Well let student Freehold investment opportunity 20 Newport Road, Cardiff CF24 0DB shand house 4 5 shand house
Investment Summary
Freehold income-producing student accommodation asset in the heart of Cardiff City Centre. New 5-year nomination agreement with Cardiff Sixth Form College from 2017-18 for 141 beds / 75% of scheme. New agreement benefits from annual upward only rent reviews to CPI + 2.5% and capped at 4%. Fully operational asset with a 100% occupancy rate in last 4 years, managed by Host Students. Excellently situated at the edge of the city centre and in a short walking distance of main university campuses. The building is opposite the University of Cardiff’s School of Engineering and School of Computer Science & Informatics and within short walking distance of the main Cardiff University campus and the University of South Wales. The part new build, part converted building opened in September 2013 and offers a high standard of accommodation and recently refurbished communal areas. Only 28% of full time students in Cardiff have access to purpose built student accommodation (PBSA). The property is forecast to generate a core student Gross Operating Income of £1,335,315 for the 2017/18 academic year, plus ancillary income. Offers in excess of£16,330,000 which will show an attractive Blended Net Initial Yield of 6.13% after deducting purchasers costs of 3.22%. shand house 6
Higher Education in Cardiff Location
There are three main providers of Higher Education in Cardiff; Cardiff University, Cardiff Metropolitan University and the Shand House is situated at the corner of Fitzalan Place and Located on the edge of the vibrant city centre and within University of South Wales, which are respectively ranked 46th, 89th and 115th by the Times Good University Guide 2018. A4161 Newport Road. It is opposite the University of Cardiff’s walking distance of the St David’s shopping and leisure centre, The city has approximately 51,000 full time students with 20% of them being international students. School of Engineering and School of Computer Science & the residents can enjoy an array of bars, shops, cinemas and Informatics. It is a 300m walk south to the University of South restaurants. The property is also situated close to the Cardiff There are approximately 14,000 purpose built student accommodation beds in Cardiff, including both University owned and Wales Cardiff Campus and a 800m walk north west to the Central train station, allowing fast connections to London in 2 privately built stock and a limited pipeline beyond 2017/18 of only c. 3,000 beds. There is therefore a significant current and University of Cardiff. hours and bus connections to Cardiff Airport future under-supply of PBSA, with only 28% of full time students having access to PBSA.
Cardiff University is the highest-ranked Cardiff Metropolitan University is University of South Wales has focused C it Welsh university, resulting in both going into a partnership with an Asian investments on the £60-million Newport N d y o R d R R r tt th e d t applications and enrolments at record television company to build a new Knowledge Quarter and the ATRiuM rb r R o o d C p levels. The university recently opened Media and Communications campus Campus in the centre of Cardiff, where w e N ay a £44 million Brain Research Centre, for 2,000 students to enhance its a new building will add to the already CATHAYS dw a M ro STATION B o o which contains the most powerful international reputation. Recently the extensive facilities for creative industries C r
i l t a y n equipment of its kind in Europe, and university committed over £70 million students. The new building will include R Cardi University d
d C R a £30 million Science Development to improve the facilities of its two facilities for advertising, TV and film set a N d th o e r Centre. Moreover, the university has campuses, including a new campus design and fashion, as well as dance and d t ra h National Museum Cardi l R R d embarked on a £450 million masterplan centre. photography studios. d d t R or Cardi City Hall wp that will include a new Innovation Ne tes D an Cardi Sixth Form College Campus and a new library. Boulevard e N G l o t S s S p s n lo o io t Cardi School of at t C p ll Rd a F te d t Engineering i R s h t n R e z d o a C y University Total Full-time International Times Applicants d a r l a a n n e l M t R o Students Ranking Per Place P ir r d a u Cardi Castle l P l o Cardiff University 30,675 23,360 7,115 46th 7 C d St ge R Duke rid CARDIFF QUEEN wb Cardiff Metropolitan University 12,580 10,920 3,280 89th 4.6 Co W N STREET STATION ind e St David’s Hall s vi o l r le University of South Wales 25,265 16,670 3,465 115th 4.5 S R t d t St David’s Shopping Centre ll S L nda e Total 68,520 50,950 (74%) 13,860 (20%) Ty w University of South Wales, E i C s
l Cardi Campus R a Motorpoint Arena Cardi d r e Principality Stadium
S t Cardi Central Library Nin ian Par St k Rd d oo W T t O udo l S c r St al L nd e e Ty a n w i W s C a y R e d n t r a CARDIFF CENTRAL l
L i C STATION n k l
a
r
e
R d d R
h t r a n Pe L l C o e y n d t r G a l e o L i r n Principality Stadium g k e
A v Cardiff Castle e d Cardiff Central Station R h rt a n Cardiff University S e lo P pe r R C d o rp o ra The Red Dragon Centre tio St David’s Shopping Centre n Rd
GRANGETOWN CARDIFF BAY
C 2 STATION STATION 3 li 2 d v d 4 R e R le A h S a t d r t n aNot to scale – For indicative purposes only. o v n St Wales Millennium Centre e A James P Queen Street Station University of South Wales
Rd rry Cardiff School of Engineering Fe 2 23 4 A
Cardiff Sixth Form College shand house 8 9 shand house
Description
The former office was converted to student accommodation in 2013 and comprises student accommodation and 3 commercial units. The property is arranged over basement, ground floor and 5 upper floors. The basement comprises laundry, common room and a significant unused area. The ground floor provides a main reception, cycle store, manager’s office and an outside patio. The 190 beds are provided over the upper floors of the building and are arranged as a mix of self contained studios and 2-6 bed cluster flats with shared kitchen and dining facilities. Within the cluster flats, a mixture of basic, standard and deluxe bedrooms are available.
