grosvenor house - savills · 2018-07-06 · 16 17 the property provides 169 student bedrooms,...
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Grosvenor House
141/143 Drury Lane & 20/22 Wild Street, London,
WC2B 5TB
32
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Investment Considerations > Prime central London student accommodation
property
> Rare opportunity to acquire a Covent Garden Freehold
> Located 300m from the London School of Economics and Political Science (LSE) Houghton Street campus, 450m from Holborn Underground Station (Piccadilly and Central lines) and 650m from Leicester Square Underground Station (Piccadilly and Northern lines)
> 169 student bedrooms, across a mix of studio units and one bed flats
> Total area of 46,627 square feet (GIA) over basement, ground and six upper floors
> London has the world’s largest student population for any single city and is ranked third in the global list of best student cities, with a total of 39 universities and four of the world’s top 100 Higher Education Institutions including LSE (2018 QS World University Rankings)
> There are 294,605 full time students in London (HESA 16/17) and only 29% students have access to dedicated student accommodation
> There is a London-wide restrictive planning regime with respect to delivery of new purpose built student accommodation that insulates existing use values
> The property benefits from a lease to the LSE from 20 March 2006 expiring 24 September 2027, subject to a mutual break on 20 March 2021
> Current rent of £1,827,839.42 per annum subject to annual upward only rent reviews on 20 March to RPI with a collar of 1.5% and a cap of 3.5%
> The LSE let the bedrooms to postgraduate students, academics and staff during term time and summer schools and the public during summer. A nursery operates on part basement level and is included under the lease
> Key asset management initiatives include exercising the mutual break to take advantage of the super reversion. Savills believe the ERV is in the order of £3,859,000
> We are instructed to seek offers in excess of £55,000,000 for the Freehold interest in Grosvenor House
141/143 Drury Lane & 20/22 Wild Street, London, WC2B 5TB
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LocationLondon is the capital city of the United Kingdom, with excellent inter-city and international travel links. The M25, which encircles the city, connects directly to routes to the North (M1, M11, M40), West (M4), South (M3, M23) and East (M2, M20) of the country. The city is supported by eight main railway stations including Kings Cross St Pancras, which connects directly to mainland Europe via the Eurostar network.
The city is supported by several major international airports including Heathrow (20 miles), Gatwick (28 miles) and Stansted (40 miles). All are easily accessible via public transport, namely coach services and express train routes. Heathrow is also linked directly to the London underground network via the Piccadilly Line (journey time from Leicester Square approximately 50 minutes).
London is the largest metropolitan area in the European Union and in demographic terms its population rate increased from 7,172,091 to 8,173,900 between 2001 and 2011; an increase of 14%. During this period the population of Westminster increased from 181,286 to 219,396; an increase of 17.3%.
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The Regent’sPark
Hyde Park
GreenPark St James’s
Park
HollandPark
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New Kent Rd A201
New
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h Hig
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Victoria Embankment Upper Thames St Lower Thames St
Victoria St Lambeth Rd
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per St A
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per St A
1 Farringd
on St B
lackfriars Rd
Waterloo Rd
York
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Stamford St Southwark St
Westway A40 Marylebone Rd A501 Euston Rd A501 Pentonville Rd A501 City Rd A501 Commercial St Tow
er Bridge Rd
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sland R
