Student / Living

STUDENT / LIVING

INVESTMENT CONSIDERATIONS

• Prime student accommodation opportunity in • Commonwealth Games in Glasgow in 2014 core city centre location, fully let for 2013/14 will help bolster the city’s international reputation • Additional income from Sainsbury’s and Ask Restaurants • Potential to increase future income by continuing to move all student • 133 bedroom studio accommodation (140 accommodation contract lengths to 51 weeks beds), providing an average bedroom size of 27.14 sq m and excellent common facilities • Savills are instructed to seek offers in excess of £16,500,000 (sixteen million five • Highest specified scheme in Glasgow. The hundred thousand pounds) for the heritable property is a former lifestyle boutique hotel, title of the property, which reflects a net initial extensively refurbished and converted to yield of 6.40% on the student income, 6.00% student use in 2011 for the Sainsbury’s and 6.75% on the Ask unit, assuming purchaser’s costs of 5.80%. • Glasgow is a renowned and established The asset is for sale inclusive or exclusive of centre for higher education, boasting three the retail element. The SPV is also available main universities and a full time student to purchase and details can be provided on population of 50,450 request. • Excellent location within the heart of the city in close proximity to university campuses including Glasgow Caledonian and Strathclyde universities 4

A R

LOCATION A

C E

A81

Glasgow is Scotland’s largest city and one of

A879

the largest in the United Kingdom boasting

G five recognised higher education institutions. C A R RSCU A

M I The city has seen particularly strong economic G SIGHTHILL A H R B Y A PARK H E L I R growth and development in recent years and L L L D R R has a population in the order of 600,000 and a A82 D D GREA T WE STER M8 catchment area of over 2 million. N RD

University of Glasgow The city which is situated in the Central Belt of Scotland benefits from excellent transport Glasgow Caledonian connections by road, rail or air. Access to the University

W GRAHAM ST extensive motorway network that surrounds C OW CAD Glasgow has been further improved by the The Glasgow DENS RD completion of the M74 extension link. The rail School of Art RCS ST network links Glasgow to a wide commuter RENFREW ST RENFREW ST KELVINGROVE catchment and trains run every 15 minutes A PARK City of Glasgow RG SAUCHIEHALL ST SAUCHIEHALL ST Y SCOTT ST LE S College University of between Glasgow and Edinburgh. Over £200m T BATH ST BATH ST Strathclyde has been invested in the airport in recent years W REGENT ST W REGENT ST QUEEN ST STATION

and an average 20,000 passengers pass through N HANOVER W GEORGE ST GEORGE ST DUKE ST every day. M8 GEORGE SQUARE AR GYL ST. VINCENT ST ST. VINCENT ST E S T W CAMPBELL ST T W NILE ST The property is located next to Buchanan Bus NT S INCE ST. V WILLIAM ST BOTHWELL ST ST

Station, Glasgow’s main bus terminal which H G

PITT ST HI BISHOP LN WATERLOO ST

serves c. 40,000 passengers each day.

W NILE ST

EXPRES ESIDE SWAY LYD C Tourism is a continuing growth sector within

HOPE STREET

ARGYLE ST ARGYLE ST TRONGATE

GALLO TE WGA

ST A814

S the city with over 2 million overnight visitors S

R CENTRAL C

OB ST and in addition, the city is a rapidly expanding STATION

YORK ST conference destination, both of which offer ET K R CLYD AW E ST opportunities to maximise summer income, IEL MA OM T BRO

AL S subject to term lengths.

LANCEFIELD QUAY

CLYDE PL T S GLASGOW

GREEN

The city centre provides a huge variety of retail R IVER CLYDE

offer from high street multiples to boutiques D Y R ISLE COMMERCE to international flagship stores. The city ranks PA NELSON ST number one on the PMA retail provision score A8 out of the UK’s top 200 retail centres and is the FESTIVAL RD LEY PARK AIS UK’s second largest retail centre after London. P Not to scale - for identification purposes only 5

