THE HUMBER PORTFOLIO

THE HUMBER PORTFOLIO

1 THE HUMBER THE HUMBER PORTFOLIO PORTFOLIO

Wellesley Avenue

Cranbrook Avenue Beresford Avenue

Investment Highlights

A portfolio comprising mainly freehold terraced student houses, situated close to the

> The majority of the properties are located under 1 mile of the main > 37 flats (incl. 82 bedrooms), with a total rent passing of £333,825 University of Hull campus on Cottingham Road pa > The portfolio includes 195 student let assets, comprising a mix of > 16 licensed HMO’s comprising 104 bedrooms C3, C4 (HMO) and sui generis uses > 4 commercial units with a current rent passing of £14,316 pa > 70% of the properties are held on 10 principal streets > Excellent opportunity to acquire the existing and well established > Current total residential rent passing of £3,222,747 pa,reflecting management platform an occupancy of 98.4% > Gross residential income of £3,227,282 agreed for the 2016/2017 > 159 houses (incl. 741 bedrooms), with a total rent passing of student year (801 of 823 bedrooms let) £2,888,922 pa

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which total 56,800 sq ft of Grade A Hull’s core destination is centred space multi-storey car park, which provides a accommodation, have attracted tenants around Queen Victoria Square, which lies large amount of footfall from people visiting such as PwC, Barclays, The Royal Bank of between the historic Old Town and the the city. The centre also comprises a Vue Scotland, Santander and Siemens. New Town. Surrounding the square are Cinema, 12 lane bowling alley and gym. the main shopping streets, which include ABP (Associated British Ports) are the A retail led development named Quay West Whitefrairgate in the Old Town and King leading provider of port facilities and services is currently under consideration and will Edward Street and Jameson Street in the to shipping and cargo owners via 21 UK extend the existing Prince Quay shopping New Town. House of Fraser, the premium ports. Their Humber operations support centre, transforming the local area and , is situated towards the end approximately 23,000 jobs in the area and creating a new ‘retail circuit’ with six new of Jameson Street, which offers a range of contribute £2.2 billion to the UK economy city blocks and a series of new streets and high end fashions concessions such as Ralph each year, and of that figure £1.56 billion is public spaces, linking the area with the St Lauren and Hugo Boss. retained within the region. Stephen’s and Prospect Shopping Centres. In 2007 the extension of St Stephen’s The investment is estimated to total £300 St Stephen’s Shopping Centre In 2014, Siemens and its partner ABP Shopping Centre was completed, it is the million and generate a c.£20m - £40m announced that it was investing £310 million most recent major retail investment project annual injection into the local economy. The in wind turbine production and installation within the city and is part of the wider salient features include 667,000 sq ft of facilities across 2 sites in the city. The Hull City Masterplan. It comprises over 45 retail space, two department stores, 60 new investment will provide a huge boost to the retailers and food outlets, and is conveniently shops, 175 bed four star hotel and 2,500 car UK’s offshore wind industry and the Humber situated outside the train station opposite parking spaces. region. The investments will create up to House of Fraser. In 2012 it was voted by 1,000 jobs directly, with additional jobs European City of Culture 2017 Retail Week as the UK’s Retail Destination of during construction and indirectly in the the year. Hull was also announced in 2013 as the supply chain. European City of Culture 2017. Over the Princes Quay is the largest shopping centre Retail course of 2017, the city will be host to a wide in Hull and is situated next to Queen Victoria array of art, music, drama and creative Hull has an extensive retail offering from high Square in the central retail district above events. Hull City Council are working with street giants to small independent shops. It is Princes Dock and is subsequently part public and private funders, businesses and well know for its diverse shopping experience suspended by stilts. It has been constructed Hull City Hall Hull train station trusts to deliver the programme of events. and abundance of brands. utilising large windows providing visitors with panoramic views of the Hull Marina and the Hull dock. Adjoining the building is a c. 1,000