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reditch H
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Hackney Rd
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York R
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Camden Rd
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ottenham
Co
urt Rd
Chalk Farm Rd Eversholt St
Hendon Way Finchley Rd A41 W
ellington Rd
Bayswater Rd A402 Oxford St A40 Oxford St Holborn Cheapside Lower Thames St
Birdcage Walk
Cromwell Rd A4
Brompton Rd A4
Piccadilly
Park Lane A4202
Kensington Rd A315 Knightsbridge
Exhibition Rd
Ken
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Chu
rch
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Westbourne Grove A4206
A5 Maidavale Edgw
are Rd
N C
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Baker St
Grosvenor S
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Regent St
Shaftesb
ury Rd
Haymarket
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lace King
sway
Guildford St
Theobalds Rd London Wall
The Mall
Sloane St
St John’s
Wood Rd
BrentCross
SouthHampstead
MaidaVale
NottingHill
Bayswater
Marylebone
Bloomsbury
Camden
King’sCross
Islington
Hackney
Shoreditch
The CityOf LondonCovent
Garden
Clerkenwell
Hoxton
SohoMayfair
Southwark
BoroughLambeth
Belgravia
Knightsbridge
BRONDESBURYSTATION
ACTONSTATION
PADDINGTONSTATION
NOTTING HILL GATE STATION
HAMMERSMITHSTATION
EARLS COURTSTATION
VICTORIASTATION
WATERLOOSTATION
KINGS CROSSST PANCRASINTERNATIONAL
LIVERPOOL STREETSTATION
WEST HAMPSTEADSTATION
MARYLEBONESTATION
EUSTONSTATION
BRENT CROSSSTATION
LONDONBRIDGESTATION
Higher Education Institution1 Royal Central School of Speech
and Drama
2 The Institute of Contemporary Music Performance
3 London Business School
4 University of Westminster - Marylebone
5 University of Westminster - Regent Street
6 ESCP Europe Business School
7 University College London - Gower Street
8 London College of Fashion
9 University of Westminster - New Cavendish Street
10 University of Westminster - Wells Street Campus
11 King’s College London - Waterloo
12 Birkbeck College
13 University College London - Bedford Way
14 SOAS - Bloomsbury
15 Architectural Association School of Architecture
16 London South Bank University
17 University College London - Brunswick Square
18 King’s College London - Guy’s Campus
19 Central St Martins
20 Regent London
21 Queen Mary University of London - Lincoln’s Inn Fields
22 BPP University Law School
23 London School of Economics
24 University of the Arts - High Holborn
25 King’s College London - Strand
26 The Courtauld Institute of Art
27 SOAS - Vernon Square
28 Queen Mary University of London - Charterhouse Square
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2
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12
15
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SituationGrosvenor House is situated in the heart of Covent Garden within the London Borough of Westminster. The property is located on Drury Lane, a prime Covent Garden location with dual frontages onto both Drury Lane and Wild Street to the rear. Drury Lane runs from High Holborn (A40) at the north down to The Strand (A4) at the south.
The property is ideally situated for a number of universities; it is within easy walking distance of the London School of Economics & Political Science, Kings College London, University College London and Westminster University.
Grosvenor House has unrivalled public transport links. It is located within a 4 minute walk (0.2 miles) of Covent
Local Universities
Garden Underground Station (Piccadilly Line), a 6 minute walk (0.3 miles) of Holborn Station (Central and Piccadilly Lines) and within a 7 minute walk (0.4 miles) to Leicester Square Underground Station (Northern and Piccadilly Lines). Charing Cross Station is also located within 13 minutes’ walk (0.6 miles) to the south west. Tottenham Court Road Station is also within a 13 minute walk (0.6 miles), with Crossrail services scheduled to commence in December 2018 providing links to Canary Wharf (12 minutes), Bond Street (2 minutes), Heathrow Terminal 5 (36 minutes) and Woolwich (20 minutes).
