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I N V E S T M E N T C O N S I D E R AT I O N S
• Primestudentaccommodationopportunityincorecitycentrelocation,fullyletfor2013/14
• AdditionalincomefromSainsbury’sandAskRestaurants
• 133bedroomstudioaccommodation(140beds),providinganaveragebedroomsizeof27.14sqmandexcellentcommonfacilities
• HighestspecifiedschemeinGlasgow.Thepropertyisaformerlifestyleboutiquehotel,extensivelyrefurbishedandconvertedtostudentusein2011
• Glasgowisarenownedandestablishedcentreforhighereducation,boastingthreemainuniversitiesandafulltimestudentpopulationof50,450
• ExcellentlocationwithintheheartofthecityincloseproximitytouniversitycampusesincludingGlasgowCaledonianandStrathclydeuniversities
• CommonwealthGamesinGlasgowin2014willhelpbolsterthecity’sinternationalreputation
• Potentialtoincreasefutureincomebycontinuingtomoveallstudentaccommodationcontractlengthsto51weeks
• Savillsareinstructedtoseekoffersinexcessof£16,500,000 (sixteen million five hundred thousand pounds) fortheheritabletitleoftheproperty,whichreflectsanetinitialyieldof6.40%onthestudentincome,6.00%fortheSainsbury’sand6.75% ontheAskunit,assumingpurchaser’scostsof5.80%.Theassetisforsaleinclusiveorexclusiveoftheretailelement.TheSPVisalsoavailabletopurchaseanddetailscanbeprovidedonrequest.
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FESTIVALPARK
KELVINGROVEPARK
GLASGOWGREEN
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SAUCHIEHALL ST SAUCHIEHALL ST
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LANCEFIELD QUAY
BROOMIELAW CLYDE ST
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QUEEN STSTATION
GEORGESQUARE
CENTRALSTATION
L O C AT I O N
GlasgowisScotland’slargestcityandoneofthelargestintheUnitedKingdomboastingfiverecognisedhighereducationinstitutions.Thecityhasseenparticularlystrongeconomicgrowthanddevelopmentinrecentyearsandhasapopulationintheorderof600,000andacatchmentareaofover2million.
ThecitywhichissituatedintheCentralBeltofScotlandbenefitsfromexcellenttransportconnectionsbyroad,railorair.AccesstotheextensivemotorwaynetworkthatsurroundsGlasgowhasbeenfurtherimprovedbythecompletionoftheM74extensionlink.TherailnetworklinksGlasgowtoawidecommutercatchmentandtrainsrunevery15minutesbetweenGlasgowandEdinburgh.Over£200mhasbeeninvestedintheairportinrecentyearsandanaverage20,000passengerspassthrougheveryday.
ThepropertyislocatednexttoBuchananBusStation,Glasgow’smainbusterminalwhichservesc.40,000passengerseachday.
Tourismisacontinuinggrowthsectorwithinthecitywithover2millionovernightvisitorsandinaddition,thecityisarapidlyexpandingconferencedestination,bothofwhichofferopportunitiestomaximisesummerincome,subjecttotermlengths.
Thecitycentreprovidesahugevarietyofretailofferfromhighstreetmultiplestoboutiquestointernationalflagshipstores.ThecityranksnumberoneonthePMAretailprovisionscoreoutoftheUK’stop200retailcentresandistheUK’ssecondlargestretailcentreafterLondon.
Nottoscale-foridentificationpurposesonly
Glasgow Caledonian University
University of Strathclyde
City of Glasgow College
University of Glasgow
The Glasgow School of Art RCS
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S I T U AT I O N
ThepropertyislocatedprominentlyonaprimestreetcornersiteatthejunctionofPortDundasRoadandKillermontStreetoppositetheentrancetoTheGlasgowRoyalConcertHall.
ThepropertyisonthedoorstepofbothBuchananStreetandSauchiehallStreet,twoofthecity’sthreeprincipalretailthoroughfares.TheBuchananGalleriesshoppingcentreislocateddirectlyacrosstheroad.
Thisisaprimelocationwithinthecitycentre,closetoretailandleisurefacilitiesaswellasbeingeasilyaccessibletotransportlinksincludingtheM74andM8motorways.
BuchananBusStation(themainGlasgowbusterminalprovidingbusservicesacrossScotlandandsouth)liesimmediatelytotheeastofthepropertyandQueenStreetStation,providingregularrailservicesacrossthecentralbeltofScotlandandbeyond,iswithin500mtothesoutheast.
Theproperty’scentralpositionmeansthatitbenefitsfromhighfootfallandsignificant‘walk-in’studenttrade,reducingmarketingcosts.