Kingston-upon-Hull is situated along the northern side of the Humber estuary and has a total population of 256,400 (2011 Census). Whilst the higher education, and manufacturing sectors have A1(M) YORKSHIRE DALES played a significant role in the economic regeneration of the city, it is now witnessing the emergence of new growth sectors including wind energy, biomass and digital technology. This emergence comes at A59 the same time as a cultural renaissance in the city, following the announcement in 2013 that it is to be YORK A165 the European City of Culture in 2017. A54 A1(M) A64 Location Economy As the largest city in the area, Hull has A1079 established itself as an important hub for A19 The city is located approximately 40 miles to Hull developed through the middle ages as retail, commerce and manufacturing. Its the south east of York, 60 miles to the east of a port, from which wool was exported to business base is characterised by some Leeds, 70 miles to the north east of northern Europe. It remains a major gateway of the larger organisations such Arco, M62 and an equidistant 200 miles to and to the European Union, and where the raw BURNLEY Reckitt Benkiser, Smith & Nephew, Croda . materials of the Baltic region were imported International and P&O Ferries. into . Now some of the largest super M62 Hull train station provides regular services ferries in the world operate from the Humber The Public Sector accounts for the largest UK wide, including a direct service to A15 Port, which is the UK’s largest, multi-purpose proportion of jobs in the city. Key employers London Kings Cross (approximately 2h ports complex serving the north of the UK. include the Inland Revenue, Hull and East M62 37m), and Leeds (56m). Humberside Airport Yorkshire Hospitals NHS Trust, Hull City BARNSLEY (approximately 20 miles to the south of Hull) Hull’s economy has significantly changed over M180 Council, the Land Registry and the University has regular flights to destinations across the last 30 years and has been shaped by of Hull. Although located outside the city of the UK and mainland Europe, with British its location and history, with many industries Hull, BP Chemicals and BAE Systems are Airways and KLM both running services from developing from the combination of the also major employers of Hull labour. M1 the airport. port and rural surroundings. These include M18 A1(M) services such as bioscience, advanced Humber Quays One and Two, a regeneration engineering, food manufacturing and port waterside development, has become the SHEFFIELD and logistics. premier business district for Hull, raising the core availability of high specification office space within the area. The two buildings,

4 5 PEAK DISTRICT Lincoln A1 THE HUMBER THE HUMBER PORTFOLIO PORTFOLIO

The Portfolio Total rent Property type Total % bedrooms Total rent Total rent passing % bedrooms let Total rent pa Number agreed for by number of number tenanted for passing pa pw/bedroom for 16/17 (as at agreed for The portfolio comprises a total 195 student let assets (a mix of C3, C4 two storey terraced houses with gardens to the rear. On average each by type 16/17 pw/ bedrooms bedrooms 15/16 15/16 tenanted 15/16 24/02/16) 16/17 and sui generis uses) and 4 commercial units. The portfolio has been bathroom serves 2.93 bedrooms (34% provision per bedroom) across bedroom aggregated over the past 20 years through the acquisition of both the houses, whilst in the flats there is a bathroom for every 2.1 bedrooms individual student rental properties as well as via the purchase of smaller (48% provision per bedroom). 1 bed flat 19 19 100.0% £100,650 £101.87 100.0% £101,040 £102.27 student property portfolios. The residential properties in the portfolio are all held freehold. The The majority of the assets are located within 1 mile of the main University properties tenanted are subject to Assured Shorthold Tenancies (AST’s). 2 bed flat 7 14 100.0% £52,560 £72.20 85.7% £45,080 £72.24 of Hull campus, which is located just north of Cottingham Road and 1 and 2 bedroom flats are typically let on AST’s for 52 week terms. The south of Inglemire Lane. 70% of the residential properties within remainder of the properties are let on 50 week terms. The tenancy start 3 bed flat 4 12 100.0% £48,300 £77.40 100.0% £48,750 £78.13 the portfolio are concentrated over 10 principal streets. The largest dates typically commence on 1st August. concentrations being along Ash Grove (10.3%), Brooklyn Street (9.7%), 4 bed flat 3 12 100.0% £44,240 £70.90 91.7% £48,300 £84.44 Tenants rental payments are typically made in 4 installments across the De Grey Street (9.7%) and Beresford Avenue (8.7%). The spread of the year. An initial payment of approximately 7.5% of the total annual rent portfolio across the prime lettings area for 2nd and 3rd year students 6 bed flat 3 18 94.4% £60,250 £68.16 94.4% £68,175 £77.12 due is paid on 1st August. A further three payments (of equal amounts) attending the university, represents a rare opportunity to control a are paid on the 15th of October, January and April. All tenants are S significant proportion of the student housing market in the city. The 823 T 7 bed flat 1 7 100.0% £27,825 £76.44 100.0% £28,525 £78.37 required to provide a rental guarantor prior to keys being released. O bedrooms which the Humber Portfolio totals reflects 5.75% of the total C K Tenancies are currently granted to full time students. H number of full time students registered at the university in 2013/2014 E O T L Flats Subtotal 37 82 98.8% £333,825 £79.26 95.1% £339,870 £83.79 H M (HESA). M ER R The mix of the portfolio by property type and income per bedroom D A IN R ING G LEMI Y is provided adjacent, whilst the map indicating the location of the RE D T LN O 2 bed house 6 12 100.0% £44,280 £70.96 100.0% £44,040 £70.58 69.5% of the letting bedrooms within the portfolio are containedE within N N properties is shown below: D E