0.3 miles
6 minutes
3 minutes
0.5 miles
10 minutes
5 minutes
0.9 miles
17 minutes
7 minutes
1.9 miles
35 minutes
15 minutes
Source: Google
Source: Transport For London (TFL)
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Distance/Method and Journey Time
Intercity Transport Links International Transport Links Landmark Destinations
Liverpool Street
Euston Waterloo Kings Cross St Pancras
Heathrow Airport Terminal 5
Oxford Circus
Embankment
Covent Garden 14 minutes 9 minutes 8 minutes 6 minutes 55 minutes 6 minutes 6 minutes
Holborn 7 minutes 7 minutes 11 minutes 3 minutes 57 minutes 3 minutes 9 minutes
23.8m
23.5m
StationCycle Hire
TCBs
Sports Court
TCB
BO
WILD STREET
MEWS
GREAT
QUEEN
STREET
Lane
Play Area
Drury
Gardens
19
Peabody Estate
15
28
1 to 50
6
79
Crown Co
Mag
istra
tes
Cour
t
Bow
Stre
et
1 to 29
150
30
151
39Bu
17
42
1 to 40
(United Grand Lodge
8 to24
55
1 to 29
Crown Court
Martlett
Crown Court
Block F
Hall
of England)
1to24
Drur
yHo
use
Cour
t
Broa
d Co
urt
Peabody Estate
141 to 145
8 to18
44to46
4
9
1 to 40
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Freemasons' Hall
40
Hotel
26
13
Fletcher Buildings
Charter House
PH
1 to 23
Bank
158
6
4
PH
69to 76
Block H
Beaumont Buildings
Sheridan Buildings
149
148
157
1to10
(1 to 35)
41to
44
77
Block G
Design Council
45
1 to 29
39
34
4078
37
38
43
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Weld
House
(site
of)
22.2m
Chy
TCB
Wild
Cou
rt
WILD STREET
1 to24
1 to24
58
34to
43
Bloc
k CBlock E
Block D
Connaught Rooms
1 to 29
Block N
Block M
Block L
1 to 29
65
1 to 10
1 to
24
1312
British Museum
Covent Garden Market
Royal Opera House
Seven Dials
Soho
Mayfair
Covent Garden
Tottenham Court Road
Holborn
Central Saint Giles
Regent’s Park
Centre PointOxford Street
Russell Square
1514
1716
The property provides 169 student bedrooms, broken down as 56 single rooms, 26 queen rooms, 49 double rooms, 33 twin rooms and 5 accessible rooms. Room sizes range from 147 sq ft up to 499 sq ft
DescriptionGrosvenor House was originally built in the early 20th Century as two separate buildings (fronting Drury Lane and Wild Street). The two were later merged to form a single office block which was then converted in 2004 following the granting of a change of use consent to student accommodation. At this time two additional floors were added to the building adding an additional 6,778 sq ft of GIA. The property was then leased to the London School of Economics with its initial intake in 2006.
The property provides 169 student bedrooms, broken down as 56 single rooms, 26 queen rooms, 49 double rooms, 33 twin rooms and 5 accessible rooms, arranged from the ground to sixth floors. All rooms include a bed, study area, kitchen and private bathroom with a shower, wash basin and WC.
The lower ground floor comprises a student common room and lounge, computer room, laundry room, and storage facilities. The lower ground floor further comprises a nursery (D1) which is not rentalised and was a requirement under the Section 106 agreement. The nursery totals 5,113 sq ft.
The property also has 24 hour security with secure door systems and CCTV cameras.
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Accommodation
Floor Plans
Ground Floor
Drury Lane
Sixth Floor Bedrooms
Fifth Floor
First - Fourth Floors
Bedroom Areas Summary
Floor G 1 2 3 4 5 6 Total
Single 10 11 11 11 11 0 2 56
Queen 0 6 6 2 2 5 5 26
Double 7 6 6 10 10 9 1 49
Twin 3 6 6 6 6 4 2 33
Accessible 1 1 1 1 1 0 0 5
Total 21 30 30 30 30 18 10 169
Room size ranges (sq ft GIA) Total
147 - 175 33
181 - 203 66
207 - 249 38
251 - 349 22
369 - 499 10
2120
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London Student MarketLondon is home to 39 universities. The total student intake of these universities is 367,235 (HESA 2016-17) of whom 294,605 study full time. Within these full time students, there are 217,650 (74%) undergraduate students and 76,955 (26%) postgraduate students. Internationals students make up 36% of the full time student population (29% of the total).
In general, international students prefer purpose built or dedicated student accommodation, as they value the centrality, amenities, services and security that this type of accommodation offers. Given London’s international reputation as a centre of academic
excellence, we expect demand for bespoke student accommodation from international students to remain strong.
The capital has experienced significant growth in student numbers over the past 15 years recording an average full time student population growth rate of 3.00% per annum and 33% in total (HESA). Over the same period, the international student population has increased by 60% and now stands at 105,395. Just 29% of full time students currently have access to purpose built student accommodation.
