1

STUDENT / LIVING

3

INVESTMENT C O N S I D E R AT I O N S • Prime student accommodation opportunity in core city centre location, fully let for 2013/14 • Additional income from Sainsbury’s and Ask Restaurants • 133 bedroom studio accommodation (140 beds), providing an average bedroom size of 27.14 sq m and excellent common facilities • Highest specified scheme in Glasgow. The property is a former lifestyle boutique hotel, extensively refurbished and converted to student use in 2011 • Glasgow is a renowned and established centre for higher education, boasting three main universities and a full time student population of 50,450 • Excellent location within the heart of the city in close proximity to university campuses including Glasgow Caledonian and Strathclyde universities

• Commonwealth Games in Glasgow in 2014 will help bolster the city’s international reputation • Potential to increase future income by continuing to move all student accommodation contract lengths to 51 weeks • Savills are instructed to seek offers in excess of £16,500,000 (sixteen million five hundred thousand pounds) for the heritable title of the property, which reflects a net initial yield of 6.40% on the student income, 6.00% for the Sainsbury’s and 6.75% on the Ask unit, assuming purchaser’s costs of 5.80%. The asset is for sale inclusive or exclusive of the retail element. The SPV is also available to purchase and details can be provided on request.

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S AR

L O C AT I O N

AC E N ST

Glasgow is Scotland’s largest city and one of the largest in the United Kingdom boasting five recognised higher education institutions. The city has seen particularly strong economic growth and development in recent years and has a population in the order of 600,000 and a catchment area of over 2 million.

A879

LL GHA CRAI

UBE

AT W

SIGHTHILL PARK

RD

RD

RD

M8

EST ERN

RD

University of Glasgow

Glasgow Caledonian University W GRAHAM ST

CO

The Glasgow School of Art

ST. VINCENT ST

W GEORGE ST

GALLOWGATE

CLYDE PL

RD NELSON ST

SALT MAR KET

YORK ST

CLYD E ST

RIVER CLYDE LE Y PAIS

TRONGATE

CENTRAL STATION

AW MIEL

LANCEFIELD QUAY

Y RD SLE PAI

DUKE ST

ST

ARGYLE ST

T

O BRO

FESTIVAL PARK

GEORGE ST

HIGH

WATERLOO ST

ARGYLE ST

S OSS

GEORGE SQUARE

ST. VINCENT ST

IDE EXPRESSWAY CLYDES ST O B C R

QUEEN ST STATION

BOTHWELL ST

BISHOP LN

A814

W NILE ST

W REGENT ST

University of Strathclyde

W NILE ST

WILLIAM ST

PITT ST

M8

W CAMPBELL ST

BATH ST

W REGENT ST

ST CENT

City of Glasgow College

SAUCHIEHALL ST

BATH ST

IN ST. V

N HANOVER ST

RENFREW ST

SAUCHIEHALL ST

ARG YLE ST

S RD

HOPE STREET

KELVINGROVE PARK

AR GY LE

A D D EN

RCS

SCOTT ST

RENFREW ST

WC

COMMERCE S T

The city centre provides a huge variety of retail offer from high street multiples to boutiques to international flagship stores. The city ranks number one on the PMA retail provision score out of the UK’s top 200 retail centres and is the UK’s second largest retail centre after London.

LL HI RY

GRE

The property is located next to Buchanan Bus Station, Glasgow’s main bus terminal which serves c. 40,000 passengers each day. Tourism is a continuing growth sector within the city with over 2 million overnight visitors and in addition, the city is a rapidly expanding conference destination, both of which offer opportunities to maximise summer income, subject to term lengths.

RSC GA

MA

A82

ST

The city which is situated in the Central Belt of Scotland benefits from excellent transport connections by road, rail or air. Access to the extensive motorway network that surrounds Glasgow has been further improved by the completion of the M74 extension link. The rail network links Glasgow to a wide commuter catchment and trains run every 15 minutes between Glasgow and Edinburgh. Over £200m has been invested in the airport in recent years and an average 20,000 passengers pass through every day.

A81

GLASGOW GREEN

A8

Not to scale - for identification purposes only

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S I T UAT I O N The property is located prominently on a prime street corner site at the junction of Port Dundas Road and Killermont Street opposite the entrance to The Glasgow Royal Concert Hall. The property is on the doorstep of both Buchanan Street and Sauchiehall Street, two of the city’s three principal retail thoroughfares. The Buchanan Galleries shopping centre is located directly across the road. This is a prime location within the city centre, close to retail and leisure facilities as well as being easily accessible to transport links including the M74 and M8 motorways. Buchanan Bus Station (the main Glasgow bus terminal providing bus services across Scotland and south) lies immediately to the east of the property and Queen Street Station, providing regular rail services across the central belt of Scotland and beyond, is within 500m to the south east. The property’s central position means that it benefits from high footfall and significant ‘walkin’ student trade, reducing marketing costs.