4, 5 and 6 bedroom houses. These properties are typically Victorian, D R

R 3 bed house 15 45 95.6% £170,485 £76.25 84.4% £154,625 £78.25 INGLEMI RE LN

C 4 bed house 57 228 98.2% £896,905 £77.00 97.8% £881,497 £76.02 R D ST A N DESMO N O BR R A INGLEMI M U OR O O E AV E N 5 bed house 46 230 98.7% £899,402 £76.19 99.6% £916,050 £76.93 THE UNIVERSITY C O D K K A L V OF HULL A L A ES E E V N LL Y WE E D A V 6 bed house 19 114 98.2% £443,200 £76.10 99.1% £457,475 £77.85

A E

V

E 7 bed house 11 77 100.0% £296,450 £74.04 98.7% £303,325 £76.75 E E GROV V ON A SALM D R FO ES 8 bed house 2 16 100.0% £64,400 £77.40 93.8% £61,125 £78.37 ER B O

A T N CO K S TTI

E NG HAM RD R N W D A 9 bed house 1 9 100.0% £38,025 £81.25 88.9% £32,600 £78.37 L C A C OTTINGH L N A M RD D VU K C P LOU R H GH RD 10 bed house 1 10 90.0% £35,775 £76.44 90.0% £36,675 £78.37 A A A R P A BROOKLYN R K R D W Y N D 1 CL 0 OU LA STREET D G NEW Y H O RD E 7 S R Houses Subtotal 158 741 98.4% £2,888,922 £76.21 97.6% £2,887,412 £76.80 A T 9 T H V

A E VENTNOR ST IN S H G

G S Grand total 195 823 98.4% £3,222,747 £76.51 97. 3% £3,227,282 £77.48 Accommodation T R

O

Warehouse V

E

C

H

A N

E R W Flats Houses L RAG T AND PARK LAN ST E 1%

R 1% 1% L D RA R AN ND LEXA A

D 4%

S T ALLDERIDGE AVE ST S A ON Y AFT A 3% V GR M

E

8% 7% 9%

T ST 2 bedroom SHAR ER A P ST MB LA B 12% B 8% 3 bedroom E T Y S 1 bedroom EY E GR B E W D 4 bedroom GODDARD AVE D E I A S V Y 2 bedroom K E 5 bedroom N

P MARSHALL ST R A 3 bedroom R L B 11% 6 bedroom IN REYN 51% OLDSO C N ST E 4 bedroom C N HE Y S L T E 7 bedroom A O ’ C S S L R 6 bedroom CU N D S S R D 36% S 8 bedroom U T N E

T E 7 bedroom QU A AIR ST 29% 9 bedroom V

E E LLA ST ELLA ST 19% 10 bedroom K AR N P RSO HULL CITY CENTRE PEA VICTORIA AVE VICTORIA AVE

NEY LN STEP For illustrative purposes only 6 7 THE HUMBER THE HUMBER PORTFOLIO PORTFOLIO