Student Numbers for Selected London Institutions
University Borough Total Full Time UG FT PG FT Total
International Times Ranking
2018
Imperial College London
Kensington and Chelsea
17,685 16,350 9,520 6,830 8,900 5
University College London
Camden 37,905 30,640 17,405 13,235 15,725 6
London School of Economics
Westminster 11,205 10,730 4,725 6,005 7,630 8
Kings College London
Southwark 30,560 24,095 16,515 7,580 9,990 27
School of Oriental and African Studies
Islington 6,360 5,205 3,245 1,960 2,910 35
Queen Mary University, London
Tower Hamlets
18,885 17,590 13,620 3,970 5,970 40
City University of London
Islington 19,400 15,920 9,245 6,675 7,560 50
University of the Arts, London (London College of Fashion)
Holborn 18,290 17,340 14,565 2,775 8,385 109
University of Westminster
Westminster 19,650 15,110 12,775 2,335 6,155 117
London South Bank University
Southwark 17,985 10,515 8,545 1,970 1,800 120
London Metropolitan University
Islington 12,145 9,250 8,055 1,195 1,230 127
The main universities within the close vicinity of Grosvenor House are detailed below:
London School of Economics and Political Science
The London School of Economics is one of the foremost social science universities in the world. In 2017 the school received 18,000 applications for 1,500 undergraduate places, a ratio of 12 applicants per place. It is currently ranked second in the world for social sciences (QS World University Rankings 2018), and 8th in the Times Good University Guide 2018. In 2016/17 the university had a total of 11,205 students, comprising 4,725 full time undergraduates and 6,005 full time post graduates. 7,630 of these were International students coming from 133 countries around the globe.
The school has a long history of political involvement with 31 alumni and former staff who are currently MPs and 42 current members of the House of Lords. More than 30 past or present heads of state have either been LSE students or academics, as have 16 Nobel Prize winners in economics, literature and peace.
King’s College London
King’s College is one of the top 25 universities in the world (2018 QS) and the fourth oldest university in England. It was ranked 27th in the Times Good University Guide 2018. King’s College has over 30,000 students from over 150 countries around the globe made up of 16,515 full time undergraduate students and 7,580 full time post graduates. Between 2011 and 2015 King’s added over 1,500 new places to the undergraduate intake as a result of increased applications. Once known primarily for science, King’s now has a distinguished reputation across eight schools, including humanities, law and social sciences. The King’s campus is currently undergoing a £1 billion redevelopment programme and since 1999 over half the university’s activities have been relocated to new and refurbished buildings.
University of Westminster
The University of Westminster draws its students from over 169 countries, more than any other university in the UK. It was ranked 117th in the Times Good University Guide 2018 with a total of 19,650 students, comprising 12,775 full time undergraduates and 2,335 full time post graduates.
The university has recently invested heavily into its buildings and facilities, with major refurbishments taking place at the Regent Campus and Little Titchfield Street. A new fabrication laboratory is currently under construction and will reinforce the faculty’s position as one of the UK’s leading centres.
University College London
University College London is one of the top seven universities in the world as ranked by both QS (7th) and The Times Good University Guide 2018 (6th).
The university is planning to invest £1.25 billion over the next ten years to implement its Transforming UCL masterplan. It is the largest capital investment programme UCL has undertaken since building its original Bloomsbury campus and one of the biggest in UK higher education.
There are currently 37,905 students enrolled at UCL, comprising 17,405 full time undergraduates and 13,235 full time post graduates.
School of Oriental and African Studies (SOAS)
The School of Oriental and African Studies is the only Higher Education Institution in Europe specialising in the study of Asia, Africa, and the Middle East. Their academic focus is on languages, cultures and societies, and it has the largest concentration of academic staff concerned with Africa, Asia and the Middle East in Europe.
SOAS was ranked 35th in the Times Good University Guide 2018 with a total of 6,360 students made up of 3,245 full time undergraduates and 1,960 full time post graduates. The number of applicants has grown by over 25% in the last two years alone with students coming from over 130 countries. The school is currently in the process of taking over the north block of Senate House which is at the western end of the SOAS precinct and will provide space for a new student hub and teaching facilities.
University of the Arts London (London School of Fashion)
The London School of Fashion is a global provider of fashion education, research and consultancy. Teaching and research within fashion design, fashion textiles and technology form the core of their expertise.
