prime student · student accommodation in edinburgh property bed type weekly rent 2017/18 term...

123 FOUNTAINBRIDGE WEST TOLLCROSS EDINBURGH | EH3 9QG

PRIME STUDENT ACCOMMODATION INVESTMENT

Executive Summary

Opportunity to acquire a prime city centre student accommodation investment.

Purpose built student accommodation comprising 331 rooms in total across 57 cluster flats.

Core city centre location, in close proximity to major university campuses including the University of Edinburgh and Edinburgh Napier.

The accommodation is fully let for the 2017/18 academic year and has consistently achieved 100% occupancy in previous years.

Situated within 10 minutes walk of the University of Edinburgh’s campus in an area with a high student population and numerous local amenities.

Current nominations agreement with the University of Edinburgh for 150 beds for 2017/18 academic year, with potential for a new agreement to be signed from 2018/19.

The projected net income for the year 2017/18 is £1,651,041 which includes projected gross summer income of over £500,000.

The world famous Edinburgh Festivals drive strong demand for bedrooms during the summer months, with city centre rents achieving a premium.

We are instructed to seek offers in excess of £22,000,000 (Twenty Two Million Pounds Sterling) for our client’s Heritable Interest, which reflects a net initial yield of 7.06%, allowing for purchaser’s costs at 6.26%, and a low capital value of £66,465 per bed space.

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123 FOUNTAINBRIDGE | EDINBURGH | EH3 9QG 02

LocationEdinburgh is a UNESCO World Heritage City, internationally recognised for its historic buildings and cultural reputation. Edinburgh has a resident population of approximately 507,000 people with a further catchment of 1.36 million people (City of Edinburgh Council, 2017). It plays host to some 80,000 students studying throughout the capital at universities including the University of Edinburgh, Heriot-Watt University, Edinburgh Napier University and Queen Margaret University.

The city’s UNESCO World Heritage status makes Edinburgh a major tourist destination, attracting approximately 4 million visitors each year. Within the UK and outside of London, Edinburgh has the highest hotel occupancy rate in Europe.

Edinburgh benefits from excellent transport links, with Edinburgh International Airport situated only 25 minutes from the city centre, providing direct flights across the world to destinations including London, New York, Paris, Madrid and Amsterdam. Edinburgh Waverley railway station is situated within the heart of the city centre and provides direct routes to London and the wider UK rail network.

SituationThe property is centrally located within the Fountainbridge area of the city centre. Fountainbridge has undergone significant redevelopment in the past decade and now boasts a strong mix of office, retail and residential uses. The property is bounded by Fountainbridge to the north and West Tollcross to the south.

Edinburgh ishome to fourestablished

universities andapproximately

80,000 full timestudents.

The University of Edinburgh is one of the world’s leading research universities and provides a diverse range of courses for students, including arts, humanities, social sciences, medicine, science, law and engineering. The University of Edinburgh’s College of Art campus is within 10 minutes walking distance, whilst George Square (the University of Edinburgh’s main hub) is a 15 minute walk. Queen Margaret University is located a short train journey from the city centre and offers many vocational courses such as nursing and occupational therapy. The bus stop directly outside the property lies on local bus routes serving both Edinburgh Napier University and Heriot-Watt University, both of which provide a variety of courses including engineering and real estate based programmes.

There are many local shops and cafés in close proximity and Edinburgh’s main retailing thoroughfare, Princes Street, is a 10 minute walk via Lothian Road. Edinburgh’s Old Town is a short distance from the property and offers many student focussed restaurants, bars and nightclubs in addition to several tourist attractions.

Haymarket railway station is within 10 minutes walking distance and provides direct rail services to Glasgow, Aberdeen, Newcastle, Birmingham and London. It also provides local rail services which link to Queen Margaret University campus in the east of Edinburgh in 12 minutes. Haymarket is a key halt for Edinburgh’s tram system, from which the airport and the west of Edinburgh can be easily accessed.


SHANDWICK PLACE

LOTHIA

N ROA

D

PRINCES STREET

GEORGE SQUARE

HAYMARKET TRAIN STATION

Tram HaltBus stop providing local services to Heriot-Watt and Edinburgh Napier University

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FOUNTAINBRIDGE


PRIME CITY CENTRE STUDENT LIFESTYLE


Description123 Fountainbridge comprises 331 student bedrooms arranged across 57 cluster flats, with the breakdown as follows:

Room Type 4 bed 5 bed 6 bed TotalCluster Flats 5 1 51 57

No. of Beds 20 5 306 331

Each flat is equipped with the following:

