Prime Student Housing Investment Opportunity S T U D E N T L I V I N G L I K E N O O T H E R
Executive Summary. A unique opportunity to invest in a best in class student housing scheme completed in 2015. Prime, new build development comprising 79 bed spaces. Situated in a prominent position on Damside Street which is strategically located for students and in close proximity to British Land s 75m Canal Corridor North retail led, mixed-use scheme. Innovative concept that allows high quality accommodation to be offered at highly affordable rental levels. Generous levels of social space including gym, games room and two big communal kitchen and eating areas. Held Freehold with a full pack of assignable warranties. Gross income of 538,616 and net income of 396,695 for the 2016/17 academic year allowing for operating costs at 141,921 ( 1,796 per bed space). Lancaster is home to two higher education institutions: Lancaster University and the University of Cumbria and over 18,000 students. The student market is dominated by Lancaster University - ranked No.1 in the North West, Top 10 in UK, 59th in Europe and in the Top 1% of universities globally. Constrained supply with only 524 purpose built bed spaces there are almost 10 returning students from outside the region for every purpose built bed space. 100% let in the first year of operation. 72% of students were international. Offers in excess of 6,000,000 reflecting an attractive net initial yield of 6.31% assuming purchasers costs of 4.80%. A purchase at this level reflects just under 76,000 per bed space.
The Location. Lancaster is an historic city in the North West of England, having gained its first charter in 1193. It is located approximately 21 miles north of Preston, 52 miles north west of Manchester and 250 miles north west of London. It has a population of 138,400 (2011 Census). The city has excellent transport links with the rest of the UK, with a number of routes providing direct access to the M6 and in turn, Southern England and Scotland. Lancaster is also on the West Coast Mainline providing fast, direct rail access to major UK destinations such as Edinburgh, Glasgow, Birmingham and London with a fastest journey time of 2 hours 25 minutes. There are also a number of regional services to Liverpool, Leeds and Manchester. Manchester International Airport lies approximately 60 miles south east and Liverpool John Lennon Airport approximately 60 miles south west. Lancaster s international visitors and residents benefit from access to over 90 global destinations from these two airports.
The Situation. The property is located in a prominent position on Damside Street and is strategically located for students: Situated in the heart of the city centre allowing easy access to its commercial core, shops, bars, restaurants and nightlife. Lancaster Railway Station is located 8 minutes walk to the west. The city s main bus station sits directly opposite with services 2, 2A, 3, 4, X4 and 42 leaving for Lancaster University every five minutes on weekdays. Two off road cycling routes to Lancaster University including one from the city centre along Lancaster Canal which takes approximately 30 minutes. The University of Cumbria s Lancaster Campus is a 15 minute walk east. The northern end of the city centre is attracting a variety of inward investment most notably British Land s 75m Canal Corridor North retail led, mixed-use scheme. Canal Corridor North Retail Scheme
University of Cumbria Lancaster Campus British Land Canal Corridor North Retail Scheme St Nicholas Arcade Shopping Centre Marketgate Shopping Centre Lancaster University Lancaster Rail Station Currys Halfords The Sugarhouse / Lancaster University Students Union Bus Station Vue Cinema Sainsburys Supermarket Lancaster Castle
Property Description. The property comprises a prime, new-build student housing scheme completed in 2015. The property is constructed over ground and five upper floors. The ground floor features extensive social space including reception, gym, study pods, residents lounge, games room, two large fully stocked communal kitchens, laundry and unisex WC. The upper floors comprise 79 en-suite studio bed spaces served by a central staircase and 630kg / 8 person passenger lift. There is an external courtyard and bicycle storage to the rear of the property which is currently underutilised. Internally, the accommodation is fitted to a high specification throughout: Three-quarter size or double beds 100MB Wi-Fi and hard-wired internet connections Intercom entry system Dedicated study area Built-in wardrobe and drawers Wall-mounted smart flat-screen TV High quality kitchenette areas Under-counter fridge/freezer Integrated Neff microwave/oven Kettle Central heating via wall-mounted radiators High specification en-suite bathrooms
The Accommodation. Flat Screen Smart Tv Large Communal Spaces for Entertaining Super Fast Broadband All Bills including Contents Insurance Three Quarter / Double Beds Games Area and Pool Table Private and Group Study Spaces On Call Security 24/7 & Key Fob Entry En-Suite Bathroom with Shower Individual Kitchen Facilities On site Gym On Site Residents Team Open Plan Kitchen Areas for Dining and Entertaining CCTV for Peace of Mind Studio Studio X Deluxe Studio Double Deluxe Average Size: 12.5 sq m Bed: Three quarter sized bed Average Size: 12.8 sq m Bed: Three quarter sized bed Average Size: 13.2 sq m Bed: Three quarter sized bed Average Size: up to 24 sq m Bed: Double bed
The Income. Budgeted income for the 2016/17 academic year is set out below: Room Type No. of Beds Tenancy Length 2016/17 Rent Per Week Total Gross Rental Income (98% occupancy) Studio 5 50 123 30,135 Studio X 12 50 131 77,028 Deluxe Studio 53 50 134 347,998 Double Deluxe* 9 50 172 75,955 Sundry Income (Laundry) 7,500 Total Gross Income 538,616 Operating Costs 2016/17 (incl. VAT) Reflects 1,796 per bed space 141,921 Net Operating Income 396,695 We expect the property to reach effective full occupancy for the 2016/17 academic year producing a gross income of 538,616 and a net income of 396,695 allowing for operating costs at 141,921 ( 1,796 per bed space). Bed spaces are let to students on all-inclusive Assured Shorthold Tenancy (AST) agreements for a 50 week term. Rent is payable in three termly instalments. Students must pay a non-refundable booking fee of 200. * Quoting rent denotes denotes average across various double deluxe bed spaces.
