TheOystercatcher

Port folio

A Diverse Residential Investment Portfolio

2 | Oystercatcher Portfolio

The Oystercatcher Portfolio

Executive Summary

A stabilised regional portfolio comprising seven residential

assets. This is a rare opportunity to buy into a Private

Rented Sector portfolio consisting predominately of

freehold, unbroken blocks. The portfolio offers both a

diverse income stream and the opportunity of a break-up

to the owner occupier and buy-to-let investor markets.

Following a period of circa 18 months of extensive

refurbishment, the owners have appointed Savills (UK)

Ltd to market the Portfolio for sale.

Portfolio Performance

The occupancy level as at 1st September 2015 was 97%.

As at the same date the passing rent per annum shows

a 7.65% increase on the total gross income received

over the course of 2014.

The Portfolio is managed by Touchstone Residential

Ltd. In total the operating costs including maintenance,

management, utilities and write offs over the year

01/06/14 - 31/05/15 accounted for 38.4% of the estimated

rental value.

The current owners have undertaken a programme of

refurbishment over the last year to position the portfolio

for sale, this has significantly increased the occupancy

rate from 85% as at 31st August 2014 to 97% as at 1st

September 2015.

We would anticipate an incoming investor over the short

to medium term to be able to further reduce the gross to

net income leakage closer to the IPD index for All ASTs

(34.3% in 2014).

The table below sets out the operating cost items as a % of

the estimated rental value (a more detailed breakdown is

contained within the dataroom):

Annual Operating costs

(01/06/14 - 31/05/15) Cost

% of ERV

(01/09/15)

Maintenance 173,849 20.1%

Management 101,891 11.8%

Utilities 22,326 2.6%

Ground Rent & Service

Charge27,915 3.2%

Write Offs 219 0.03%

Other & Unallocated 5,806 0.7%

Total 332,006 38.4%

The Opportunity

The Portfolio represents an opportunity to acquire a well

balanced residential investment portfolio situated across

England. The assets are located across the North West,

North East, West Midlands, East Midlands and Yorkshire &

Humberside. It provides an incoming investor with a core

income stream, whilst also being well positioned for an investor

to benefit from anticipated future house price growth. This

gives an incoming investor the opportunity to also pursue

a phased break-up of the individual apartments to both the

owner occupier and buy-to-let markets, with the added benefit

of the creation of ground rent income on the freehold assets.

The assets are located in strong local rental locations close

to a mix of universities, employment and leisure hubs. The

apartments are offered for rent at competitive price points

in the local markets. The Portfolio presents the opportunity

for an incoming investor to acquire the assets beneath

reinstatement value.

The Residential Market

Hometrack House Price Cities Index for July 2015 reports

an average UK year on year increase of 6.2%. The report

highlights that the northern powerhouse cities, including

Manchester, Newcastle and Sheffield, have registered a

pick-up in growth since 2013, however average prices are

still below those of 2007. Growth over the last 3 months

(+4.3%) is at the fastest rate for 11 years. There remains further

upside for house prices in regional cities outside London. The

table below reflects Savills capital growth forecast for the

next 5 years.

Savills House Price Forecast

2015 2016 2017 2018 2019 5 year

North East 1.0% 3.5% 3.5% 2.0% 2.0% 12.6%

North West 1.0% 4.0% 4.0% 2.0% 2.0% 13.7%

Yorkshire & Humberside 1.5% 4.5% 4.5% 2.5% 2.5% 16.5%

West Midlands 2.0% 4.5% 4.5% 3.0% 3.0% 18.2%

East Midlands 2.0% 5.0% 5.0% 3.0% 3.0% 19.3%

Source: Savills Research, 2015

The rising demand for rented housing over the past decade

and lack of new housing supply has driven the price of

housing beyond the reach of a large segment of the

population. Our expectation is that the PRS will continue to

expand for the remainder of the decade, to 6.6m households

in the UK by 2019, which is around 250,000 new PRS

households per annum. Savills rental growth forecast for the

UK (excluding London) for the next 5 years is as follows:

