Valuation Report of. Ty Glyn High Street Bangor Gwynedd LL57 1YH

Transcription

1 Valuation Report of Ty Glyn High Street Bangor Gwynedd LL57 1YH 18

2 Contents 1. Summary Instructions Purpose of Valuation Asset Type & Classification Scope of Instruction Bases of Valuation Assumptions Valuation Procedure Conflicts of Interest Liability The Property Location Description Accommodation Condition Statutory Enquiries Highways Planning Property Taxation Equality Act 2010 & Disability Discrimination The Regulatory Reform (Fire Safety) Order Services Site and Ground Conditions Environmental Issues Asbestos Flooding Energy Performance Certificates Tenure Occupational Leases and Other Agreements The Market Market Trends & General Comments Bangor Comments Property Specific Comments Comparable Transactions Valuation Valuation Considerations SWOT Appendices Appendix I Photographs

3 Appendix II Site Plan Appendix III Tenancy Information Appendix IV Sales Particulars Appendix V Letter of Instruction

4 1. Summary Report Date 18 th Addressee Rob Weaver, Investment Director Property Partner 71 Queen Victoria Street London EC4V 4AY Purpose Of Valuation Internal purposes The Property Ty Glyn High Street Bangor Gwynedd LL57 1YH Description The subject property comprises a former HM Revenue & Customs building which is believed to date back approximately 60 years. The building was comprehensively reconfigured and refurbished in 2014 to provide a total of 60 self-contained studio apartments, in addition to an office / reception, lounge, games room and storage. Each studio is self-contained in nature and contains a double bed, desk, fitted kitchen and en-suite shower room. The subject premises are situated to the northern side of High Street, adjacent to its junctions with Glynne Road and Maes-Y-Dref, within the city of Bangor. The core of Bangor city centre is situated approximately 0.25 miles south and is marked by the Clock Tower, adjacent to which is the Deinol Shopping Centre. Area We calculated the building to extend to circa 1,218.4 m2 (13,114 sq ft) (NIA) upon a site of approximately acres. Tenure Freehold 1

5 Tenancies We are advised that the subject property produced a net rental income of 337,673 for the 2016/2017 academic year, with approximately 330,000 forecast for the 2017/2018 academic year. Likely occupational and investor demand and likely purchasers; Should the property be offered for sale once again, we would anticipate interest in the form of student property investment specialists and institutional investors. We would also envisage a good level of interest from overseas investment vehicles with demand driven by the fall in Pound Sterling since the well documented EU Referendum. Volatility of property performance, capital value and rental value or maintainable operating profits; The student investment market has been relatively non-volatile over the past 5-10 years, with prime rents and yields rising year on year. The material conditions attaching to existing planning consent(s) /Section 106 or Section 38 Agreements; N/A Any title issues requiring further investigation; N/A Any pertinent issues, whether adverse or otherwise, requiring further investigation; N/A Necessary capital expenditure None Opinions of Value Valuation Bases Market Value (MV) subject to the existing tenancies in place Ty Glyn, High Street, Bangor, Gwynedd, LL57 1YH 4,535,000 (Four Million Five Hundred and Thirty Five Thousand Pounds) Market Rent (MR) 330,000 p.a. * (Three Hundred and Thirty Thousand Pounds) 2

6 Reinstatement Estimate An estimate has been arrived at using an instantaneous basis of value, adopted without regard to future inflation and without provision of loss of rent, any consequential loss or VAT. However, the estimate includes allowances for demolition, site clearance and professional fees. 2,500,000 (Two Million Five Hundred Thousand Pounds) NB This summary should be read in conjunction with the full report attached hereto. 3

7 2. Instructions We refer to your ed instructions dated Thursday 7 th, a copy of which is appended to our report. You have requested valuation advice in respect of the above student investment premises and we are pleased to report as follows: 2.1. Purpose of Valuation You have informed us that our valuation is to be prepared for internal purposes Asset Type & Classification It is our understanding that the asset to be valued is a Freehold student investment premises which contains a total of 60 self-contained studios Scope of Instruction The property has been valued on the bases requested, as defined in VPS4 of The Red Book. You have specifically requested our opinion of value on the following bases: Market Value (MV) subject to the existing tenancies in place Market Rent (MR) In accepting your instruction we confirm the following: The valuation date is at the date of this report, 12 th. That we carry Professional Indemnity Insurance on a per claim basis which is adequate in respect of this instruction. This report has been prepared by David Haugh MRICS (Associate Partner) under the supervision of Ian Naylor MRICS (Partner) who accepts responsibility for this report, has sufficient skills, knowledge and understanding to provide an unbiased and objective valuation and undertake this instruction competently, is a member of the RICS Valuer Registration Scheme and is qualified to provide this advice as an External Valuer in accordance with PS2 and VPS3 of the RICS Valuation Global Standards (July 2017) published by The Royal Institution of Chartered Surveyors (RICS) ( The Red Book ). The property was inspected on Friday 8 th, in cold weather conditions. We have not made any investigations into the Capital Allowance position in respect of the subject property in the preparation of this valuation; we recommend that the purchaser of the property makes their own investigations to satisfy themselves in this respect. 4