Lancaster Student Market. Lancaster is home to two higher education institutions: Lancaster University and the University of Cumbria and over 18,000 students. Lancaster University is ranked in the UK Top 10 in both the Guardian and the Complete University Guides. The University is also ranked No.1 in the North West, 59th in Europe by Times Higher Education in 2016 and is in the Top 1% of universities globally. Lancaster University attracted 11,480 full-time students in 2014/15 and has been growing at a rate of 16% since 2008/09, well above the UK average of 12% over the same period. The University of Cumbria attracted 6,675 full-time students in 2014/15. The University specialises in agriculture and operates across six campuses throughout Cumbria. The Lancaster campus is the largest, home to approximately half of its total student population. The Cushman & Wakefield Student Accommodation Tracker records 7,559 purpose-built student accommodation (PBSA) bed spaces in Lancaster. Supply is dominated by Lancaster University which offers 6,584 bed spaces on campus. The University of Cumbria offers 451 bed spaces to its students. The remaining private stock, 524 purpose built bed spaces (which includes Damside), accounts for just 7% of total supply when compared to the UK average of 39%. This serves to underline the lack of private purpose-built accommodation in the city. Development has been and continues to be constrained through planning policy, listed building and conservation area designations and restrictions on land assembly and ownership. Market conditions indicate healthy rental growth prospects. Supply Demand Analysis Returning Student Market Population / Beds Percentage Total Returning Full-Time Students 8,245 100% Returning UK Outside Region Students 2,940 36% Returning International Students 2,270 28% Returning Private Sector Demand Pool 5,210 64% Total Private Sector Supply 524 - Demand / Supply Ratio 9.9:1 -
Existing Private Sector PBSA Competition. Cable Street Crosslane / GSA Coral Prime Student Living 233 non en-suite beds CityBlock 1 Empiric Student Property CityBlock 30 en-suite beds CityBlock 2 & 3 Empiric Student Property CityBlock 182 en-suite beds
Tax The property is not elected for VAT. Capital allowances available by way of separate negotiation. We believe Stamp Duty Land Tax (SDLT) is payable at 3% utilising Multiple Dwelling Relief (MDR). Warranties The vendor has a full pack of warranties which are assignable to the purchaser. Energy Performance The property has an Energy Performance Certificate EPC) Rating of B(45). Tenure The property is held Freehold under three separate title numbers LAN53517, LA738759 and LA700323. The subject property comprises an irregular shaped site, with an approximate gross site area of 0.071 hectares (0.18 acres). Planning Planning consent was granted for the erection of student accommodation building comprising 79 rooms with external and internal communal living space and refuge/cycle storage on 4 February 2013 under Application Number 12/01159/FUL.
Proposal We are instructed to seek offers in excess of 6,000,000, reflecting an attractive net initial yield of 6.31% assuming purchaser s costs of 4.80%. A purchase at this level reflects a low capital value per bed space of just under 76,000. The asset can also be sold by way of the Special Purpose Vehicle in which it is held. Further details available upon request. Contact For further information or to arrange a viewing, please contact: Simon Lowe Cushman & Wakefield 1 Marsden Street Manchester, M2 1HW Tel: 0161 455 3745 Email: simon.lowe@cushwake.com Mike Mitchell Cushman & Wakefield 1 Marsden Street Manchester, M2 1HW Tel: 0161 455 3797 Email: mike.mitchell@cushwake.com August 2016. Misrepresentations Act 1967 and Property Misdescriptions Act 1991 Cushman & Wakefield, their clients and any joint agents give notice that: (i) These particulars do not form part of any offer or contract and must not be relied upon as statements or representations of fact. (ii) No person in the employment of the agents has any authority to make or give representation or warranty whatever in relation to this property. (iii) Floor areas, measurements or distances given are approximate. Unless otherwise stated, any rents, or outgoings quoted are exclusive of VAT. (iv) Any descriptions given of the property cannot be taken to imply, it is in good repair, has all necessary consents, is free of contamination, or that services and facilities are in working order. Interested parties are advised to carry out their own investigations as required. www.wearedamside.co.uk