Savills Rental Growth Forecast

2015 2016 2017 2018 2019 5 year

Mainstream Markets (excluding London) 2.0% 2.5% 3.0% 3.0% 3.5% 14.8%

Source: Savills Research, 2015

Oystercatcher Portfolio | 3

Summary

Block Location TenureNo. of units

Passing Rent/PA

ERV/PA ERP

1 42-56 Caversham Place Sutton Coldfield Leasehold 8 64,560 69,600 1,000,000

2 Eastwood & Stoneleigh Court Manchester Freehold 26 179,820 185,640 3,050,000

3 Sharrow View Sheffield Freehold 20 133,560 138,000 2,340,000

4 91-107B Gell Street Sheffield Freehold 26 167,280 179,400 2,920,000

5 9-24 Foundry Court Newcastle Freehold 16 87,036 91,200 1,350,000

6 1-22 Langley Mere Newcastle Freehold 22 100,860 123,600 1,680,000

7 Manor Court Grimsby Leasehold 16 76,500 78,750 1,240,000

Total 134 809,616 866,190 13,580,000

ERV - Estimated Rental Value. The amount a property in good, lettable condition can be rented for annually on the open market.

A1(M)M40

M6

M180

A1(M)

M1

London

Manchester

Sheffield

Birmingham

Sutton Coldfield

Grimsby

Newcastle

42-56 Caversham Place 1

Eastwood & Stoneleigh Court2

91-107B Gell Street

8-46 Sharrow View

4

3

9-24 Foundry Court

1-22 Langley Mere

5

6

Manor Court 7

ERP - Estimated Realisation Price. The amount the asset could be sold for with vacant possession, in good condition and assuming a reasonable marketing period. The ERP includes a price assuming the freehold interest is sold separately from the leasehold interests on the freehold blocks. This assumes a ground rent income of 250 PA / unit, capitalised at 3.5%.

Sutton Park

Perry Common

Sutton Coldfield

Birmingham

TheBelfry

42-56 Caversham Place

M6

M6

M6

M42

4 | Oystercatcher Portfolio

Oystercatcher Portfolio

42 56 Caversham Place Sutton Coldfield, B73 6HY

Units 8

ERP 1,000,000

Passing Rent (pa) 64,560

Occupancy 100%

ERV (pa) 69,600

Tenure Leasehold

Description

Unbroken block comprising apartments subject to 999 year leasehold interests from January 2001

8 x two bedroom flats

Held subject to 8 x ASTs

Parking

Ground rent of 400 per annum (50/ apartment) currently payable in addition to a service charge.

1

Location

Caversham Place comprises a single block of eight self contained flats with an enclosed car park at ground floor level, and four upper floors. Sutton Coldfield train station (with regular services into Birmingham New Street station in 20 minutes) is within walking distance (0.7 miles) along with accessible bus routes from Birmingham Road.

The current average asking rent (Zoopla) for a two bedroom flat in the B73 post code area is 634 pcm, c.6.5% beneath the average 2 bedroom rent passing in Caversham Place.

Birmingham PRS Overview

In autumn 2013, Birmingham City Council approved its Housing

Growth Plan, which foresees a need for 80,000 new homes in

Birmingham by 2031. Over the last ten years, the PRS has

continued to expand, doubling in size, and now representing

20% of homes in the city of Birmingham.

Operating Costs

Operating costs

(01/06/14 - 31/05/15) Cost

% of ERV

(01/09/15)

Maintenance 4,973 7.1%

Management 7,924 11.4%

Utilities 1,359 2.0%

Ground Rent & Service Charge

20,903 30.0%

Write Offs 0 0.0%

Other & Unallocated 0 0.0%

Total 35,159 50.5%

One unit was partially refurbished in 2015 at a cost of c.500. A

further 1,500 was spent on replacing domestic appliances.

A57(M)

A6010

A5103

Manchester

Manchester Grammar School

Manchester University Fallowfield Campus

Manchester High School for Girls

University of Manchester

Manchester Metropolitan

University

Manchester Piccadilly Station

Eastwood & Stoneleigh

Court

Oystercatcher Portfolio | 5

Oystercatcher Portfolio

Eastwood Court and Stoneleigh Court Manchester, M14 6JU

Units 26

ERP 3,050,000

Passing Rent (pa) 179,820

Occupancy 100%

ERV (pa) 185,640

Tenure Freehold

Description

Two freehold unbroken blocks

26 x two bedroom flats

Held subject to 25 x ASTs & 1 x Assured Tenancy

Communal garden space

Parking

2

Location

The property comprises two adjacent blocks of flats arranged

over ground floor and rising to three upper levels. It is situated

in the heart of the popular area of Fallowfield. The property

is ideally located for easy train and bus access to Manchester

City Centre. Both the University of Manchester and Manchester

Metropolitan University campuses are within a 10 minute walk.

The current avera