8 2.4. Bases of Valuation As requested, the property has been valued on the following bases as defined in PS3 of the RICS Valuation Standards; Market Value (MV) The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. Market Rent (MR) The estimated amount for which a property, or space within a property, should lease (let) on the date of valuation between a willing lessor and a willing lessee on appropriate lease terms in an arm s length transaction after proper marketing wherein the parties had acted knowledgeably, prudently and without compulsion Assumptions We append a report on the property, including descriptions and notes as to location, extent and features of the site, construction and accommodation of the buildings, their apparent condition and the results of enquiries of the various authorities. We also include an extract of the Ordnance Survey plan showing the extent of the site, as we understand it to be, outlined in red and include some photographs. Details of the extent of the property, tenure, tenancies, permitted uses and related matters have been supplied by your customer. Where possible this information has been checked on site Valuation Procedure This Valuation has been prepared in accordance with the RICS Valuation - Global Standards (July 2017), published by the Royal Institution of Chartered Surveyors ( RICS ) ( the Red Book ) and the IVSC International Valuation Standards (IVS) Conflicts of Interest We have no conflict of interest in providing this advice and, having checked our records, we understand none of the Partners nor employees of Sanderson Weatherall have had any other fee earning relationship within the last two years with your customers, nor the subject property, apart from the fee for this present service Liability Our valuation is provided for the stated purpose and is for the use of the addressee only and no responsibility is accepted to any other party for the whole or any part of its contents. In particular, our liability is not extended to your customer, nor to any other party or financial institution to whom your customer, in the event of obtaining a copy, might show this report. 5

9 Neither the whole or any part of this report, or any reference thereto, may be included in any document, circular, or statement nor our opinions of value disclosed without our prior written approval of the form and context in which they will appear. David Haugh MRICS Associate Partner, Valuation Services RICS Registered Valuer RICS Registration Number Ian Naylor MRICS Partner, Valuation Services RICS Registered Valuer RICS Registration Number 18 th Authorised to sign for and on behalf of Sanderson Weatherall LLP 6

10 3. The Property 3.1. Location The subject property is situated to the northern side of High Street, adjacent to its junctions with Glynne Road and Maes-Y-Dref, within the city of Bangor. The core of Bangor city centre is situated approximately 0.25 miles south and is marked by the Clock Tower, adjacent to which is the Deinol Shopping Centre. The main campus of Bangor University is situated approximately 0.50 miles west and is within comfortable walking distanced to the subject site. Bangor Railway Station is located approximately 0.60 miles south of the subject property which provides links to Chester in circa 1 hour and to London in 3 hours & 15 minutes. Bangor is a city in the Gwynedd Unitary Authority in North West Wales, and is one of the smallest cities in the UK and the oldest city in Wales. Bangor lies on the coast of North Wales, near the Menai Strait which separates the island of Anglesey from Gwynedd. There are two rivers within the boundaries of Bangor; the River Adda and the River Cegin. Bangor Mountain is situated to the east of the city, with the highest mountain in Wales, Snowdon, approximately 14.0 miles south. The general location of the property is illustrated on the following Ordnance Survey extracts: 7

11 Not to Scale 3.2. Description For the purposes of this instruction, we do not intend to describe the forms of construction adopted in detail, and would instead refer you to our photographs within this report and appendices, but would state the following. The subject property comprises a former HM Revenue & Customs building which is believed to date back approximately 60 years. The building was comprehensively reconfigured and refurbished in 2014 to provide a total of 60 self-contained studio apartments, in addition to an office / reception, lounge, games room and storage. Each studio is self-contained in nature and contains a double bed, desk, fitted kitchen and en-suite shower room. The building itself is formed of three storeys, plus basement level, and is of stone and rendered infill blockwork construction, surmounted by a pitched, timber framed, slate covered roof. Windows are upvc framed with double glazed panels. Heating is provided to the bedrooms and communal areas via wall mounted electric storage heaters. Hot water is provided via independent gas fired boilers although these were not observed upon our inspection. Internally, each studio benefits from a laminate covered floor with the exception of the bathroom floor which is vinyl covered. Walls and ceilings are of painted plaster and incorporate fluorescent lights. The various kitchens are of a modern fitted nature and contain a sink and microwave oven. Each en-suite bathroom contains a sink, WC and shower. 8

