123 FOUNTAINBRIDGE WEST TOLLCROSS EDINBURGH EH3 9QG PRIME STUDENT ACCOMMODATION INVESTMENT

Transcription

1 123 FOUNTAINBRIDGE WEST TOLLCROSS EDINBURGH EH3 9QG PRIME STUDENT ACCOMMODATION INVESTMENT

2 123 FOUNTAINBRIDGE EDINBURGH EH3 9QG Executive Summary Opportunity to acquire a prime city centre student accommodation investment. Purpose built student accommodation comprising 331 rooms in total across 57 cluster flats. Core city centre location, in close proximity to major university campuses including the University of Edinburgh and Edinburgh Napier. The accommodation is fully let for the 2017/18 academic year and has consistently achieved 100% occupancy in previous years. Situated within 10 minutes walk of the University of Edinburgh s campus in an area with a high student population and numerous local amenities. Current nominations agreement with the University of Edinburgh for 150 beds for 2017/18 academic year, with potential for a new agreement to be signed from 2018/19. The projected net income for the year 2017/18 is 1,651,041 which includes projected gross summer income of over 500,000. The world famous Edinburgh Festivals drive strong demand for bedrooms during the summer months, with city centre rents achieving a premium. We are instructed to seek offers in excess of 22,000,000 (Twenty Two Million Pounds Sterling) for our client s Heritable Interest, which reflects a net initial yield of 7.06%, allowing for purchaser s costs at 6.26%, and a low capital value of 66,465 per bed space.

3 123 FOUNTAINBRIDGE EDINBURGH EH3 9QG 03 Location Edinburgh is a UNESCO World Heritage City, internationally recognised for its historic buildings and cultural reputation. Edinburgh has a resident population of approximately 507,000 people with a further catchment of 1.36 million people (City of Edinburgh Council, 2017). It plays host to some 80,000 students studying throughout the capital at universities including the University of Edinburgh, Heriot-Watt University, Edinburgh Napier University and Queen Margaret University. The city s UNESCO World Heritage status makes Edinburgh a major tourist destination, attracting approximately 4 million visitors each year. Within the UK and outside of London, Edinburgh has the highest hotel occupancy rate in Europe. Edinburgh benefits from excellent transport links, with Edinburgh International Airport situated only 25 minutes from the city centre, providing direct flights across the world to destinations including London, New York, Paris, Madrid and Amsterdam. Edinburgh Waverley railway station is situated within the heart of the city centre and provides direct routes to London and the wider UK rail network. Situation The property is centrally located within the Fountainbridge area of the city centre. Fountainbridge has undergone significant redevelopment in the past decade and now boasts a strong mix of office, retail and residential uses. The property is bounded by Fountainbridge to the north and West Tollcross to the south. Edinburgh is home to four established universities and approximately 80,000 full time students. The University of Edinburgh is one of the world s leading research universities and provides a diverse range of courses for students, including arts, humanities, social sciences, medicine, science, law and engineering. The University of Edinburgh s College of Art campus is within 10 minutes walking distance, whilst George Square (the University of Edinburgh s main hub) is a 15 minute walk. Queen Margaret University is located a short train journey from the city centre and offers many vocational courses such as nursing and occupational therapy. The bus stop directly outside the property lies on local bus routes serving both Edinburgh Napier University and Heriot-Watt University, both of which provide a variety of courses including engineering and real estate based programmes. There are many local shops and cafés in close proximity and Edinburgh s main retailing thoroughfare, Princes Street, is a 10 minute walk via Lothian Road. Edinburgh s Old Town is a short distance from the property and offers many student focussed restaurants, bars and nightclubs in addition to several tourist attractions. Haymarket railway station is within 10 minutes walking distance and provides direct rail services to Glasgow, Aberdeen, Newcastle, Birmingham and London. It also provides local rail services which link to Queen Margaret University campus in the east of Edinburgh in 12 minutes. Haymarket is a key halt for Edinburgh s tram system, from which the airport and the west of Edinburgh can be easily accessed.