Room Type Room Area (sq m)
Ensuite room in Cluster Flats 14 – 16
Twin Flat 32
Standard Studio 21 – 23
Deluxe Studio 28 shand house 10 11 shand house
Tenancy
The property is currently part let to the Cardiff Sixth Form College also receive the benefit of Retail Unit 1 on the ground College. We understand that Cardiff Sixth Form College are in floor measuring 1,800 sq ft at a peppercorn rent for a term the process of being taken over by Duke Education. Therefore, coterminous with the accommodation agreement. the latest nomination agreement is issued in the name of the new owners. The remaining beds are let on a direct let basis. Retail Unit 2 (measuring 1,400 sq ft) and Retail Unit 3 (measuring 1,050 sq ft) are let to respectively Starbucks and A new 5-year Nomination Agreement has been signed for One Stop. The 10-year lease with Starbucks commenced in 141 of the 190 beds and will be starting on 1st September February 2014 and the rent payable is £22,500 per annum. 2017. The lease will benefit from annual rent reviews based The 15-year lease with One Stop commenced in April 2014 on the Consumer Price Index raised by 2.5% and capped at and the rent is £17,000 per annum. Both leases have a mutual 4%. The minimum rent payable on the starting date will be break option at the end of 5 years and an open market £972,351, as illustrated below. Moreover, Cardiff Sixth Form upward only rent review every 5 years. shand house 12 13 shand house
Accommodation and Income Profile
Student Accommodation A summary of the available accommodation and the forecast Net Operating Income is shown below. We assume that the property can be managed for £1,900 per bed per annum equating £361,000.
Room Types Beds Term 2017/18 Rent Gross Term (weeks) per Week (£) Income (£pa)
Standard 6 Bed Ensuite (Direct Let) 6 48 140.00 40,320
Standard 6 Bed Ensuite (Nomination Agreement) 24 45 142.80 154,224
Deluxe 6 Bed Ensuite (Direct Let) 12 48 141.00 81,216
Deluxe 6 Bed Ensuite (Nomination Agreement) 24 45 147.90 159,732
Standard 4 Bed Ensuite (Direct Let) 8 48 145.00 55,680
Standard 4 Bed Ensuite (Nomination Agreement) 16 45 142.80 102,816
Standard 2 Bed Flat (Direct Let) 14 48 148.00 99,456
Standard 2 Bed Flat (Nomination Agreement) 42 45 142.80 269,892
Standard 1 Bed Flat (Direct Let) 0 48 - -
Standard 1 Bed Flat (Nomination Agreement) 3 45 185.00 24,975
Standard Studio (Direct Let) 7 51 186.00 66,402
Standard Studio (Nomination Agreement) 24 45 178.50 192,780
Deluxe Studio (Direct Let) 2 51 195.00 19,890
Deluxe Studio (Nomination Agreement) 8 45 188.70 67,932
Totals and Averages 190 45.92 160.27
Gross Term Income 1,335,315
Direct Let 362,964
Nomination Agreement 972,351
Occupancy Void (1% on Direct Let) (3,630)
Net Term Income 1,331,685
Operating Expenditure (361,000)
Net Term Income after Operating Expenditure 970,685
Holiday Income 14,694
Ancillary Income 8,593
Net Operating Income 993,842
Total Income The total Net Income for 2017/18, including the revenue generated by the commercial spaces on the ground floor of £39,500 is forecast to be £1,033,342. shand house 14 15 shand house
Comparables Proposal Savills are instructed to seek offers in excess of£16,330,000 which will show an attractive Scheme Operator Beds Room Type Rent 2017/18* Blended Net Initial Yield of 6.13% after deducting purchasers costs of 3.22%. Eclipse Collegiate AC 671 6 Bed En-suite £137.00 The pricing reflects 6.10% on the student accommodation and 7.00% on the retail. 3 Bed En-suite £155.00 Linked Studio £165.00 Studio £177.50 Ultra Studio £215.00 Further Information The Fitzalan CRM 355 Bronze Studio £165.00 Silver Studio £170.00 Tenure VAT Gold Studio £185.00 Platinum Studio £199.00 Freehold. VAT is not expected to arise on the sale. Platinum Plus Studio £210.00 Windsor House Collegiate AC 321 Twodio £175.00 EPC Capital Allowances Studio £185.00 The EPC rating for the property is B. All EPC certificates are No capital allowances are available. Premier Studio £196.00 available in the data room. Ultra Studio £206.00 Deluxe Studio £211.00 *Given a 51 weeks contract
Contacts
James Hanmer Ross Griffin Lizzie Beagley Thibaut Pieters Director Director Director Financial Analyst +44 (0) 207 016 3711 +44 (0) 292 036 8961 +44 (0) 207 016 3863 +44 (0) 207 016 3761 +44 (0) 796 755 5897 +44 (0) 797 200 0113 +44 (0) 780 799 9174 +44 (0) 777 347 6312 [email protected] [email protected] [email protected] [email protected]
33 Margaret Street 12 Windsor Place 33 Margaret Street 33 Margaret Street London Cardiff London London W1G 0JD CF10 3BY W1G 0JD 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 8644 | May 2017