementSuite
ClusterRooms
Studios
PenthouseStudios
Laundrette
BikeStore
RefuseStore/Plant
NottoScale-ForIdentificationPurposesOnly.
Ground Floor
2nd Floor 18th Floor
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London student accommodation investment
VictoriaHallisapremiumstudenthousingmanagementproviderwithaccommodationacrosstheUKandEurope;includingschemesinBirmingham,Cardiff,Glasgow,Liverpool,Leicester,Manchester,Newcastle,Nottingham,Wolverhampton,Sheffield,Cork(Ireland),Bremen(Germany)andValencia(Spain).
VictoriaHall’sexpertiseandskillisrecognisedintheindustry(threetimeNationalStudentHousingSurveyWinner),foritsabilitytoimplementsuccessfullettingstrategies.Thishasbeendemonstratedatthepropertyforbothacademicyearssincecompletion.Incontrasttotheproperty,severalcomparablestudentaccommodationschemes,whicharelocatedclosertoCentralLondon,havenotachievedhigherthan75%occupancyforthe2012/2013academicyear.Thisisevidencenotonlyofthestrengthofthepropertyintermsoflocationandspecification,buttheproficiencyandcapabilityofVictoriaHallasmanagementoperators.
BESt-iN-cLaSS MaNagEMENt
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London student accommodation investment
Investment Appeal Student accommodation is an attractive investment assetclassduetosolidincomereturns,atrackrecordofrentalgrowthandyieldstability.Thesefactorshaveresultedintotalreturnsoutperformingtraditionalpropertysectors.
Transactionvolumeshaveshownanincreasingtrendsince2009whenc.£700millionstocktradedcomparedto2012whenapproximately£3billionwastradedinthesector.Londonremainsaprimaryfocusforinvestors,whoarekeentotakeadvantageofthedepthoftheuniversitymarketandthehighnumberofinternationalstudentsattractedtothecity.Strongrentalgrowthisatrendwecanexpecttoseerepeatedintheshorttermandisakeydriverforinvestorslookingtoenterthesector.
Student ProfileThepropertyhasreached99%occupancyforthetwoacademicyearssinceopening,demonstratingit’sstronglettingperformance.
Amongthestudentsinthe2012/2013academicyear,60%attendeightdifferentestablishments:UniversityofWestminster,MiddlesexUniversity,UniversityCollegeLondon,CityUniversity,CollegeofLaw,KingsCollegeLondon,RegentsCollegeandBrunelUniversity.StudentsfromtheUniversityofWestminsteroccupy30%oftheproperty,demonstratingthedepthofdemandcreatedbythatuniversityandit’sstrongrelationshipwiththeproperty.
Demand GrowthFulltimestudentnumbersinLondonhavegrownby19%overthepastfiveyears.
SuPPLY & DEMaND iMBaLaNcE
University of Westminster
University of Westminster
Wembley Park
12Minutes BakerStreet
Northwick Park
4Minutes
Full Time London Student Numbers
2012/13 Wembley Student Accommodation Tenant Nationality
295,000
300,000�
305,000�
bers
275,000�
280,000�
285,000�
290,000�
295,000�
2009/2011
Stud
ent�Num
b
2010/2011 2011-2012
TheUKHigherEducationsystemisheavilyoversubscribedwithonlytenplacesforevery14applicants.Theinternationalstudentdemandcomponentofthisoversubscriptioncontinuestogrow,attractedbyhighqualitydegreestaughtinEnglishandLondon’sattractivenessasaglobalcity.Between1975and2008thenumberofstudentschoosingtostudyoutsidetheirowncountryincreasedbymorethanfive-fold.Thisisforecasttodoubleagaininthenext14years.Thepropertyhashistoricallybeenamagnetforinternationalstudents(67%in2012/2013),ideallyplacingittobenefitfromtheforecastgrowthininternationalstudentnumbers.
TheUKcontinuestotakeadvantageofthisincreasinglymobilestudentpopulation,inparticularLondon,whichhasthehighestnumberofhighereducationinstitutionsofanyglobalcity.Approximately1in4studentsstudyinginLondonareinternational,andastheyrepresentthecoreoccupiersofpurposebuiltstudenthousing,areasignificantdemandpooltocapture.