University of Hull

The University of Hull is situated on Cottingham Road to the north Currently the university provides accommodation for 2,601 students east of the city centre, within close proximity to the entire subject (this is largely comprised by The Lawns on campus) with further portfolio. accommodation for 150 students which is leased. A further 560 rooms are due to open on campus in 2016. The remainder is The University of Hull was originally established as University College provided by the private sector. Hull in 1927, before becoming England’s fourteenth university upon the grant of a Royal Charter in 1954 Within the city there are only 502 private direct let purpose built beds. 21.6% reflects the percentage of purpose built beds (University Major investments at the university include the redevelopment and private owned) in relation to all full time students. Therefore of The Brynmor Jones Library, at a cost of £27.4m. In addition a a significant proportion (78.4%) of the student accommodation further £2m has been spent on remodelling University House, which requirement is delivered typically in the form of HMO’s and accommodates student services and a refurbished students union. residential flats. It is anticipated that there will continue to be The university benefits from a 94 acre campus which has over recent significant depth of demand for the accommodation within the years seen new buildings provided for languages and chemistry, subject portfolio, which has been well positioned to benefit from this a Graduate Research Institute and a state of the art sport, health demand through an extensive programme of refurbishment. and exercise science laboratory. A summary of photographs of the campus are shown above and on the adjacent page. % of undergraduate and postgraduate students registered at the University of Hull in 2013-2014 (Source:HESA) The University’s six faculties offer teaching and research across a wide range of disciplines, including health, business, social sciences, the performing arts, education, science and engineering. The most recent statistics available by HESA from 2013-2014, 17% confirms that university currently had 11,950 full time undergraduate and 2,375 full time post graduate students. In addition the university had 2,335 part time undergraduate and 1,355 post graduate Undergraduate full time students enrolled. Post graduate full time 28.3 % of students were over 21 at the start of their studies in 2014 (mature students) and 11.3 % of full time undergraduates were overseas students (both EU and non-EU). 83%

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Sitting room 3 Ashgrove

Kitchen 16 Brooklyn Street Bathroom 49 Cranbrook Avenue

Kitchen 27 Brooklyn Street Bedroom 49 Cranbrook Avenue

Tenant profile Lettings of properties within the portfolio to 1st year students are minimal as the majority of them are housed by the University of Hull in University owned accommodation, which is common practice with most universities. The below pie chart shows the division of tenants of the properties within the portfolio by academic year of study for 2013/2014, 2014/2015 and 2015/2016 academic years. 2013/2014 2014/2015 2015/2016 1% 2% 1% 2% 1% 1%

6% 10% 8% 1st year 2nd year Bedroom 26 Suffolk Street Kitchen 3 De Grey Street 43% 3rd year 32% 55% 52% 38% 4th year 48% Postgraduate Commercial element

The portfolio also includes 4 commercial units with a current rent passing per annum of £14,316. These units are located in Alexandra Road, Beverley Road and Newland Avenue (x2) and are all held freehold. We have outlined these four units in the table below:

The retention rates provided below focus on Tenants may change houses because of 2013/2014, the portfolio benefitted from an the number of tenants that remain renting changes in group size, but as the portfolio of overall retention rate of 27.4% and in 2014 Current rent passing pa / Street Number Use Tenant Date of lease Term length a property within the portfolio from one properties is diverse it allows the landlords to /2015 the retention rate was 33.2%. ERV (where vacant) pa academic year to the next (whether this is attain higher retention rates. the tenant remaining in ths same property, or The below chart shows the retention rate renting another property within the portfolio). Mike Jordan of students. Considering all tenants in Alexandra Road 24a Garage TBC TBC £3,120 T/A Carcrafts Retention rate for 2013/2014 tenants Retention rate for 2014/2015 tenants Beverley Road 568 Retail Tina Rudland 10/10/2012 6 years £5,200 88.20% Newland Avenue 203 Retail Jadie Newton 15/09/2014 3 years £6,000 100%

Newland Avenue 207 Retail Vacant NA NA £5,750 (ERV) 46% 47.30% 10.90% 16% 7.60% 2.40% 0% 0%