SITUATION

The property is located prominently on a prime Glasgow International airport is approximately street corner site at the junction of Port Dundas 8 miles to the west of the centre of the City and Road and Killermont Street opposite the is accessible by a regular shuttle bus service entrance to The Glasgow Royal Concert Hall. leaving at ten minute intervals throughout the day from George Square. The property also The property is on the doorstep of both benefits from easy access to Glasgow’s Subway Buchanan Street and Sauchiehall Street, two of network, which is located within 350m. the city’s three principal retail thoroughfares. The Buchanan Galleries shopping centre is The asset is within close walking distance of located directly across the road. a number of higher education institutions within Glasgow. The property sits on the main This is a prime location within the city centre, pedestrian route to Glasgow Caledonian close to retail and leisure facilities as well University’s campus on Cowcaddens Road, as being easily accessible to transport links which runs parallel to the north of Killermont including the M74 and M8 motorways. Street. The main campus of the University of Strathclyde is situated on George Street and Buchanan Bus Station (the main Glasgow bus teaching buildings can be accessed from terminal providing bus services across Scotland the north of the campus site on Cathedral and south) lies immediately to the east of the Street, the entrance for which is approximately property and Queen Street Station, providing 750m to the south east. The University of regular rail services across the central belt of Glasgow is situated in the West End of the city Scotland and beyond, is within 500m to the approximately 2.3 km to the west, but is easily south east. accessed via subway. The property’s central position means that it benefits from high footfall and significant ‘walk- in’ student trade, reducing marketing costs. 6

BUCHANAN BUS ROYAL CONCERT QUEEN STREET GEORGE STATION HALL STATION SQUARE

UNIVERSITY OF STRATHCLYDE

CITY OF GLASGOW COLLEGE

GLASGOW CALEDONIAN UNIVERSITY

ROYAL CONSERVATOIRE BUCHANAN SUBWAY CENTRAL BUSINESS OF SCOTLAND GALLERIES STATION DISTRICT 7

HIGHER EDUCATION IN GLASGOW

Universities Glasgow Caledonian University has a strong There are five recognised higher education international presence with campuses in 2014 Times Applicants University Total Full-time International institutions in Glasgow, with a sixth - The London, New York and Bangladesh and Ranking Per Place City of Glasgow College, which was formed partnerships in China, India, South America and Oman. They have invested heavily in facilities in 2012 through the merger of Glasgow’s University of Glasgow 26,295 20,745 5,235 25 6.9 colleges, Central College Glasgow, Glasgow and teaching spaces at the Glasgow campus Glasgow Caledonian Metropolitan College and Glasgow College which is located in the town centre and have 16,120 12,380 2,035 81 6.1 University of Nautical Studies. There are three main attendees from over 100 countries currently universities; Glasgow, Caledonian and studying in Glasgow. The University of 19,755 14,780 2,815 42 6.2 Strathclyde, all of whom feature on the Times Strathclyde The Scottish Government has abolished tuition Good University Guide and have significant full fees for all students from Scotland and the The Glasgow School of Art 1,720 1,655 495 - - time student populations. All universities are EU (excluding England, Northern Ireland and investing heavily in their campuses. Royal Conservatoire 895 890 195 - - Wales) who study at Scottish universities. This Total 64,785 50,540 10,775 Founded in 1451, the University of Glasgow has kept application numbers from EU students is the fourth oldest in the English speaking particularly strong. Source: HESA 2011/12, The Times 2014 world and was ranked 51st in the QS World Purpose Built Student Housing in Glasgow Rankings 2013/14. In recent years, the University Student Housing - No. of student houses in Glasgow has worked hard to build its international There are approximately 10,789 purpose reputation and this has started to show in built student accommodation bedrooms in overseas recruitment numbers. In July of this Glasgow, including both University owned and 50,540 year the University successfully purchased privately built stock. This equates to only c. Current demand a neighbouring landholding, allowing it to 21% of full time students being able to access (full-time higher education students) now review, redevelop and expand the main such accommodation which is significantly campus, adding to their extensive on-campus lower than the UK average and points to a Undersupply investment of recent years. supply and demand imbalance within the (current demand minus current supply) city. Approximately 60% of purpose built 39,751 The University of Strathclyde was established in accommodation is provided by the universities, Current Supply 1796 during the Scottish Enlightenment and has and 40% by the private sector. (university and private accomodation maintained a strong focus on Technology. It is combined) in the process of investing £350m in its campus and was the THE UK University of the Year 2012. 10,789 8

DESCRIPTION

The property is arranged over basement, ground, mezzanine and five upper levels and is of modern steel frame construction having elevations comprising sandstone blockwork interspersed with double glazed panels. The frontage to Killermont Street incorporates a glazed atrium feature.