SupplyTheLondonstudentaccommodationmarketisstructurallyunder-suppliedwithonly62,000purposebuiltbedspacescomparedto303,100students.Therearecurrently4,200bedsunderconstruction.However,recentplanningregulationchangesenforcinganaffordablehousingrequirementwillimpactonthefeasibilityoffuturedevelopment.
Currentlyonly1in5fulltimestudentshaveaccesstopurposebuilthallsofresidence.Usingdataforbothfullandparttimestudents(strippingouttheOpenUniversity)thefigureiscloserto1in7representingasignificantsupplyanddemandimbalanceespeciallycomparedtoregionalcities,wheretheaverageisc.1in3.
33%
22%7%
38%British
Chinese
Indian
Other
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London student accommodation investment
rENtaL LEvELS
QuotingrentsforcomparableschemeslocatedaroundLondonareoutlinedbelow.ThepropertyoffershighqualityaccommodationatthemostcompetitivecostcomparedtoalternativepurposebuiltstudentaccommodationinLondon.
Property Cluster Rooms 13/14 (£’s per
week)
Studio Rooms 13/14 (£’s per
week)
Subject Property 155-170 185-200
EmilyBowes,TottenhamHale 159-189 259-275
NorthLodge,TottenhamHale 165-179 n.a.
Opal,TufnellPark 197-225 239-249
DerwentPoint,Angel n.a. 250-258
QuantumCourt,Shadwell 199-249 259-299
BartholomewRoad,KentishTown n.a. 259-285
WoodlandCourt,CaledonianRoad 199-225 259-289
Nido,KingsCross n.a. 269-390
WedgewoodCourt,HollowayRoad 199-259 275
Urbanest,Hoxton 239-249 299-369
SomersetCourt,Euston 249 379-389
GreatSuffolkStreet,Southwark 259 299-389
Derwent Point, Angel
May-2012
136Beds
2YearNominationAgreement
5.90%NIY
£23.24M(£170,800perbed)
Nido Portfolio, London
May-2012
2,526Beds
DirectLet
6.25%NIY
£415M(£164,300perbed)
Recent Comparable Sales
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London student accommodation investment
NEt OPEratiNg iNcOME PrOjEctiONS
Income Guarantee
Investment Year 1 2 3 4 5 6
Academic Year 2013/14 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019
INCOME
CoreTermTimeIncome £3,352,331 £3,486,424 £3,625,881 £3,770,916 £3,921,753 £4,078,623
Summer Income £440,749 £458,379 £476,714 £495,783 £515,614 £536,239
Sundry Income £39,424 £41,001 £42,641 £44,347 £46,120 £47,965
Total Gross Income £3,832,504 £3,985,804 £4,145,236 £4,311,046 £4,483,488 £4,662,827
OPERATING EXPENSES
Utilities £292,964 £300,288 £307,795 £315,490 £323,377 £331,461
Salaries £215,158 £220,537 £226,050 £231,701 £237,494 £243,431
Marketing £79,721 £81,714 £83,757 £85,851 £87,998 £90,197
Insurance £64,689 £66,306 £67,964 £69,663 £71,404 £73,189
Repairs&Maintenance £47,127 £48,306 £49,513 £50,751 £52,020 £53,320
Administration £21,593 £22,132 £22,686 £23,253 £23,834 £24,430
Other £7,995 £8,195 £8,400 £8,610 £8,825 £9,046
Total Operating Expenses £729,247 £747,478 £766,165 £785,319 £804,952 £825,076
REAL ESTATE NOI £3,103,257 £3,238,326 £3,379,071 £3,525,727 £3,678,536 £3,837,751
VHManagementFees £223,435 £233,159 £243,293 £253,852 £264,855 £276,318
NET OPERATING INCOME £2,879,823 £3,005,167 £3,135,778 £3,271,874 £3,413,681 £3,561,433
NetInitialYield 6.3% 6.6% 6.8% 7.1% 7.5% 7.8%
Cash-on-CashYield 8.8% 9.4% 9.9% 10.5% 11.1% 11.7%
2013 / 2014 Operating Assumptions
Leasing Deluxe Studio Penthouse
Letting Rates (Bed/Week)
51WeekRentalRate £155.00 £185.00 £210.00
42WeekRentalRate £170.00 £200.00 £225.00
ShortTermRentalRate £185.00 £215.00 £240.00
AnnualRentalGrowthRate 4.0%
AnnualExpensesGrowthRate 2.5%
Occupancy
94roomson51weekletsat£174pwaverage
238roomson42weekletsat£184pwaverage
83roomsonSTletsat80%occupancyat£197pwaverage
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Price Weareseekingoffersinexcessof£45,000,000 (forty five million pounds) subjecttocontractandexclusiveofVAT.Thisreflectsalowcapitalvalueof£103,500perbedandaninitialyieldof6.3%,risingtoaminimumof6.6% in 2014/2015andaminimumof6.8%in2015/2016basedonacompany shareacquisition.