1st year 2nd year 3rd year 4th year Post grad 1st year 2nd year 3rd year 4th year Post grad

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Operating costs Accommodation Warehouse

2015-2016 Rent Average contracted Total Gross Rent Type Assets Bedrooms Per Week length (weeks) 2015-2016 (52 weeks) The portfolio is currently managed under the usually commence around November for the occupied) and a leased property 107 Flats 37 82 50-52 £79.26 £333,825 trading name “Accommodation Warehouse” following academic year. In recent years the Cottingham Road. A 15 year lease is currently which was established around 1996. Although portfolio has been over 90% let prior to the in place with the Landlord of 107 Cottingham Houses 158 741 50 £76.21 £2,888,922 previously acting as an agency for multiple end of the calendar year. Road from 7th September 2010 on a rent landlords, it is now only involved with the passing of £10,000 per annum. This rent At the busiest times additional temporary Total residential income 195 823 50-52 £76.51 £3,222,747 management of The Humber Portfolio. includes the property 107a Cottingham staff are taken on, often being current or Road, a 3 bed flat which in turn is sub let out Accommodation Warehouse is a well former University of Hull students. Other income to students at a rate of £11,925 pa for both established, reputable, successful brand that £14,316 Tenants are made up of a broad cross the 15-16 and 16-17 academic years. Commercial income prides itself on providing students with a high section of nationalities. Accommodation quality of property and service. The vendors would consider the transfer Warehouse has especially close links with of the Accommodation Warehouse lettings Administration fees £82,300 The management operates with 3 full time students on Erasmus programes from business and lease, along with the sale of office staff made up of an office manager Bordeaux, Montpellier, Nuremberg and 105 Cottingham Road, as part of a wider Total Gross Income £3,319,363 and two office administrators. Advertising Münster Universities. portfolio sale. and promotion is carried out through social The office of Accommodation Warehouse Occupancy void at 1.6% -£38,021 media accounts (Facebook/ twitter), by currently occupies both the freehold 105 leaflet dropping, and by sponsoring some of Cottingham Road (this property is owner Utilities (755 tenancies in 2014 – 2015 incl. the University of Hull sports teams. Lettings -£430,380 utility costs)

Management costs including wages & -£165,361 office rent

Total net income £2,685,601

Occupancy Arrears

The Portfolio’s occupancy level as at 25/02/16 was 98.6 %. As at A system of parental rental guarantors and predominately joint 25/02/16, tenancies of 97.3% of the bedrooms (801 of 823) have and multiple tenancies limit the number of non recoverable been agreed for the 2016-2017 student year. arrears considerably. As of 26th February 2016 arrears stand at £15,947.28 for the 15/16 academic year including tenants no longer in Utility costs occupation. Further details will be provided within the dataroom.

For the 2015/2016 the rent payable of 93.7% (759 bedrooms) of the Refurbishment programme tenancies were inclusive of utilities. Over the course of the 2014- 2015 student year the utilities cost to the landlord equated to the The table above excludes refurbishment costs. The properties within following sum per tenant; internet: £110.19, water: £68.16, electricity: the portfolio are subject to a major proactive rolling programme of £164.47 and gas: £225.00. Further breakdown is provided within the refurbishment. The landlord has refurbished 46 % of the properties dataroom. with new kitchens and 48% with new bathrooms within the last 3 years. Within the last 3 to 6 years 48% of the properties have had Management costs new kitchens installed and 44% new bathrooms. White goods and furniture These costs include current staff costs, rent for the premises occupied by the Accommodation Warehouse, insurance of the properties The table above also excludes the cost of white goods and furniture. within the portfolio, summer cleaning of the properties, lettings costs All of the properties are fully furnished and include fridges, freezers, and seasonal staff. Further details are provided within the dataroom. washing machines, tumble dryers, vacuum cleaners and televisions. The bedrooms are relatively standardized to include a small double bed (c.4’), desk, chest of drawers, wardrobe, bookcase & bedside cabinet.