It has been placed among the top five institutions in the world for art and design with a ranking of 109 in the Times Good University Guide 2018. Over the next 5 years the University will invest more than £250 million in student facilities cementing its place as the largest art and design university in Europe.
It currently has a total of 18,290 students comprising 14,565 full time undergraduates and 2,775 full time post graduates.
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IncomeGrosvenor House is currently let to the London School of Economics and Political Science on a full repairing and insuring basis from 20 March 2006 expiring 24 September 2027, subject to a mutual break on 20 March 2021. The current rent is £1,827,839.42 per annum subject to annual upward only rent reviews to RPI with a collar of 1.5% and a cap of 3.5%.
The LSE are ranked 35th in the QS’ World University rankings and have a Dun & Bradstreet rating of 5A1 indicating a tangible net worth of £508,901,000 and a minimum risk of business failure.
It is our opinion that the property is highly reversionary to direct let PBSA rental levels and on a refurbished basis, the ERV would be approximately £3,680,000
on the assumption of rents of between £400 and £700 per week and £2,500 per bed per annum operating costs.
The basement nursery is not currently rentalised under the lease and we believe this has an ERV of £35 per sq ft equating to approximatively £179,000 per annum, subject to planning.
PBSA Rental Comparables
Operator Hall Accommodation Term Length (weeks) Rent Per Week
Scape Bloomsbury
Standard Studio 51 £365
Medium Studio 51 £405
Large Studio 51 £500
Premium Studio 51 £600
Twin Room 51 £550
Two Bed Apartment 51 £735
Private Kirby Street Classic Studio 51 £374
Urbanest Westminster BridgeStudio Room 51 £460
Luxury Studio 51 £569
Pure
Pure Bloomsbury
Bronze Ensuite 51 £383
Bronze Studio 51 £385
2-Bed Flat 51 £401
Silver Ensuite 51 £410
Bronze Studio Plus 51 £425
Gold Ensuite 51 £440
Silver Studio 51 £435
Silver Studio Plus 51 £445
Gold Studio 51 £475
Gold Studio Plus 51 £485
Platinum Studio 51 £525
Platinum Studio Plus 51 £535
Pure Bankside Studio Flat 51 £335
Pure Paris Gardens Studio Flat 51 £365
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Asset Management Considerations> Release super-reversion following
triggering break and modernising of bedrooms
> The estimated rental value of the asset once refurbished is in the order of £3,859,000 per annum
> Excellent sized bedrooms, some capable of sub-division or adding further occupancy
> Potential to use mutual break to re-gear LSE lease
> Creation of additional 7 bedrooms on sixth floor and develop new seventh floor
> Maximisation of income through summer lettings strategy
> Let out nursery on commercial terms
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TenureThe right to buy the Freehold interest in the property is available for purchase.
EPC’sEPCs are available for review on the dataroom.
VATWhilst the Property is opted to tax, this is largely disapplied because of the student accommodation use and the disposal is expected to be structured so that VAT is only applicable to the non-residential use equating to approximately 0.23% of the purchase price.
Proposal Savills are instructed by GH Partnership LLP (the ‘LLP’) to dispose of their contracted position in respect of the Freehold of Grosvenor House. The LLP entered into a contract with Student First Limited dated 27 January 2016 to acquire the Property. A notional deposit (£1) was paid on exchange with the balance of the purchase price payable on completion. Completion is triggered by the LLP serving a completion notice on Student First requiring completion to take place 20 working days after service of the notice but if the LLP does not do so then completion will take place on a longstop date, 28 February 2020. The disposal will be by way of sub-sale, assignment or novation of this contract. Savills are instructed to seek offers in excess of £55,000,000.
DataroomFurther detail can be found by accessing https://sites.savills.com/GrosvenorHouse/ subject to agreeing a non-disclosure agreement.
ContactsJames Hanmerjhanmer@savills.comT: 0207 016 3711M: 07967 555 897
Richard McKennarmckenna@savills.comT: 0207 016 3807M: 07972 000 092
George Bossomgbossom@savills.comT: 0207 299 3036M: 07807 999 615
Disclaimer
Savills, and 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 the 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.
2018 Savills (UK) Limited. All rights reserved. Designed by Savills Marketing: 020 7409 8834 | April 2018
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