The converted former lifestyle boutique hotel has been in operation as student accommodation for approximately two years and comprises a total of 133 en-suite studio units incorporating 140 beds. These are arranged as single level studio units of between 20 and 28sq m, split level studios between 31 and 35sq m and two bedroom units known as “twodios”The Gallery Apartmmeasuringents, 2 Port 47sq Dundas m Place, plus. Glasgo Thew, G2 3LD bedrooms provided are significantly larger in size than typical student bedrooms and are rented on an all inclusive basis, to include all

utility bills, TV licence and 12MB broadband. 24

Britannia TCBs Building Posts

William Harley Library

PORT DUNDAS

Subways

5 16

RO C Hotel OWC ADDEN AD S Shelter ROAD

Car Park ta 29.9m Multistorey Car Park

RT D 1 UNDAS PLACE

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Posts Bus Station

TRE ET 10 Statue Area : 0.111 ha (0.275 acres)

Shelter K ILLER MONT ST REET

Glasgow Royal Concert Hall

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ACCOMMODATION

The studios are finished to a high specification and size which significantly exceeds that of other existing studios offered to the Glasgow student accommodation market. The average bedroom size is 27.14 sq m. It is our view that no other schemes are comparable in specification or amenity. All bedrooms include king sized bed, wall mounted flat screen television and large bathroom. Finishes to fixtures and furnishings include hardwood veneered wardrobes and clothes storage, high gloss lacquered kitchen units and open storage finishes and hardwood timber laminate floors throughout.

Common areas include gym, cinema room, common room, study room, laundry and cycle store.

The commercial units are on ground and basement levels. The Sainsbury’s comprises 277 sq m (2,981 sq ft) of gross retail space at ground floor level with a further 128 sq m (1,382 sq ft) of basement storage. The Ask Restaurants comprises a total gross internal area of 411 sq m (4,424 sq ft) with a customer area of 277 sq m (2,981 sq ft). 10

Studios ACCOMMODATION Core SCHEDULE

Room Type Number of Beds

Studio 9 Classic Studio 77 Large Studio 12 Deluxe Studio 8 Split Level Studio 14 Premium Split Level 6 2 bed apartment 14 Total 140