4 123 FOUNTAINBRIDGE EDINBURGH EH3 9QG SHANDWICK PLACE PRINCES STREET HAYMARKET TRAIN STATION LOTHIAN ROAD FOUNTAINBRIDGE GEORGE SQUARE Tram Halt Bus stop providing local services to Heriot-Watt and Edinburgh Napier University

5 123 FOUNTAINBRIDGE EDINBURGH EH3 9QG 05 PRIME CITY CENTRE STUDENT LIFESTYLE

6 123 FOUNTAINBRIDGE EDINBURGH EH3 9QG 06 Description Each flat is equipped with the following: Individual bedrooms benefit from: Common areas feature: 123 Fountainbridge comprises 331 student bedrooms arranged across 57 cluster flats, with the breakdown as follows: Room Type 4 bed 5 bed 6 bed Total Cluster Flats No. of Beds WiFi throughout Contemporary sofas Flat screen TVs in lounge areas Modern kitchens with integrated appliances Breakfast bar and bar stool seating Bathroom and WC Large bed Wardrobe Study desk and chair Shelves Vanity unit CCTV Secure gated bike storage Garden / Courtyard Hospitality office Free parking for residents Laundry facilities Secure door entry system

7 123 FOUNTAINBRIDGE EDINBURGH EH3 9QG 07 Income The majority of bedrooms are let directly to students on short assured tenancy agreements, with 45% on 44 or 46 week contracts, and 55% on 51 week contracts. This allows for a level of guaranteed income through the year while allowing the opportunity for additional summer income to be generated. Of the direct lettings there is a relatively even mix of students from the three main universities, with 37% from Heriot-Watt, 27% from University of Edinburgh and 23% from Napier, demonstrating the strength of the central location. There are 150 beds currently under nomination agreement to the University of Edinburgh for 2017/18 for a period of 39 weeks, at a rent of 772,200 ( 132 per week). The property is 100% let for the 2017/18 academic year. A summary of income is shown in the table figure 01 below. Provisional discussions have taken place with the University of Edinburgh regarding a new nominations agreement from the 2018/19 academic year for a duration of 3 years, for 125 beds with annual RPI increases at a collar and cap of 3% and 5% per annum respectively. Provisional quoting rents for the 2018/19 academic year are outlined in the table figure 02 below. Summer Income The Edinburgh Festival runs throughout August and attracts millions of visitors each year. The demand for accommodation is significantly higher throughout the summer months than at any other time of the year, with city centre rents often achieving a premium. The property is well located for tourists visiting the Edinburgh Festival as it lies 1 mile s walk from the George Square and Pleasance festival hubs. Gross summer income for 2016 / 17 was 497,358, which represented an increase of 20% on the summer income from the previous academic year. (Figure 01) Summary of income (Figure 02) Provisional quoting rents for the 2018/19 academic year Gross Student Rental Income 1,858,805 Projected Gross Summer Income ,000 Sundries Vending / Laundry 10,000 Total Gross Income 2,368,805 3% Void - 55,764 Operating Costs at 2,000 per bed - 662,000 Net Income 1,651,041 Number of Beds Tenancy Length (weeks) Rental per Week per Unit Total Rent Classic Room ,800 Classic Room ,500 University Rooms ,125 Total 331 1,963,425

