Well let student Freehold investment opportunity 20 Newport Road, Cardiff CF24 0DB

4 5shand house shand house

Investment Summary � Freehold income-producing student accommodation asset in the heart of Cardiff City Centre.

� New 5-year nomination agreement with Cardiff Sixth Form College from 2017-18 for 141 beds / 75% of scheme.

� New agreement benefits from annual upward only rent reviews to CPI + 2.5% and capped at 4%.

� Fully operational asset with a 100% occupancy rate in last 4 years, managed by Host Students.

� Excellently situated at the edge of the city centre and in a short walking distance of main university campuses. The building is opposite the University of Cardiff’s School of Engineering and School of Computer Science & Informatics and within short walking distance of the main Cardiff University campus and the University of South Wales.

� The part new build, part converted building opened in September 2013 and offers a high standard of accommodation and recently refurbished communal areas.

� Only 28% of full time students in Cardiff have access to purpose built student accommodation (PBSA).

� The property is forecast to generate a core student Gross Operating Income of £1,335,315 for the 2017/18 academic year, plus ancillary income.

� Offers in excess of £16,330,000 which will show an attractive Blended Net Initial Yield of 6.13% after deducting purchasers costs of 3.22%.

6shand house

Higher Education in Cardiff

There are three main providers of Higher Education in Cardiff; Cardiff University, Cardiff Metropolitan University and the University of South Wales, which are respectively ranked 46th, 89th and 115th by the Times Good University Guide 2018. The city has approximately 51,000 full time students with 20% of them being international students.

There are approximately 14,000 purpose built student accommodation beds in Cardiff, including both University owned and privately built stock and a limited pipeline beyond 2017/18 of only c. 3,000 beds. There is therefore a significant current and future under-supply of PBSA, with only 28% of full time students having access to PBSA.

Cardiff University is the highest-ranked Welsh university, resulting in both applications and enrolments at record levels. The university recently opened a £44 million Brain Research Centre, which contains the most powerful equipment of its kind in Europe, and a £30 million Science Development Centre. Moreover, the university has embarked on a £450 million masterplan that will include a new Innovation Campus and a new library.

Cardiff Metropolitan University is going into a partnership with an Asian television company to build a new Media and Communications campus for 2,000 students to enhance its international reputation. Recently the university committed over £70 million to improve the facilities of its two campuses, including a new campus centre.

University of South Wales has focused investments on the £60-million Newport Knowledge Quarter and the ATRiuM Campus in the centre of Cardiff, where a new building will add to the already extensive facilities for creative industries students. The new building will include facilities for advertising, TV and film set design and fashion, as well as dance and photography studios.

Location

Shand House is situated at the corner of Fitzalan Place and A4161 Newport Road. It is opposite the University of Cardiff’s School of Engineering and School of Computer Science & Informatics. It is a 300m walk south to the University of South Wales Cardiff Campus and a 800m walk north west to the University of Cardiff.

Located on the edge of the vibrant city centre and within walking distance of the St David’s shopping and leisure centre, the residents can enjoy an array of bars, shops, cinemas and restaurants. The property is also situated close to the Cardiff Central train station, allowing fast connections to London in 2 hours and bus connections to Cardiff Airport

University Total Students

Full-time International Times Ranking

Applicants Per Place

Cardiff University 30,675 23,360 7,115 46th 7

Cardiff Metropolitan University 12,580 10,920 3,280 89th 4.6

University of South Wales 25,265 16,670 3,465 115th 4.5

Total 68,520 50,950 (74%) 13,860 (20%)

St David’s Shopping Centre

Queen Street Station

Principality Stadium

Cardiff Castle

Cardiff University

Cardiff Central Station

University of South Wales

Cardiff School of Engineering

Cardiff Sixth Form College

Lewis Rd

Lewis Rd

Ocean Way

Tyndall St

E Tyndall St

Cour

tena

y Rd

Moorland

Rd

Fitzalan Pl

Central Link

Central Link

Lloyd George Ave

Ninian Park Rd

Tudor StWood St

Pena

rth

Rd

Penar

th R

d

Penarth

Rd

Sloper Rd

Cathedral Rd

Cathedral RdC

lare St

Clare R

d

North Rd

North Rd

Duke St

Cowbridge Rd

Corbett Rd

New

port

Rd

Newport Rd

Boulevard De Nantes

Broadway

A4232

A4232

Windsor Rd

Moira Pl

Constellatio

n St Splott Rd

Glossop Rd

City R

d

City Rd

Clive St

Ferry Rd

Avonda

le Rd

James St

Corporation Rd

Neville St

CARDIFF BAY STATION

GRANGETOWN STATION

CARDIFF CENTRAL STATION

CARDIFF QUEEN STREET STATION

CATHAYS STATION

Motorpoint Arena Cardi�

St David’s Hall

Cardi� Central Library

The Red Dragon Centre

Wales Millennium Centre

St David’s Shopping Centre

University of South Wales, Cardi� Campus

Principality Stadium

Cardi� Castle

National Museum Cardi�

Cardi� Sixth Form College

Cardi� University

Cardi� School of Engineering

Cardi� City Hall

Not to scale – For indicative purposes only.

8 9shand house shand house

DescriptionThe former office was converted to student accommodation in 2013 and comprises student accommodation and 3 commercial units. The property is arranged over basement, ground floor and 5 upper floors. The basement comprises laundry, common room and a significant unused area. The ground floor provides a main reception, cycle store, manager’s office and an outside patio. The 190 beds are provided over the upper floors of the building and are arranged as a mix of self contained studios and 2-6 bed cluster flats with shared kitchen and dining facilities. Within the cluster flats, a mixture of basic, standard and deluxe bedrooms are available.