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Households in Multiple Occupation & Article 4 Directive

The current policy of Hull City Council is that properties over 3 or more story’s with 5 or more non-related occupants require to be licensed as Households in Multiple Occupation (HMO). As such 16 properties fall under this legislation, as follows:

Street Number Dwelling type Number of bedrooms Alexandra Road 24 Detached 5 Ash Grove 12 Mid-terrace 7 Ash Grove 35 Mid-terrace 9 Beech Grove 1 Detached 8 Beverley Road 413 End-terrace 10 De Grey Street 19 Mid-terrace 7 De Grey Street 21 Mid-terrace 7 De Grey Street 23 Mid-terrace 7 De Grey Street 25 Mid-terrace 7 De Grey Street 27 Mid-terrace 7 Grafton Street 39 Mid-terrace 5 Grafton Street 59 Mid-terrace 5 Grafton Street 61 Mid-terrace 5 Grafton Street 63 Mid-terrace 5 Grafton Street 65 Mid-terrace 5 Grafton Street 67 Mid-terrace 5

The remaining properties within the portfolio that comprise 3-6 unrelated occupants are HMO’s but are not required to be licensed as such at this time. Any future conversions from dwelling houses to HMO (licensed or otherwise) no longer falls under permitted developments having been removed as such across a wide area surrounding the University of Hull by Hull City Council through an Article 4 Directive. Hull City Council are being very proactive in enforcing this Article 4 legislation through the courts. This precludes current purchases of private residential properties then being let to students (without the necessary planning consents being secured) and thus enhances the value of the properties within the portfolio which are all exempt from the legislation due to their pre- existing use prior to the implementation of Article 4. Development potential

Whilst the existing landlords have delivered an extensive program of refurbishment of the properties, there is still considerable scope to add additional accommodation through development, subject to securing the necessary consents from the local authority. Examples include potential building plots (subject to planning) at 64-66 Grafton Street, the rear of 135- 139 Sharp Street, the rear of 35-39 Ash Grove, 25a Brooklyn Street and 24a Alexandra Road.

411 & 413 Beverley Road

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Further information

Energy Performance Certificates These are contained within the data room and are available upon request. The individual EPC ratings are included within the tenancy schedule provided within the dataroom.

Legal All the properties within the portfolio are held freehold. A dataroom containing all relevant legal documentation will be made available to interested parties. Walker Morris LLP (Leeds) will be representing the vendors. The lead contact is Ian Hartley. T: +44 (0)113 283 2500 E: [email protected]

Method of Sale The portfolio is being offered for sale by way of private treaty. Offers are sought for the freehold interests subject to contract and the current tenancies and leases. Should a closing date be set for the submission of offers, all interested parties will be informed.

Online Dataroom A data room is available at: www.savills.co.uk/thehumberportfolio containing the following information: > EPC’s > Internal and external photographs > Example ASTs > Commercial Leases > Tenancy schedule > Mapping of properties

VAT The portfolio is not subject to VAT.

Viewings Internal inspections will be possible strictly by prior arrangement with the selling agents. Please contact Savills for details and to arrange an inspection.

Wellesley Avenue 16 17 THE HUMBER THE HUMBER PORTFOLIO PORTFOLIO

Contacts

George Hepburne Scott Associate Director Residential Capital Markets – Investment 0207 016 3761 [email protected] James Watkins Investment Surveyor Residential Capital Markets – Investment 0207 409 8056 [email protected] Matthew Jones Director Leeds Development & Investment 0113 220 1252 [email protected]

33 Margaret Street London W1G 0JD

Important Notice: Savills, their clients and any joint agents give notice that: 1. They are not authorised to make or give any representations or warranties in relation to the property either here or elsewhere, either on their own behalf or on behalf of their client or otherwise. They assume no responsibility for any statement that may be made in these particulars. These particulars do not form part of any offer or contract and must not be relied upon as statements or representations of fact. 2. Any areas, measurements or distances are approximate. The text, photographs and plans are for guidance only and are not necessarily comprehensive. It should not be assumed that the property has all necessary planning, building regulation or other consents and Savills have not tested any services, equipment or facilities. Purchasers must satisfy themselves by inspection or otherwise. Designed and produced by Savills Marketing: 020 7499 9644 | February 2016 18 19 THE HUMBER PORTFOLIO

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