12 Front Elevation Typical Studio 9

13 3.3. Accommodation A summary of the accommodation provided is detailed in the table below: Description Approximate Net Internal Floor Area m² sq ft Basement Storage, Laundry & Games Room ,555 Ground Floor Office / Reception, Lounge, x18 Studios (A1 A18) & Accessible WC ,873 First Floor X21 Studios (B1 B21) ,753 Second Floor X21 Studios (C1 B21) ,933 1, ,114 The above areas have been ascertained from historic plans you have provided us with. We cross checked the above areas with check measurements taken on site and found them to be correct Condition We have not carried out a building survey and our comments that follow should not be regarded as such. Externally, the building appeared to be in a solid state of repair, commensurate with its age, nature of use and forms of construction adopted. Internally, the building was comprehensively re-conditioned and refurbished in Resultantly the various studios and communal areas were found to be in a good state of repair. We would recommend that a planned schedule of maintenance is instigated in order to preserve the condition of the building Statutory Enquiries Highways From enquiries made of the local Highways Authority we understand that the main roads and footpaths in the vicinity of the property are made up and adopted. As such we assume there are no outstanding liabilities pertaining to the property Planning The subject site is unallocated within the Anglesey and Gwynedd Joint Local Development Plan adopted July

14 The building is not Listed nor is it situated within a Conservation Area. As outlined above, the building was comprehensively reconfigured and refurbished in 2014 to provide a total of 60 self-contained studio apartments. We are aware that the above works were undertaken in accordance with the following planning consent REF: (C13/0545/11/LL). Our valuation assumes that all conditions and obligations were adhered to Property Taxation We understand that each flat is assessed within Council Tax Band A. Students are exempt from paying council tax, although council tax is payable for any empty units Equality Act 2010 & Disability Discrimination It should be noted that our inspection of the premises does not constitute an accessibility audit for Equality Act purposes. However, during our brief inspection the following features of the property were noted, and may be worthy of further consideration: No passenger lift access to each floor The Regulatory Reform (Fire Safety) Order 2005 We have not had sight of any Fire Safety Assessment for this property. We recommend that the occupiers take appropriate measures to ensure that they are in compliance with the legislation. Our valuation assumes that a Fire Safety Assessment has not been carried out but that the findings of any such report would not be valuation significant Services Mains services: Heating: Lifts: Other: We understand that all mains services are connected and available to the site. Heating is provided via wall mounted electric storage heaters. None. High speed broadband Concierge CCTV coverage Bike store None of the above services were tested during the course of our inspection of the property Site and Ground Conditions Site Area hectares (0.336 acres) 11

15 Notes on Site The subject site is irregular in shape and slopes down gently from north to south. The building is positioned centrally within the site and faces south onto High Street itself from where pedestrian access is granted. There are two small car parks to the east and west of the building which provide a total of x12 car parking spaces. The northern boundary of the site is marked by an adjoining Army Careers Office, with the southern boundary marked by High Street itself. The eastern boundary of the site is marked by Glynne Road, with the western boundary of the site marked by a combination of adjoining residential sites (22 & 24 Maes-Y- Dref) and Maes-Y-Dref itself. The extent of the site boundaries, as we understand them are shown edged red on the 1:1250 scale Ordnance Survey extract attached within Appendix II Environmental Issues We are not Chartered Environmental Surveyors and we have not been instructed to make any investigations, in relation to the presence or potential presence of contamination or other environmental features in land or buildings or affecting the property. We have not carried out any investigation into past uses, either of the properties or any adjacent land, to establish whether there is any potential for contamination from such uses or sites, and have therefore assumed that none exists. In practice, purchasers in the property market do require knowledge about contamination and other environmental factors. A prudent purchaser of this property would be likely to require appropriate investigations to be made to assess any risk before completing a transaction. Should it be established that contamination does exist, or the property is affected by other environmental factors, this might reduce the value now reported. No indications of past or present contaminative land uses or other environmental features were noted during our inspection. Our inspection was of a limited visual nature and we cannot give any assurances that previous uses on the site or in the surrounding areas have not contaminated subsoils or groundwaters. In the event of contamination being discovered or if it transpires there are other environmental features specifically affecting the property, further specialist advice should be obtained. You are advised to ensure that your legal adviser takes up the usual enquiries on your behalf, in respect of possible contamination or environmental issues, prior to entering into any commitments. Given the site s historic non-contaminative uses and central location within the city of Bangor, we anticipate limited risk in an environmental respect Asbestos Our inspection of the property does not constitute a survey in compliance with Government Directives and as such we will not comment in detail on any potential asbestos containing materials believed to be present in the property. We understand that the building dates back approximately 60 years and resultantly there may be traces of asbestos throughout the structure. It may also be the case that the asbestos was removed as part of 12