Typical upper floor Not to scale - for identification purposes only 11

Studios Core INCOME TENURE

Student Accommodation Average Average Rent Heritable Interest Bedroom Type No. Occupancy Rent The majority of bedrooms are let directly to Term Per Week students and subject to ‘standard’ form short Studio 9 51 £155.00 99% £70,434 assured tenancy agreements for 44 and 51 PLANNING week occupancy terms. There are 16 rooms Classic Studio 77 47.8 £172.85 99% £630,066 under nomination agreement to the University Large Studio 12 49.3 £194.39 99% £113,736 Under planning decision notice (ref: 10/02753/ of Glasgow for 2013/14. The University pay DC) dated 10th March 2011, full planning Deluxe Studio 8 51 £210.00 99% £84,823 £136,765 which is in line with direct let rents consent was granted for the Park Inn Hotel for achieved at the scheme. Split Level Studio 14 48.5 £218.24 99% £146,703 the ‘Use of hotel and restaurant/bar as student Premium Split Level Studio 6 51 £250.00 99% £75,735 residences with restaurant and retail unit at The property is fully let for the 2013/14 academic ground floor level’. Further information can be year, as it was for 2012/13 and an income 2 Bed Apartment 14 48 £151.96 99% £101,099 provided on request. summary is shown in the table opposite. Projected Sundry Income £4,490 CRM, the largest third party manager of Projected Summer Income £45,092 EPC student accommodation in the UK, currently Total Gross Income £1,272,177 manage the scheme. The contract with CRM is Management Costs at £2,400 per bed per annum -£336,000 The EPC rating for the studio bedrooms is F85. determinable on change of ownership. The commercial units, let to Sainsbury’s and Total Net Income £936,177 For further information on their marketing of this ASK Restaurants, currently have a rating of E71 scheme, please go to: and G177 respectively. The EPC certificates of Retail Units each individual unit are available upon request. www.crm-students.com/crm- The two commercial units on ground floor are let to Sainsbury’s Supermarkets Limited and Ask accommodation/glasgow/gallery- Restaurants Limited respectively. apartments/ VAT The retail unit is let to Sainsbury’s Supermarket Limited for 15 years from 10 April 2012 on effective The estimated range of operating costs in full repairing and insuring terms, subject to a tenant only break at year 10 on six months written Provided the buyer complies with the relevant running the property including management notice. Rent reviews are 5 yearly to RPI subject to a cap and collar between 2-4%. The current conditions, the sale of the property should fee is between £2,300 - £2,500. passing rent is £90,000. There will be a minimum uplift to £99,369 in April 2017. As at October 2013, qualify as a VAT-free transfer of a going concern Sainsbury’s Supermarket Limited was rated by Dun & Bradstreet as 5A1 representing a minimal risk (TOGC) and as such, no VAT should be payable The property currently benefits from ‘Halls of of business failure with tangible net assets estimated at £4,509,000,000. on the acquisition. Residency’ status and is therefore not subject to council tax. The restaurant is let to Ask Restaurants Limited for 25 years from 7 November 2011 on effective full repairing and insuring terms, subject to a tenant only break at year 15 on six months written notice. Rent reviews are upward only 5 yearly. The current passing rent is £90,000, which equates to a low passing rent of only £20.34/ sq ft. As at October 2013, Ask Restaurants Limited was rated by Dun & Bradstreet as 5A1 representing a minimal risk of business failure with tangible net assets estimated at £137,816,000. 12

C A P I TA L Est. costs at Net Initial Reversionary PROPOSAL ALLOWANCES £2,400/bed Yield Net Yield* Savills are instructed to seek offers in excess of No MDR Purchasing Costs Value (2013/14) (2014/15) There is an unclaimed pool of capital allowances £16,500,000 (sixteen million five hundred in the order of £2,200,000 and these can be Student Accommodation 5.80% £13,821,991 6.40% 6.74% thousand pounds) for the heritable title of the property, which reflects a net initial yield acquired subject to negotiation. Further details Ask Restaurant 5.80% £1,260,239 6.75% 7.42% on request. of 6.40% on the student income, 6.00% for Sainsbury’s 5.80% £1,417,769 6.00% 6.51% the Sainsbury’s and 6.75% on the Ask unit, assuming purchaser’s costs of 5.80%. The asset SDLT Total / Avg. 5.80% £16,500,000 6.39% 6.77% is for sale inclusive or exclusive of the retail element. The SPV is also available to purchase The purchaser should be able to claim Multiple and details can be provided on request. Dwellings Relief (MDR) with respect to the Assuming MDR student accommodation element and we would Student Accommodation 2.80% £13,821,991 6.59% 6.94% CONTACTS advise seeking the appropriate professional advice in this regard. The table opposite Ask Restaurant 5.80% £1,260,239 6.75% 7.42% demonstrates the potential impact on yield Marcus Roberts James Hanmer should MDR be claimed. Sainsbury’s 5.80% £1,417,769 6.00% 6.51% 020 7016 3799 020 7016 3711 07807 999 187 07967 555 897 Total / Avg. 3.29% £16,500,000 6.55% 6.94% [email protected] [email protected] DATAROOM * Note Cheryl Jackson Bruce Patrick 0131 247 3726 0141 222 5873 For further information please register at: - Student accommodation: it assumes to increase the weighted avg. rent by 4% and move the weighted avg. term to 50.3 weeks; Costs are assumed to increase by 2.5% on avg. 07967 555 829 07870 555 816 www.savills.com/galleryapartments - Retail units: assumed RPI increase at 3.3% p.a. [email protected] [email protected]

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 | November 2013