8 123 FOUNTAINBRIDGE EDINBURGH EH3 9QG 08 Higher Education in Edinburgh Full time students comprise over 12% of Edinburgh s population (City of Edinburgh Council, 2016). The University of Edinburgh is one of the world s leading research universities and provides a diverse range of courses for students, including arts, humanities, social sciences, medicine, science, law and engineering. Edinburgh Napier University was granted its University status in 1992 and was awarded the Queen s Anniversary Prize for Higher and Further Education in Heriot-Watt University is divided into six schools and operates from a large campus in south west Edinburgh. There are a significant number of postgraduate students and student number growth has remained stable in recent years. Queen Margaret University was founded in 1875 and offers many vocational courses such as nursing and occupational therapy. The University relocated to a new purpose built campus on the south east side of Edinburgh in FT Student population 27,385 10,090 8,860 3,565 Growth 2010/11 to 2015/16 (PG&UG) +20% -6% +18% +9% No. International students 8,285 2,090 2, % International Students Change in UCAS Application +4% -2.8% -8.8% -0.6% UCAS applications: accepts ratio Current Times Rank Times Rank Change in Times Rank

9 123 FOUNTAINBRIDGE EDINBURGH EH3 9QG 09 Student Accommodation in Edinburgh Comparable Rental Evidence Property Bed Type Weekly Rent 2017/18 Term Annual Rent 2017/18 IQ Fountainbridge Cluster En Suite / 50 6,493-8,300 Studio/ 1 bedroom flat / 50 7,525-13,500 Nido Edinburgh Cluster En Suite ,407-6,837 Studio / 1 bedroom flat ,912-9,417 IQ Grove Street Cluster En Suite ,665-7,095 Studio / 1 bedroom flat ,224-11,653 Portsburgh Court Cluster En suite / 51 7,304-8,619 Edinburgh Student Accommodation Supply Owner/Operator Room Numbers Block Total University of Edinburgh 6,665 Heriot-Watt University 2,086 Edinburgh Napier University 1,241 Queen Margaret University 800 Unite 1,408 IQ 635 Edinburgh College 122 Mansion 278 Ziggurat 59 CRM 492 Student Housing Company 966 Prime Student Living 148 Universal Student Living 96 Student Castle 187 Nido Collection 168 Sanctuary Student 800 Homes for Students 356 Fresh Student Living 407 Downing Students 238 Destiny Student 536 Collegiate AC 412 Total 18,100 beds

10 123 FOUNTAINBRIDGE EDINBURGH EH3 9QG 10 DUNDAS ST A90 QUEENSFERRY RD RACELSTON TERRACE A90 DEA N PATH DEAN PARK CRES GLOUCESTER LN YOUNG ST HOWE ST HERIOT ROW GEORGE ST THISTLE ST ALBYN PLACE QUEEN STREET CASTLE ST HILL ST HANOVER ST ABERCROMBY PL SCOTTISH NATIONAL PORTRAIT GALLERY A900 WAVERLEY STATION CALTON HILL A1 REGENT GARDENS A1 BELFORD RD ROTHESAY PL A90 MELVILLE ST PRINCES STREET EDINBURGH CASTLE SCOTTISH NATIONAL GALLERY MARKET ST NORTH BRIDGE E MARKET ST ST MARY S ST NEW ST SCOTTISH PARLIAMENT BUILDING THE ROYAL MILE HOLYROOD RD DYNAMIC EARTH W COATES HAYMARKET STATION Prime City Centre Location W APPROACH RD A70 University Buildings Major Festival Sites YEAMAN PL PALMERSTON PL A8 MANOR PL A8 W APPROACH ROAD DUNDEE ST DORSET PL VIEWFO RTH AT HOLL CR E S GROVE ST GILMORE P ARK B700 GARDENE R S CRES GILMORE PLACE EICC FOUNTAINBRIDGE VIEWFORTH LOTHIAN ROAD SEMPLE ST LEAMINGTON TERRACE KING S STABLES RD CASTLE TERR LYCEUM THEATRE BREAD STREET 123 A700 LOCHRIN PL GILMORE PLACE TARVIT ST A702 KING S THEATRE JOHNSTON TERR LAURISTON GARDENS GRASS MARKET LAURISTON PL BRUNTSFIELD LINKS WARRENDER PARK TERRACE NATIONAL MUSEUM OF SCOTLAND GEORGE HERIOT'S SCHOOL MARCHMONT RD MELVILLE DR ARGYLE PL SYLVAN PL CHAMBER ST FESTIVAL THEATRE BUCCLEUCH PL PLEASANCE CLERK ST H GDNS MERCHIST MERCHISTON PA MONTPELIER SPOTTISWOOD GEORGE SQUARE THE MEADOWS PO TERROW NICOLSON ST BUCCLEUCH ST S CLERK ST ST LEONARD S ST E PRESTON ST HOLYROOD PARK RD DALKEITH RD A70 MPLE PARK CRES BRUNTSFIELD ARDEN ST HATTON PL SCIENNES RD NEWINGTON MI