16 the conversion works in However, we do not believe this to be valuation significant. Our valuation assumes the findings of an asbestos survey would not be valuation significant Flooding We have made informal enquiries to Natural Resources Wales and we do not believe the site to be at immediate risk of flooding. However, we would advise that appropriate flood insurance is obtained Energy Performance Certificates The subject property has an Energy Performance Asset Rating of 42 falling within Band B. Properties within the UK require an Energy Performance Certificate (EPC) when bought, sold, built or rented. An EPC measures the asset rating of a building in relation to its energy performance. The 2015 Energy Efficiency Regulations, passed in March 2015, set out minimum energy efficiency standards (MEES) for England and Wales. These regulations will make it unlawful for landlords to grant a new lease of properties that have an energy performance certificate (EPC) rating below E, from 1 April This is seen as a long stop date and the regulations therefore could be introduced sooner. Furthermore, it is conceivable that in the future, the minimum energy efficiency rating could be more stringent. It is also proposed that from April 2023 this requirement will extend to all premises, including those where a lease is already in place and a tenant is already in occupation Tenure FREEHOLD We have not examined the title documents nor have we been provided with a report on title in respect of the subject property. We therefore assume that the freehold interest is not subject to any onerous restrictions, charges, easements or rights of way and is in all respects good and marketable. We recommend that legal advice is taken to verify our assumptions to be correct Occupational Leases and Other Agreements We have been provided with a tenancy schedule pertaining to the subject property, which we append to the rear of this report. It is worth noting that a small number of the studios are let several times throughout the academic year, thus increasing rental return. We have also been provided with a breakdown of the gross and net rental income over the past three years, which we summarise in the table below. We have not been provided with a detailed breakdown of costs. 13

17 2014 / / / /2018 (Forecast) Gross Income 428, , , ,456 Net Income 332, , , ,762 % Deduction 22.5% 23.0% 25.0% 27.0% As outlined in the table above, gross income is set to reach its highest level at the end of this academic year which in our opinion demonstrates the continued success of the property. Gross income fell by approximately 14% year on year in 2015 / 2016; we are informed that this was due to the opening of a Bangor University hall of residence. Gross income recovered for the 2016 / 2017 year and actually exceeded the 2014 / 2015 year. Despite income fluctuating over the past three years gross to net deductions have remained relatively consistent ranging from %. In our opinion this percentage of deduction is typical for a building of this size. We would recommend that costs are scrutinised regularly to ensure the building remains profitable. 14

18 4. The Market 4.1. Market Trends & General Comments The UK Government s decision to increase tuition fees to up to 9,000 per annum in 2012 caused uncertainty in the market with student numbers falling by 7% in September However, this appears to be no more than a one-off structural change with UCAS recording the highest ever intake of undergraduate students for the 2015/16 academic year. Indeed, in 2014 acceptances from the UK increased by +3.2% to 447,500, whilst EU acceptances increased by +7.6% to 26,400 students. Applicants from countries outside the EU also increased to 74,600 (+5.7%). These increases are forecasted to continue over the coming years at a rate of 3.5% per annum. The uplift of tuition fees has forced many Universities to try and extend their reach to the overseas markets where higher fees can be charged. Indeed, the UK is already the biggest beneficiary of overseas students in Europe and it is anticipated that in the next decade some 30,000 more international students are expected to join university courses in the UK, second only to Australia, but more than the United States. In this regard the academic record of Universities certainly helps, but purpose built student accommodation is becoming a key factor in attracting students. Established universities such as the Russell Group of Universities are well placed to take advantage of the changing market, with cities such as Birmingham proving to be attractive to students. Of course poorer located universities that have low university league rankings will increasingly struggle to justify their tuition fees and the lack of adequate accommodation deters some students, particularly those from overseas. In a recent market publication by Savills Spotlight UK Student Housing, Bangor was placed in the Upper Second division of Savills (2017) Student Housing Development League Table, along with cities such as Sheffield, Cardiff, Swansea, Glasgow, Durham and Newcastle upon Tyne. The growth in student numbers, coupled with an undersupply of purpose built accommodation in strong university centres, has changed the investment market over recent years, and student accommodation is increasingly becoming a mainstream asset class. Traditionally, institutional investors only looked to long leases or indirect investment but they are now entering the direct let markets. This has led to a compression in yields with domestic and overseas buyers entering what was previously a specialist asset class. Due to increased activity levels there is also a greater transparency in both performance and transactional data, which helps to lower the risks of investing in student accommodation. Knight Frank s recently published UK Student Housing Investment Update 2017 states that from their research they estimate that a total of 3.1 billion was invested in the UK purpose-built student accommodation market in 2016, more than double the levels witnessed in 2013 and Furthermore, it states that new investors continued to enter the sector, with much of last year s activity a result of the continued trend for portfolio acquisitions. Their research suggested that of the deals concluded in 2016, portfolios represented around 60% of the total and that Funds were the most active investors within the sector as a whole, with a large number of overseas investors entering the market driven by the well documented fall in Pound Sterling. We have ascertained the following average yield table from the Savills Spotlight UK Student Housing 2017 publication: 15

