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

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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1

9

1011

tHE PrOPErtY

WembleyPark

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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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2

3

8

6

12

WembleyStadiumStation

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5

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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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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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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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fLOOr PLaNSCommon Areas

Reception

ManagementSuite

ClusterRooms

Studios

PenthouseStudios

Laundrette

BikeStore

RefuseStore/Plant

NottoScale-ForIdentificationPurposesOnly.

Ground Floor

2nd Floor 18th Floor

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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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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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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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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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London Student Accommodation Investment Opportunitypdf.savills.com/documents/Victoria Hall, Wembley...

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Transcript of London Student Accommodation Investment Opportunitypdf.savills.com/documents/Victoria Hall, Wembley...