Room Type Room Area (sq m)

Ensuite room in Cluster Flats 14 – 16

Twin Flat 32

Standard Studio 21 – 23

Deluxe Studio 28

10 11shand house shand house

TenancyThe property is currently part let to the Cardiff Sixth Form College. We understand that Cardiff Sixth Form College are in the process of being taken over by Duke Education. Therefore, the latest nomination agreement is issued in the name of the new owners. The remaining beds are let on a direct let basis.

A new 5-year Nomination Agreement has been signed for 141 of the 190 beds and will be starting on 1st September 2017. The lease will benefit from annual rent reviews based on the Consumer Price Index raised by 2.5% and capped at 4%. The minimum rent payable on the starting date will be £972,351, as illustrated below. Moreover, Cardiff Sixth Form

College also receive the benefit of Retail Unit 1 on the ground floor measuring 1,800 sq ft at a peppercorn rent for a term coterminous with the accommodation agreement.

Retail Unit 2 (measuring 1,400 sq ft) and Retail Unit 3 (measuring 1,050 sq ft) are let to respectively Starbucks and One Stop. The 10-year lease with Starbucks commenced in February 2014 and the rent payable is £22,500 per annum. The 15-year lease with One Stop commenced in April 2014 and the rent is £17,000 per annum. Both leases have a mutual break option at the end of 5 years and an open market upward only rent review every 5 years.

12 13shand house shand house

Accommodation and Income ProfileStudent Accommodation

A summary of the available accommodation and the forecast Net Operating Income is shown below. We assume that the property can be managed for £1,900 per bed per annum equating £361,000.

Room Types Beds Term (weeks)

2017/18 Rent per Week (£)

Gross Term Income (£pa)

Standard 6 Bed Ensuite (Direct Let) 6 48 140.00 40,320

Standard 6 Bed Ensuite (Nomination Agreement) 24 45 142.80 154,224

Deluxe 6 Bed Ensuite (Direct Let) 12 48 141.00 81,216

Deluxe 6 Bed Ensuite (Nomination Agreement) 24 45 147.90 159,732

Standard 4 Bed Ensuite (Direct Let) 8 48 145.00 55,680

Standard 4 Bed Ensuite (Nomination Agreement) 16 45 142.80 102,816

Standard 2 Bed Flat (Direct Let) 14 48 148.00 99,456

Standard 2 Bed Flat (Nomination Agreement) 42 45 142.80 269,892

Standard 1 Bed Flat (Direct Let) 0 48 - -

Standard 1 Bed Flat (Nomination Agreement) 3 45 185.00 24,975

Standard Studio (Direct Let) 7 51 186.00 66,402

Standard Studio (Nomination Agreement) 24 45 178.50 192,780

Deluxe Studio (Direct Let) 2 51 195.00 19,890

Deluxe Studio (Nomination Agreement) 8 45 188.70 67,932

Totals and Averages 190 45.92 160.27

Gross Term Income 1,335,315

Direct Let 362,964

Nomination Agreement 972,351

Occupancy Void (1% on Direct Let) (3,630)

Net Term Income 1,331,685

Operating Expenditure (361,000)

Net Term Income after Operating Expenditure 970,685

Holiday Income 14,694

Ancillary Income 8,593

Net Operating Income 993,842

Total Income

The total Net Income for 2017/18, including the revenue generated by the commercial spaces on the ground floor of £39,500 is forecast to be £1,033,342.

14 15shand house shand house

Comparables

Scheme Operator Beds Room Type Rent 2017/18*

Eclipse Collegiate AC 671 6 Bed En-suite £137.00

3 Bed En-suite £155.00

Linked Studio £165.00

Studio £177.50

Ultra Studio £215.00

The Fitzalan CRM 355 Bronze Studio £165.00

Silver Studio £170.00

Gold Studio £185.00

Platinum Studio £199.00

Platinum Plus Studio £210.00

Windsor House Collegiate AC 321 Twodio £175.00

Studio £185.00

Premier Studio £196.00

Ultra Studio £206.00

Deluxe Studio £211.00

*Given a 51 weeks contract

ProposalSavills are instructed to seek offers in excess of £16,330,000 which will show an attractive Blended Net Initial Yield of 6.13% after deducting purchasers costs of 3.22%.

The pricing reflects 6.10% on the student accommodation and 7.00% on the retail.

Important NoticeSavills, 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 | May 2017

Further Information

Tenure

Freehold.

EPC

The EPC rating for the property is B. All EPC certificates are available in the data room.

VAT

VAT is not expected to arise on the sale.

Capital Allowances

No capital allowances are available.

Contacts

James Hanmer Director +44 (0) 207 016 3711 +44 (0) 796 755 5897 jhanmer@savills.com

Ross Griffin Director +44 (0) 292 036 8961 +44 (0) 797 200 0113 rgriffin@savills.com

Lizzie Beagley Director +44 (0) 207 016 3863 +44 (0) 780 799 9174 lizzie.beagley@savills.com

Thibaut Pieters Financial Analyst +44 (0) 207 016 3761 +44 (0) 777 347 6312 thibaut.pieters@savills.com

12 Windsor Place Cardiff CF10 3BY

33 Margaret Street London W1G 0JD

33 Margaret Street London W1G 0JD

33 Margaret Street London W1G 0JD