19 In-line with the wider commercial and residential property markets, yields for student accommodation in London are lower than the rest of the country. There is also a clear differential between properties with lease agreements in place with universities, nomination agreements and direct lets. We believe the subject premises to fall into the latter category Secondary Regional & Direct Let with average yields for this product of % Bangor Comments Bangor is home of Bangor University which was established in 1884 and was historically called the University College of North Wales ( ) and the University of Wales, Bangor ( ). Bangor University is ranked within the top 500 universities in the world and is ranked 65 th best university in the UK according to The Complete University Guide League Tables. Bangor University has a total of 10,628 student enrolled for the 2015/2016 academic year, with enrolment falling approximately 5% from the 2011/2012 academic year. According to the University, for the 2015/2016 Academic Year 37% of students were from Wales, 42% of students were from the rest of the UK, 4% of students were from the EU and 17% of total students were from overseas (Non-EU). According the HESA the average number of overseas students within UK universities was circa 3.6%. As demonstrated above, Bangor University is approximately 3.4% higher than the national figure. This is of relevance to the subject premises, given that overseas students tend to prefer self-contained studio accommodation, as opposed to traditional cluster flats within accredited halls of residence. Rental rates achievable throughout Bangor vary greatly depending on obvious factors such as specific location, quality of accommodation and length of tenancy granted. We summarise numerous apartment schemes throughout the city below which we have had regard to in arriving at our opinion of Market Rent (MR): 16

20 Address Room Type Tenancy Length (Weeks) Weekly Rent St Mary s Village Studios Standard Studio Premium Studio Deluxe Studio Ty Willis House Bronze Studio Silver Studio Gold Studio Neuadd Kyffin Studio The rental comparable table above demonstrates a rental tone in the order of per person per week. The subject property currently offers a range of five rooms, detailed below, which clearly fall within the tone outlined above. Resultantly we believe the passing rentals currently being achieved to be reflective of Market Rent (MR). Address Room Type Tenancy Length (Weeks) Weekly Rent Ty Glyn Neon Various Cobalt Various Nickel Various Copper Various Rodium Various Property Specific Comments The subject property comprises a former HM Revenue & Customs building which is believed to date back approximately 60 years. The building was comprehensively reconfigured and refurbished in 2014 to provide a total of 60 self-contained studio apartments, in addition to an office / reception, lounge, games room and storage. Each studio is self-contained in nature and contains a double bed, desk, fitted kitchen and en-suite shower room. We understand that the property is currently being marketed for sale via national agents, Allsop. We are unaware of how long the premises have been marketed for, nor are we aware of other interest that has been received. However, we understand that the property has been marketed for offers in excess of 4,450,000 which reflects a Net Initial Yield (NIY) of 6.95% when taking into account the projected net rental of circa 330,000 for the 2017/2018 academic year. We are informed that you have submitted an offer of 4,535,000 which we analyse to equate to a NIY of circa 6.82%. This again takes into account the projected net rental income of circa 330,000 for the 2017/2018 academic year, as well as purchaser s costs at their prevalent rate. We believe this purchase price to reflect Market Value (MV) when taking into account all factors pertaining to the property, as well as the various comparables detailed below: 4.4. Comparable Transactions In arriving at our opinion of Market Value (MV) we have had regard to the following comparable transactions: 17

21 Purpose Built Student Accommodation: Address Description Sold Sale Price Richmond Square, Richmond Road, Cardiff Comprising a modern purpose built apartment scheme containing a total of 77 flats providing 103 double bedrooms. The property is currently producing a gross rental income of 620,940 p.a. ( 116 per bedroom per week) For Sale 8,500,000 (NIY 5.13%) Ladybarn House, Manchester The subject property was constructed in 1994 and comprises a direct-let investment containing a total of 117 self-contained studios and 4 retail units. We are unaware of specific rental information. March ,250,000 (NIY 6.50%) The Pavilion, Birmingham Comprising a substantial student accommodation block purpose built in The premises are formed of five storeys and contain a total of 147 en-suite bedrooms, 138 of which are studios with the remaining 9 of a one bedroom nature. Situated to the eastern side of William Street, at its junction with Bishopgate Street, in the Five Ways district of Birmingham. The property is strategically located a short distance from the core of Birmingham City Centre, with excellent access offered to the University of Birmingham, Birmingham International College, Aston University, Birmingham City University and Birmingham City Hospital. The property currently produces a gross rental income of approximately 1,025,000 per annum, which equates to 133 per person per week when assuming the property is fully let for the entirety of the year (52 weeks). This is then discounted to a net rental of 766,760 per annum when discounting utility bills and the management agreement in place with Derwent Students. Your client has agreed to purchase the premises for 11,250,000, which equates to a Net Initial Yield (NIY) of circa 6.45% on the net rental. The purchase price can also be analysed as a cost per bedroom of approximately 76,500. June ,250,000 (NIY 6.45%) 18