DetailsoftheJersey-basedspecialpurposevehicleareavailableonrequest.
VATThepropertyhasbeenelectedforVAT.Ifthetransactionisconcludedbywayofanassetsale,itisintendedthatitwillbetreatedasatransferofagoingconcernandthereforeVATwillnotbepayableonthepurchaseprice.
Capital AllowancesSignificantcapitalallowancesareavailablebyseparatenegotiation.
DataroomThereisfurtherincomeandcostinformationaswellasfloorplans,onaseparatewebsiteandaccesscanbeobtainedbycontactingJamesHanmer.
iNvEStMENt SuMMarY
PrOPOSaL
Important Notice
Savills,theirclientsandanyjointagentsgivenoticethat:
1.Theyarenotauthorisedtomakeorgiveanyrepresentationsorwarrantiesinrelationtothepropertyeitherhereorelsewhere,eitherontheirownbehalforonbehalfoftheirclientorotherwise.Theyassumenoresponsibilityforanystatementthatmaybemadeintheseparticulars.Theseparticularsdonotformpartofanyofferorcontractandmustnotberelieduponasstatementsorrepresentationsoffact.
2.Anyareas,measurementsordistancesareapproximate.Thetext,photographsandplansareforguidanceonlyandarenotnecessarilycomprehensive.Itshouldnotbeassumedthatthepropertyhasallnecessaryplanning,buildingregulationorotherconsentsandSavillshavenottestedanyservices,equipmentorfacilities.Purchasersmustsatisfythemselvesbyinspectionorotherwise.
DesignedandProducedbySavillsMarketing:02074998644|May2013
Strong Operating Performance- OpportunitytoinvestinastrongperformingLondonstudent
accommodationpropertythathasachieved99%occupancyineachyearofoperations.
Structural Under-Supply and Stable Demand- FulltimestudentnumbersinLondonhavegrownby19%overthepastfive
years.Thereare303,100fulltimestudentsinLondon,comparedto62,000studentaccommodationbeds.Additionally,thedevelopmentpipelineisconstrainedbyrecentplanningregulationchanges.
High Quality Affordable Accommodation- Highquality,lowcostresidence,whichishighlyattractivetoademandpool
withconstrainedresources.
Best-in-Class Management Operator- Best-in-Classmanagementcompanywithprovenmarketoutpeformance
attheproperty.
Mixed-Use Regeneration Area- Heartofavibrantdevelopmentcorridorprovidinganarrayofnewand
improvedretailandleisureamenitiesforthestudentpopulation.
Income GuaranteeThenetincomefiguresoutlinedbelowwillbeguaranteedbythevendor,throughtheprovisionofanescrowaccountthatcouldbedrawnuponbythepurchaserintheeventofanyshortfallinactualnetannualincome.Theguaranteewillbefor3yearsandwillprovidethepurchaserwiththefollowingminimumnetincome:
2013/2014:£2,879,823
2014/2015:£3,005,167
2015/2016:£3,135,778
Duringthesethreeyears,thepropertywillcontinuetobemanagedandletbyVictoriaHallManagementLtdand,asaresultoftheguarantees,thepurchaserwillhavenolettingoroperationalrisk,whileenjoying100%ofalladditionalincomereceivedabovetheguaranteedlevels
FinancingEastdilSecuredhashaddiscussionswithlenderswithregardtofinancingtheproperty.Additionaldetailisavailableuponrequest.
traNSactiON StructurE
cONtactS
Forfurtherinformationandtoarrangeinspections,pleasecontact:
Peter Cooper-Parry [email protected]
James Hanmer [email protected]
James [email protected]
Michael D. Cochran [email protected]
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