» WiFi throughout » Contemporary sofas » Flat screen TVs in lounge areas » Modern kitchens with

integrated appliances » Breakfast bar and bar stool

seating » Bathroom and WC

Individual bedrooms benefit from:

» Large bed » Wardrobe » Study desk and chair » Shelves » Vanity unit

Common areas feature:

» CCTV » Secure gated bike storage » Garden / Courtyard » Hospitality office » Free parking for residents » Laundry facilities » Secure door entry system


IncomeThe majority of bedrooms are let directly to students on short assured tenancy agreements, with 45% on 44 or 46 week contracts, and 55% on 51 week contracts. This allows for a level of guaranteed income through the year while allowing the opportunity for additional summer income to be generated. Of the direct lettings there is a relatively even mix of students from the three main universities, with 37% from Heriot-Watt, 27% from University of Edinburgh and 23% from Napier, demonstrating the strength of the central location.

There are 150 beds currently under nomination agreement to the University of Edinburgh for 2017/18 for a period of 39 weeks, at a rent of £772,200 (£132 per week).

The property is 100% let for the 2017/18 academic year. A summary of income is shown in the table figure 01 below.

Provisional discussions have taken place with the University of Edinburgh regarding a new nominations agreement from the 2018/19 academic year for a duration of 3 years, for 125 beds with annual RPI increases at a collar and cap of 3% and 5% per annum respectively.

Provisional quoting rents for the 2018/19 academic year are outlined in the table figure 02 below.

Summer Income The Edinburgh Festival runs throughout August and attracts millions of visitors each year. The demand for accommodation is significantly higher throughout the summer months than at any other time of the year, with city centre rents often achieving a premium. The property is well located for tourists visiting the Edinburgh Festival as it lies 1 mile’s walk from the George Square and Pleasance festival hubs.

Gross summer income for 2016 / 17 was £497,358, which represented an increase of 20% on the summer income from the previous academic year.

Gross Student Rental Income £1,858,805

Projected Gross Summer Income 2018 £500,000

Sundries – Vending / Laundry £10,000

Total Gross Income £2,368,805

3% Void -£55,764

Operating Costs at £2,000 per bed -£662,000

Net Income £1,651,041

Number of Beds Tenancy Length (weeks) Rental per Week per Unit Total Rent

Classic Room 106 45 £140.00 £667,800

Classic Room 100 51 £125.00 £637,500

University Rooms 125 39 £135.00 £658,125

Total 331 £1,963,425

(Figure 01) Summary of income (Figure 02) Provisional quoting rents for the 2018/19 academic year


Higher Education in EdinburghFull time students comprise over 12% of Edinburgh’s population (City of Edinburgh Council, 2016).

The University of Edinburgh is one of the world’s leading research universities and provides a diverse range of courses for students, including arts, humanities, social sciences, medicine, science, law and engineering.

Edinburgh Napier University was granted its University status in 1992 and was awarded the Queen’s Anniversary Prize for Higher and Further Education in 2009.

Heriot-Watt University is divided into six schools and operates from a large campus in south west Edinburgh. There are a significant number of postgraduate students and student number growth has remained stable in recent years.

Queen Margaret University was founded in 1875 and offers many vocational courses such as nursing and occupational therapy. The University relocated to a new purpose built campus on the south east side of Edinburgh in 2007.