22 Metchley Hall, Birmingham Comprising a purpose-built student accommodation scheme constructed in September 2011 providing a total of 67 ensuite bedrooms divisible between 58 studios, 7 one bedroom flats and 2 two bedroom flats. The premises are strategically located to the south of the University of Birmingham campus and had had an agreement in place with the University of Birmingham which guaranteed 97% occupancy although this was drawing to a close. The property was producing a total gross rental income of 580,721 per annum (average of 167 per person per week on an all-inclusive basis), with a net rental of 460,121 per annum ( 132 per person per week) when discounting utility bills and the management agreement in place with Derwent Students. The property sold in February 2014 for 7,050,000 reflecting a Net Initial Yield (NIY) of circa 6.2% when accounting for purchaser s costs at 5.8%.The purchase price can also be analysed as a cost per bedroom of approximately 105,000. February ,050,000 (NIY 6.20%) The Edge Apartments, Birmingham Comprising a modern purpose-built student accommodation scheme providing a total of 77 en-suite bedrooms divisible between studios, 2 bedroom apartments and 3 bedroom apartments. The site also incorporates a gym, coffee shop, and Sainsbury s store. The premises are strategically located to the south of the University of Birmingham campus being adjacent to Selly Oak Railway Station. We are unaware of the exact gross rental but based on advertised prices we anticipate a rent in the order of 756,095 per annum ( 189 per person per week on an allinclusive basis), with an estimated net rental of 586,695 per annum ( 147 per person per week) when discounting utility bills and the management agreement in place with Collegiate Accommodation. The property sold in August 2014 for 9,000,000 reflecting a Net Initial Yield (NIY) of circa 6.2%. The purchase price can also be analysed as a August ,000,000 (NIY 6.20%) 19

23 cost per bedroom of approximately 117,000. Saul House, Ruston Way, Lincoln Comprising a recently developed, five storey, purpose built student living scheme located adjacent to the main University Of Lincoln campus building. 69 high specification en-suite bedrooms are arranged between 23 cluster flats. 100% occupancy is enjoyed, with tenants all paying 110 pppw on an all-inclusive basis producing a rounded 395,000 per annum. The investment was acquired in October 2014 for 3.7M. Assuming a discount of circa 25% to attain a net rental ( 300,000 per annum) this reflects a Net Initial Yield of approximately 7.6% when accounting for purchaser s costs at 5.8%. The purchase price can also be analysed as a cost per bedroom of approximately 54,000. October ,700,000 (NIY 7.60%) Pickering House, Kenyon Street, Sheffield Comprising a modern, purpose built student cluster flat scheme, containing a total of 69 bedrooms within 14 flats (1x 4 bed & 13 x 5 bed). The property was producing a gross rental income of 276,395 per annum, which equates to 77 pppw when assuming the property is fully let for the entirety of the year (52 weeks). We were informed that the property was also 80% pre-let for the forthcoming academic year. The investment was acquired by institutional investor in June 2014 for 3,015,000. Assuming a discount of circa 25% to attain a net rental ( 210,000 per annum) this reflects a Net Initial Yield of approximately 6.9% when accounting for purchaser s costs at 6.6%. The purchase price can also be analysed as a cost per bedroom of approximately 44,000. June ,015,000 (NIY 6.90%) 20

24 5. Valuation 5.1. Valuation Considerations Having regard to the above commentary we are of the opinion that the value of the unencumbered freehold interest on the bases requested is: Valuation Bases Market Value (MV) subject to the existing tenancies in place Ty Glyn, High Street, Bangor, Gwynedd, LL57 1YH 4,535,000 (Four Million Five Hundred and Thirty Five Thousand Pounds) Market Rent (MR) 330,000 p.a. * (Three Hundred and Thirty Thousand Pounds) *Our opinion of Market Rent (MR) is provided on a net rental basis. We stress the importance of the valuation date as recent experience has shown that property values may change quite significantly over a relatively short period of time SWOT Strengths The subject property contains a total of 60 selfcontained studios, which are viewed more desirably by students in comparison to traditional cluster flats. The building was substantially reconfigured and reconditioned approximately 3 years ago and subsequently the studios are of a good internal condition. Weaknesses In our opinion the subject property has limited redevelopment opportunities should it become vacant. Bangor has a relatively small surrounding population, when compared with larger northern cities such as Manchester, Leeds, Liverpool and Sheffield. The premises are situated centrally within the city of Bangor, adjacent to the well-respected Bangor University which is ranked within the top 75 universities of the UK. Opportunities Potential for rental and ultimately capital growth. Should the premises ever become direct-let with the university this would, in our opinion, enhance desirability with investors and thus increase Market Value (MV). Threats Should any new apartment schemes be developed they would provide direct competition to the subject premises. Post Brexit and wider economic uncertainty. Additional student facilities such as a gymnasium. 21

25 6. Appendices Appendix I Appendix II Appendix III Appendix IV Appendix V Photographs Site Plan Tenancy Information Sales Particulars Letter of Instruction 22