Glasgow International airport is approximately 8 miles to the west of the centre of the City and is accessible by a regular shuttle bus service leaving at ten minute intervals throughout the day from George Square. The property also benefits from easy access to Glasgow’s Subway network, which is located within 350m. The asset is within close walking distance of a number of higher education institutions within Glasgow. The property sits on the main pedestrian route to Glasgow Caledonian University’s campus on Cowcaddens Road, which runs parallel to the north of Killermont Street. The main campus of the University of Strathclyde is situated on George Street and teaching buildings can be accessed from the north of the campus site on Cathedral Street, the entrance for which is approximately 750m to the south east. The University of Glasgow is situated in the West End of the city approximately 2.3 km to the west, but is easily accessed via subway.

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BUCHANAN BUS STATION

ROYAL CONCERT HALL

QUEEN STREET STATION

GEORGE SQUARE

UNIVERSITY OF STRATHCLYDE CITY OF GLASGOW COLLEGE

GLASGOW CALEDONIAN UNIVERSITY

ROYAL CONSERVATOIRE OF SCOTLAND

BUCHANAN GALLERIES

SUBWAY STATION

CENTRAL BUSINESS DISTRICT

7

H I G H E R E D U C AT I O N IN GLASGOW Universities There are five recognised higher education institutions in Glasgow, with a sixth - The City of Glasgow College, which was formed in 2012 through the merger of Glasgow’s colleges, Central College Glasgow, Glasgow Metropolitan College and Glasgow College of Nautical Studies. There are three main universities; Glasgow, Caledonian and Strathclyde, all of whom feature on the Times Good University Guide and have significant full time student populations. All universities are investing heavily in their campuses. Founded in 1451, the University of Glasgow is the fourth oldest in the English speaking world and was ranked 51st in the QS World Rankings 2013/14. In recent years, the University has worked hard to build its international reputation and this has started to show in overseas recruitment numbers. In July of this year the University successfully purchased a neighbouring landholding, allowing it to now review, redevelop and expand the main campus, adding to their extensive on-campus investment of recent years. The University of Strathclyde was established in 1796 during the Scottish Enlightenment and has maintained a strong focus on Technology. It is in the process of investing £350m in its campus and was the THE UK University of the Year 2012.

Glasgow Caledonian University has a strong international presence with campuses in London, New York and Bangladesh and partnerships in China, India, South America and Oman. They have invested heavily in facilities and teaching spaces at the Glasgow campus which is located in the town centre and have attendees from over 100 countries currently studying in Glasgow.

University

Total

Full-time International

2014 Times Ranking

Applicants Per Place

University of Glasgow

26,295

20,745

5,235

25

6.9

Glasgow Caledonian University

16,120

12,380

2,035

81

6.1

The University of Strathclyde

19,755

14,780

2,815

42

6.2

The Glasgow School of Art

1,720

1,655

495

-

-

Royal Conservatoire

895

890

195

-

-

Total

64,785

50,540

10,775

The Scottish Government has abolished tuition fees for all students from Scotland and the EU (excluding England, Northern Ireland and Wales) who study at Scottish universities. This has kept application numbers from EU students particularly strong.

Source: HESA 2011/12, The Times 2014

Purpose Built Student Housing in Glasgow

Student Housing - No. of student houses in Glasgow

There are approximately 10,789 purpose built student accommodation bedrooms in Glasgow, including both University owned and privately built stock. This equates to only c. 21% of full time students being able to access such accommodation which is significantly lower than the UK average and points to a supply and demand imbalance within the city. Approximately 60% of purpose built accommodation is provided by the universities, and 40% by the private sector.

50,540

39,751

Current demand (full-time higher education students) Undersupply (current demand minus current supply) Current Supply (university and private accomodation combined)

10,789

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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 The Gallery Apartments, 2 Port Dundas Place, Glasgow, G2 3LD as “twodios” measuring 47sq m plus. The 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

TCBs

Britannia Building Posts

William Harley Library

165

AD AS RO DUND PORT

Hotel

Subways

COWC AD Shelter

DENS

ROAD

Car Park

ta

29.9m

Multistorey Car Park

PORT 1

el

DUND

AS PLA CE 2

L Twr Posts

TREE T

Statue

Bus Station

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Area : 0.111 ha (0.275 acres) KILLE RMON T

Shelter

STRE

ET

Glasgow Royal

NOTE: Reproduced from the Ordnance Survey Map with the permission of the Controller of H.M.SA Stationery Office. © Crown copyright licence number 100024244 Savills (UK) Ltd. 14

12

10

8

6

UCHI EHAL L ST REET 15

9

7

PH

3

13

17 19 to 23

150

Bank

1

TREE T

Concert Hall

TCBs

4

Posts

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AC C O M M O DAT I O N 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).