FT Student population 27,385 10,090 8,860 3,565

Growth 2010/11 to 2015/16 (PG&UG) +20% -6% +18% +9%

No. International students 8,285 2,090 2,155 935

% International Students 27.3 16.6 20.6 17.7

Change in UCAS Application +4% -2.8% -8.8% -0.6%

UCAS applications: accepts ratio 10.5 7 6.8 7.5

Current Times Rank 24 116 39 102

Times Rank 2016 37 93 37 101

Change in Times Rank +13 -23 -2 -1


Student Accommodation in Edinburgh

Property Bed Type Weekly Rent 2017/18 Term Annual Rent 2017/18

IQ FountainbridgeCluster En Suite £151 - £166 43 / 50 £6,493 - £8,300

Studio/ 1 bedroom flat £175 - £270 43 / 50 £7,525 - £13,500

Nido EdinburghCluster En Suite £149 - £159 43 £6,407 - £6,837

Studio / 1 bedroom flat £184 - £219 43 £7,912 - £9,417

IQ Grove StreetCluster En Suite £155 - £165 43 £6,665 - £7,095

Studio / 1 bedroom flat £168 - £271 43 £7,224 - £11,653

Portsburgh Court Cluster En suite £166 - £169 44 / 51 £7,304 - £8,619

Owner/Operator Room Numbers Block Total

University of Edinburgh 6,665

Heriot-Watt University 2,086

Edinburgh Napier University 1,241

Queen Margaret University 800

Unite 1,408

IQ 635

Edinburgh College 122

Mansion 278

Ziggurat 59

CRM 492

Student Housing Company 966

Prime Student Living 148

Universal Student Living 96

Student Castle 187

Nido Collection 168

Sanctuary Student 800

Homes for Students 356

Fresh Student Living 407

Downing Students 238

Destiny Student 536

Collegiate AC 412

Total 18,100 beds

Comparable Rental Evidence Edinburgh – Student Accommodation Supply


LAURISTON PL

LYCEUMTHEATRE

KING’S THEATRE

SCOTTISHNATIONAL GALLERY

SCOTTISH NATIONALPORTRAIT GALLERY

NATIONAL MUSEUMOF SCOTLAND

GEORGE HERIOT'SSCHOOL

EDINBURGHCASTLE

WAVERLEY STATION

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FOUNTAINBRIDGE

REGENT GARDENS

SCOTTISH PARLIAMENTBUILDING

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CALTON HILL

BRUNTSFIELD LINKS

THE MEADOWS

GEORGE SQUARE

NEWINGTONBRUNTSFIELD

EICC

123University Buildings

Major Festival Sites

Prime City Centre Location


TenureHeritable Interest (Scottish equivalent of English Freehold). We have measured the site area using Promap and estimate the site extends to 0.94 acres (0.38 hectares).

Multiple Dwellings Relief / Land & Buildings Transaction TaxIt is our understanding that Multiple Dwellings Relief (MDR) may be available for the sale however we would advise prospective purchasers seek the appropriate professional advice in this regard.

PlanningThe property has full planning permission granted for purpose built student accommodation. The property is therefore exempt from the Private Housing (Tenancies) (Scotland) Act 2016 which comes into effect in 1st December 2017.

d Bdy

Fountainbridge Square

Lochrin Square

Uni

on P

ath

WEST

WEST TOLLCROSS

FOUNTAINBRIDGE

TR

Lochrin Basin

117

Tollcross

Nursery S

chool

18

123

Primary School

16

20

125

117

Quayside House

5

21

to 3

129

4

1715

1992

Lochrin

94


VATThe property is not elected for VAT.

ManagementThe property is currently managed by Mansion Group. This agreement will be terminated on sale though they may consider providing management services for a new purchaser, subject to terms.

EPCThe property has an EPC rating of E+. A draft Action Plan is available for the property, available on request.

Capital AllowancesFurther information available on request.

Investment Overview » Edinburgh’s status as a European capital city and

global tourist destination has continually attracted both domestic and overseas capital – providing a purchaser with a liquid and attractive market in which to invest.

» Consistent occupancy levels of 100% demonstrated over a number of years.

» Current rental levels offer a sustainable low base from which to grow student income.

» Opportunity to enhance gross rental position through refurbishment of the accommodation.

» Demand for bedrooms in the summer months is strengthened by the annual Edinburgh Festival and the city’s strong language school market operating during July and August.

» Opportunity to negotiate new nominations agreement with the University of Edinburgh for 2018/19 to improve on current terms.

» Quoting price reflects a low capital value of £66,465 per bed space.

» Grant of new student accommodation planning permissions in Edinburgh is likely to become more challenging in the future, therefore limiting supply in good locations.

Investment ProposalWe are instructed to seek offers in excess of £22,000,000 (Twenty Two Million Pounds Sterling) for our client’s Heritable Interest in the property which reflects a net initial yield of 7.06%, allowing for purchaser’s costs at 6.26%.


Calum [email protected] 0131 222 4517

Carolyn [email protected] 0141 304 3258

Russell [email protected] 0161 235 7666

David [email protected] 0141 223 8767

CONTACT

MISREPRESENTATION ACT Cushman and Wakefield (and any joint agent appointed) on their own behalf and for vendors or lessors of this property, whose agents they are, give notice that: (i) These particulars are produced in good faith, but are a general guide only and do not constitute any part of a contract and must not be relied upon as statements or representations of fact. (ii) No person in the employment of the agent(s) has any authority to make or give representation or warranty whatever in relation to this property. (iii) the property is offered subject to contract and unless otherwise stated all rents and outgoings are stated exclusive of VAT. (iv) Floor areas, measurements or distances given are approximate. (v) Nothing in these particulars should be deemed a statement that the property is in good condition, or that any services or facilities are in working order. (vi) Unless otherwise stated, no investigations have been made regarding pollution, or potential land, air or water contamination. Interested parties are advised to carry out their own investigations as required. October 2017.

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prime student · student accommodation in edinburgh property bed type weekly rent 2017/18 term...

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