26 Appendix I Photographs

27 EXTERNAL VIEWS

28 COMMUNAL LOUNGE COMMUNAL GAMES ROOM

29 TYPICAL INTERNAL VIEWS STUDIOS

30 TYPICAL INTERNAL VIEWS STUDIOS

31 TYPICAL INTERNAL VIEWS STUDIO REAR ELEVATION INCLUDING CAR PARK

32 Appendix II Site Plan

33 The Bungalow RHODFA MAIR/ST MARY'S AVENUE Glanfa Surgery 1 to 15 Neuadd yr Eglwys FFORDD GLYNNE / GLYNNE ROAD BWTHYN Y MYNACH 8 5 RHODFAR BRODYR / FRIARS' AVENUE MAES-Y-DREF CR Garage 13.7m 358to360 Ty Glyder STRYD JAMS (JAMES STREET) Car Park m 344 Club 346 to to PH 336 3to4 1to Bron Derw FRIARS ROAD Surgery 18 1 Tan y Graig Shelter m Mountainview Isnant TCB 1 Ty? Glyn Studios 13.5m ED Bdy 13.3m Def PH 376to378 Friars' Terrace 364 FW 338 ESS FFORDD YR MYNYDD/MOUNT STREET FW Def 1 to 12 Cysgod y Mynydd Llawr Y Ddinas Def m 10m 20m 30m 11 to Ordnance Survey Crown Copyright All rights reserved. Licence number Plotted Scale - 1:1250 SGWAR Y FRON/MOUNTAIN SQ 54

34 Appendix III Tenancy Information

35 STUDIO AVAILABILITY Studio Rent Approximate number of weeks Total Monthly / Quarterly / Full A , Monthly A , Quarterly Instalments A , Quarterly Instalments A , Quarterly Instalments A , Monthly A , Monthly A , Quarterly Instalments A , Monthly A , Full Payment A , Quarterly Instalments A , Quarterly Instalments A , Quarterly Instalments A , Quarterly Instalments A , Monthly A , Monthly A , Quarterly Instalments A , Quarterly Instalments A , Quarterly Instalments B , Quarterly Instalments B , Quarterly Instalments B , Quarterly Instalments B , Quarterly Instalments B , Single Payment B , Monthly B , Monthly B , Full Payment B , Quarterly Instalments B , Quarterly Instalments B , Monthly B , Quarterly Instalments B Single Payment B Single Payment B , Quarterly Instalments B , Quarterly Instalments B , Monthly B , Quarterly Instalments B , Quarterly Instalments B , Quarterly Instalments B , Quarterly Instalments B , Quarterly Instalments B , Quarterly Instalments C , Quarterly Instalments C , Full Payment C , Quarterly Instalments C , Monthly C , Full Payment C , Quarterly Instalments C Single Payment C , Monthly C , Quarterly Instalments C , Quarterly Instalments C , Quarterly Instalments C , Instalments C , Quarterly Instalments C , Quarterly Instalments C , Quarterly Instalments C , Quarterly Instalments C , Quarterly Instalments C , Monthly C Single Payment C , Monthly C , Quarterly Instalments C , Quarterly Instalments C , Quarterly Instalments Total 390, Please be aware that three of the flats highlighted have more than one contract during the academic year.

36 Ty Glyn Bangor Student Accommodation FINANCIALS YEAR 1 YEAR 2 YEAR 3 YEAR / / / / / / / /18 BUDGET ACTUAL BUDGET ACTUAL PREDICTED ACTUAL DRAFT PREDICTED ACTUAL Gross Income 426, , , , , , , Operating Costs Agents Fees - 53,295-50,167-54,361-46, , , , Marketing Costs - Fixed Year 1 Web Set Up - 1,500-1, Hoardings / Graphics - 2,500-3, Tenancy Handbook - 1,200-1, Marketing Costs - Rolling Website Hosting / Upgrade Promotions / printing / media - 1,000-1,031-1,000-1, , , , Sponsorship - 2,000-2,000 Statutory Services - 27,000-10,947-27,000-17, , , , mbs Broadband - 9,000-7,298-7,500-7, , , , Building Insurance - 2,000-10,487-2,000-4, , , , Personal Contents Insurance Maintenance - Inspections - 1,200-2,125-1,200-1, , Maintenance - Ext Cleaning - 3,300-1,800-3, , , , Maintenance - Int Cleaning - 4,200-4,403-4,200-6, , , , Non-recoverable repairs - 3,600-1,679-3, , , , Operating Costs Total - 112,895-96, ,261-84, , , , Net Rental Income 313, , , , , , , % 78% 75% 77% 76% 75% 73%

37 Appendix IV Sales Particulars

38 Student Investment Opportunity Ty Glyn, High Street, Bangor, LL57 1YH A freehold high quality student conversion comprising 60 self-contained studios