11 123 FOUNTAINBRIDGE EDINBURGH EH3 9QG 11 Tenure hrin Square Bdy Heritable Interest (Scottish equivalent of English Freehold). We have measured the site area using Promap and estimate the site extends to 0.94 acres (0.38 hectares). Multiple Dwellings Relief / Land & Buildings Transaction Tax It is our understanding that Multiple Dwellings Relief (MDR) may be available for the sale however we would advise prospective purchasers seek the appropriate professional advice in this regard FOUNTAINBRIDGE Quayside House Tollcross Primary School Planning The property has full planning permission granted for purpose built student accommodation. The property is therefore exempt from the Private Housing (Tenancies) (Scotland) Act 2016 which comes into effect in 1st December Fountainbridge Square 18 WEST TOLLCROSS Lochrin Nursery School WEST Union Path Lochrin Basin

12 123 FOUNTAINBRIDGE EDINBURGH EH3 9QG 12 VAT The property is not elected for VAT. Management The property is currently managed by Mansion Group. This agreement will be terminated on sale though they may consider providing management services for a new purchaser, subject to terms. EPC The property has an EPC rating of E+. A draft Action Plan is available for the property, available on request. Capital Allowances Further information available on request. Investment Overview Edinburgh s status as a European capital city and global tourist destination has continually attracted both domestic and overseas capital providing a purchaser with a liquid and attractive market in which to invest. Consistent occupancy levels of 100% demonstrated over a number of years. Current rental levels offer a sustainable low base from which to grow student income. Opportunity to enhance gross rental position through refurbishment of the accommodation. Demand for bedrooms in the summer months is strengthened by the annual Edinburgh Festival and the city s strong language school market operating during July and August. Opportunity to negotiate new nominations agreement with the University of Edinburgh for 2018/19 to improve on current terms. Quoting price reflects a low capital value of 66,465 per bed space. Grant of new student accommodation planning permissions in Edinburgh is likely to become more challenging in the future, therefore limiting supply in good locations. Investment Proposal We are instructed to seek offers in excess of 22,000,000 (Twenty Two Million Pounds Sterling) for our client s Heritable Interest in the property which reflects a net initial yield of 7.06%, allowing for purchaser s costs at 6.26%.

13 13 CONTACT Calum Cowe Carolyn McEwan Russell Hefferan David Davidson MISREPRESENTATION ACT Cushman and Wakefield (and any joint agent appointed) on their own behalf and for vendors or lessors of this property, whose agents they are, give notice that: (i) These particulars are produced in good faith, but are a general guide only and do not constitute any part of a contract and must not be relied upon as statements or representations of fact. (ii) No person in the employment of the agent(s) has any authority to make or give representation or warranty whatever in relation to this property. (iii) the property is offered subject to contract and unless otherwise stated all rents and outgoings are stated exclusive of VAT. (iv) Floor areas, measurements or distances given are approximate. (v) Nothing in these particulars should be deemed a statement that the property is in good condition, or that any services or facilities are in working order. (vi) Unless otherwise stated, no investigations have been made regarding pollution, or potential land, air or water contamination. Interested parties are advised to carry out their own investigations as required. October 2017.