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AC C O M M O DAT I O N 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

Studios Core

Typical upper floor

Not to scale - for identification purposes only

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INCOME Student Accommodation The majority of bedrooms are let directly to students and subject to ‘standard’ form short assured tenancy agreements for 44 and 51 week occupancy terms. There are 16 rooms under nomination agreement to the University of Glasgow for 2013/14. The University pay £136,765 which is in line with direct let rents achieved at the scheme. The property is fully let for the 2013/14 academic year, as it was for 2012/13 and an income summary is shown in the table opposite. CRM, the largest third party manager of student accommodation in the UK, currently manage the scheme. The contract with CRM is determinable on change of ownership. For further information on their marketing of this scheme, please go to: www.crm-students.com/crmaccommodation/glasgow/galleryapartments/ The estimated range of operating costs in running the property including management fee is between £2,300 - £2,500. The property currently benefits from ‘Halls of Residency’ status and is therefore not subject to council tax.

TENURE No.

Average Term

Average Rent Per Week

Occupancy

Rent

9

51

£155.00

99%

£70,434

Classic Studio

77

47.8

£172.85

99%

£630,066

Large Studio

12

49.3

£194.39

99%

£113,736

8

51

£210.00

99%

£84,823

14

48.5

£218.24

99%

£146,703

6

51

£250.00

99%

£75,735

14

48

£151.96

99%

£101,099

Bedroom Type Studio

Deluxe Studio Split Level Studio Premium Split Level Studio 2 Bed Apartment Projected Sundry Income Projected Summer Income Total Gross Income

Heritable Interest

PLANNING Under planning decision notice (ref: 10/02753/ DC) dated 10th March 2011, full planning consent was granted for the Park Inn Hotel for the ‘Use of hotel and restaurant/bar as student residences with restaurant and retail unit at ground floor level’. Further information can be provided on request.

£4,490 £45,092 £1,272,177

Management Costs at £2,400 per bed per annum

-£336,000

Total Net Income

£936,177

Retail Units The two commercial units on ground floor are let to Sainsbury’s Supermarkets Limited and Ask Restaurants Limited respectively. The retail unit is let to Sainsbury’s Supermarket Limited for 15 years from 10 April 2012 on effective full repairing and insuring terms, subject to a tenant only break at year 10 on six months written notice. Rent reviews are 5 yearly to RPI subject to a cap and collar between 2-4%. The current passing rent is £90,000. There will be a minimum uplift to £99,369 in April 2017. As at October 2013, Sainsbury’s Supermarket Limited was rated by Dun & Bradstreet as 5A1 representing a minimal risk of business failure with tangible net assets estimated at £4,509,000,000. 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.

EPC The EPC rating for the studio bedrooms is F85. The commercial units, let to Sainsbury’s and ASK Restaurants, currently have a rating of E71 and G177 respectively. The EPC certificates of each individual unit are available upon request.

VAT Provided the buyer complies with the relevant conditions, the sale of the property should qualify as a VAT-free transfer of a going concern (TOGC) and as such, no VAT should be payable on the acquisition.

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C A P I TA L A LLOWA N CE S There is an unclaimed pool of capital allowances in the order of £2,200,000 and these can be acquired subject to negotiation. Further details on request.

S D LT The purchaser should be able to claim Multiple Dwellings Relief (MDR) with respect to the student accommodation element and we would advise seeking the appropriate professional advice in this regard. The table opposite demonstrates the potential impact on yield should MDR be claimed.

DATA R O O M

No MDR

Purchasing Costs

Est. costs at £2,400/bed

Net Initial Yield

Reversionary Net Yield*

Value

(2013/14)

(2014/15)

Student Accommodation

5.80%

£13,821,991

6.40%

6.74%

Ask Restaurant

5.80%

£1,260,239

6.75%

7.42%

Sainsbury’s

5.80%

£1,417,769

6.00%

6.51%

Total / Avg.

5.80%

£16,500,000

6.39%

6.77%

Student Accommodation

2.80%

£13,821,991

6.59%

6.94%

Ask Restaurant

5.80%

£1,260,239

6.75%

7.42%

Sainsbury’s

5.80%

£1,417,769

6.00%

6.51%

Total / Avg.

3.29%

£16,500,000

6.55%

6.94%

Assuming MDR

* Note

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.

www.savills.com/galleryapartments

- Retail units: assumed RPI increase at 3.3% p.a.

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

PROPOSAL Savills are instructed to seek offers in excess of £16,500,000 (sixteen million five hundred thousand pounds) for the heritable title of the property, which reflects a net initial yield of 6.40% on the student income, 6.00% for the Sainsbury’s and 6.75% on the Ask unit, assuming purchaser’s costs of 5.80%. The asset is for sale inclusive or exclusive of the retail element. The SPV is also available to purchase and details can be provided on request.

C O N TAC T S Marcus Roberts 020 7016 3799 07807 999 187 [email protected]

James Hanmer 020 7016 3711 07967 555 897 [email protected]

Cheryl Jackson 0131 247 3726 07967 555 829 [email protected]

Bruce Patrick 0141 222 5873 07870 555 816 [email protected]