39 INVESTMENT CONSIDERATIONS Freehold student accomodation block Converted office now comprising 60 selfcontained studios Central Bangor location, close to Bangor University High quality conversion Contracted rent for 2017/2018: 390,167 Gross yield (based on contracted rent): 8.77% Expected rent for 2017/2018: 452,456 Gross yield (based on expected rent): 10.17% TENURE Freehold - as outlined on the OS plan. LOCATION Ty Glyn is located in the university city of Bangor in North West Wales, 114 km (71 miles) west of Liverpool and 289 km (180 miles) north of Cardiff. The city has a population of 18,808 (2011 Census) of which almost 60% are students, making Bangor a popular university city. Bangor train station is located on the North Wales Coast Line running between Crewe, Chester and Holyhead. There are also direct trains to London taking approximately 3 hours 25 minutes. The A55 runs around the southern boundary of Bangor and provides access to Chester and Holyhead. Liverpool John Lennon Airport is the nearest airport located 128 km (80 miles) east of the city. Ty Glyn is located on the High Street, on the corner of Glynne Road, in the north eastern part of Bangor city centre. The immediate vicinity is mainly residential. The location is within walking distance of the University approximately 0.6km (0.4mile) and the city centre approximately 0.16km (0.1 mile). The centre of Bangor offers shops, bars and amenities catering to the student market. The train station is located (0.9 mile) from the property. UNVERSITY OF BANGOR Founded in 1884, Bangor University has a student population of 11,000 and over 650 teaching staff. The University has firmly established itself in the top 15 in the UK in the Times Higher Education s student experience rankings and in the top 40 in the UK for Research. Enrolments have been rising and are close to record levels supported by an increasing number of international students. Much of the university campus has been recently modernised including a 40 million Arts and Innovation Centre forming the new Students Union. For indicative purposes only For indicative purposes only

40 DESCRIPTION The property is a converted former office building arranged over three storeys internally configured to provide 60 self-contained studios. The conversion was finished for the September 2014 intake. We understand that the property was stripped back to shell condition, and the internal layout extensively reconfigured, as part of a comprehensive refurbishment programme. Planning documentation, final completion certificate, warranties and floorplans can all be found in the data room. The block now provides good quality modern student accommodation within gated secure grounds. In addition, there is car parking available for 15 cars. The studios are accessed via the main door to the front elevation which leads to a central atrium with stairs to all floors. There are no lifts within the building. Each studio is fully furnished and comprises a kitchen area with an electric hob and fitted microwave oven, double bed, desk and breakfast bar. Each studio also has its own toilet and shower unit. The studios vary in size between 14.9 sqm and 22 sqm. Each flat is serviced with high speed unlimited fibre optic internet. There are two communal lounges with sofas, TVs and a pool table within the building as well as on-site laundry facilities.

41 RENTAL INCOME The property is currently fully occupied producing a gross rent of 390,167. Due to the nature of the student market in Bangor, particularly its popularity with foreign students, tenancy lengths vary. In instances where studios are let for a term of less than 51 weeks, the management agents expects to fill any spare capacity with new tenants. Our expected rent consolidates additional lettings throughout the academic year; this is based on the gross rent achieved last year totalling 449,817. Based on previous years, operating costs average approximately 23% of gross rent reserved, which is typical for student accommodation of this nature. EXPENDITURE A full breakdown of costs can be found in the data room. The current managing agent is Varcity Living based in Bangor. Varcity are currently contracted to manage Ty Glyn until the end of the current academic year (15 September 2018). The purchaser will inherit Varcity as their managing agent until the end of the contract which can be found on the data room. We understand that Varcity are interested in retaining management. THE OPPORTUNITY Ty Glyn was converted in 2014 to provide high quality accommodation in a prime location for students of Bangor University. Having stabilised the asset alongside managing agent Varcity, the developer now wishes to start a new project. The acquisition of Ty Glyn at the quoted price of 4,450,000 shows an attractive net return after all costs of 7.58% (based on rents achieved for academic year 2016/17). Ty Glyn operates with a good reputation amongst students and shows high occupancy levels year on year. ADDITIONAL INFORMATION An extensive information pack is available to view and download online at: ENERGY PERFORMANCE CERTIFICATES EPCs are available to view and download from the data room. METHOD OF SALE The property is for sale by way of Private Treaty, however we reserve the right to conclude the marketing by way of an Informal Tender process. ASKING PRICE Offers are invited in excess of 4,450,000 subject to all existing tenancies, subject to contract VIEWING INFORMATION Vicky Bingham vicky.bingham@allsop.co.uk Anthony Hart anthony.hart@allsop.co.uk Jack Robson jack.robson@allsop.co.uk 33 Park Place, Leeds, LS1 2RY Tel: Misrepresentation Act: 1. Allsop LLP on its own behalf and on behalf of the vendor/lessor of this property whose agent Allsop LLP is, gives notice that: (a) these particulars do not constitute in whole or in part an offer or contract for sale or lease; (b) none of the statements contained in these particulars as to the property are to be relied on as statements or representations of fact; and (c) the vendor/lessor does not make or give, and neither Allsop LLP nor any of its members or any person in its employment has any authority to make or give, any representation or warranty whatsoever in relation to the property. The only representations, warranties, undertakings and contractual obligations to be given or undertaken by the vendor/lessor are those contained and expressly referred to in the written contract for sale or agreement for lease between the vendor/lessor and a purchaser or tenant. 2. Prospective purchasers or tenants are strongly advised to: (a) satisfy themselves as to the correctness of each statement contained in these particulars; (b) inspect the property and the neighbouring area; (c) ensure that any items expressed to be included are available and in working order; (d) arrange a full structural (and where appropriate environmental) survey of the property; and (e) carry out all necessary searches and enquiries. Allsop is the trading name of Allsop LLP.