GlasgowInternationalairportisapproximately8milestothewestofthecentreoftheCityandisaccessiblebyaregularshuttlebusserviceleavingattenminuteintervalsthroughoutthedayfromGeorgeSquare.ThepropertyalsobenefitsfromeasyaccesstoGlasgow’sSubwaynetwork,whichislocatedwithin350m.
TheassetiswithinclosewalkingdistanceofanumberofhighereducationinstitutionswithinGlasgow.ThepropertysitsonthemainpedestrianroutetoGlasgowCaledonianUniversity’scampusonCowcaddensRoad,whichrunsparalleltothenorthofKillermontStreet.ThemaincampusoftheUniversityofStrathclydeissituatedonGeorgeStreetandteachingbuildingscanbeaccessedfromthenorthofthecampussiteonCathedralStreet,theentranceforwhichisapproximately750mtothesoutheast.TheUniversityofGlasgowissituatedintheWestEndofthecityapproximately2.3kmtothewest,butiseasilyaccessedviasubway.
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GLASGOW CALEDONIAN UNIVERSITY
CITY OF GLASGOW COLLEGE
UNIVERSITY OF STRATHCLYDE
SUBWAY STATION
GEORGE SQUARE
QUEEN STREET STATION
BUCHANAN BUS STATION
ROYAL CONSERVATOIRE OF SCOTLAND
CENTRAL BUSINESS DISTRICT
BUCHANAN GALLERIES
ROYAL CONCERT HALL
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H I G H E R E D U C AT I O N I N G L A S G O W
Universities
TherearefiverecognisedhighereducationinstitutionsinGlasgow,withasixth-TheCityofGlasgowCollege,whichwasformedin2012throughthemergerofGlasgow’scolleges,CentralCollegeGlasgow,GlasgowMetropolitanCollegeandGlasgowCollegeofNauticalStudies.Therearethreemainuniversities;Glasgow,CaledonianandStrathclyde,allofwhomfeatureontheTimesGoodUniversityGuideandhavesignificantfulltimestudentpopulations.Alluniversitiesareinvestingheavilyintheircampuses.
Foundedin1451,theUniversityofGlasgowisthefourtholdestintheEnglishspeakingworldandwasranked51stintheQSWorldRankings2013/14.Inrecentyears,theUniversityhasworkedhardtobuilditsinternationalreputationandthishasstartedtoshowinoverseasrecruitmentnumbers.InJulyofthisyeartheUniversitysuccessfullypurchasedaneighbouringlandholding,allowingittonowreview,redevelopandexpandthemaincampus,addingtotheirextensiveon-campusinvestmentofrecentyears.
TheUniversityofStrathclydewasestablishedin1796duringtheScottishEnlightenmentandhasmaintainedastrongfocusonTechnology.Itisintheprocessofinvesting£350minitscampusandwastheTHEUKUniversityoftheYear2012.
GlasgowCaledonianUniversityhasastronginternationalpresencewithcampusesinLondon,NewYorkandBangladeshandpartnershipsinChina,India,SouthAmericaandOman.TheyhaveinvestedheavilyinfacilitiesandteachingspacesattheGlasgowcampuswhichislocatedinthetowncentreandhaveattendeesfromover100countriescurrentlystudyinginGlasgow.
TheScottishGovernmenthasabolishedtuitionfeesforallstudentsfromScotlandandtheEU(excludingEngland,NorthernIrelandandWales)whostudyatScottishuniversities.ThishaskeptapplicationnumbersfromEUstudentsparticularlystrong.
Purpose Built Student Housing in Glasgow
Thereareapproximately10,789purposebuiltstudentaccommodationbedroomsinGlasgow,includingbothUniversityownedandprivatelybuiltstock.Thisequatestoonlyc.21%offulltimestudentsbeingabletoaccesssuchaccommodationwhichissignificantlylowerthantheUKaverageandpointstoasupplyanddemandimbalancewithinthecity.Approximately60%ofpurposebuiltaccommodationisprovidedbytheuniversities,and40%bytheprivatesector.
University Total Full-time International2014 Times Ranking
Applicants Per Place
UniversityofGlasgow 26,295 20,745 5,235 25 6.9
GlasgowCaledonianUniversity
16,120 12,380 2,035 81 6.1
TheUniversityofStrathclyde
19,755 14,780 2,815 42 6.2
TheGlasgowSchoolofArt 1,720 1,655 495 - -
RoyalConservatoire 895 890 195 - -
Total 64,785 50,540 10,775
Source: HESA 2011/12, The Times 2014
Student Housing - No. of student houses in Glasgow
Current demand(full-timehighereducationstudents)
Undersupply(currentdemandminuscurrentsupply)
Current Supply (universityandprivateaccomodationcombined)
39,751
10,789
50,540
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D E S C R I P T I O N
Thepropertyisarrangedoverbasement,ground,mezzanineandfiveupperlevelsandisofmodernsteelframeconstructionhavingelevationscomprisingsandstoneblockworkinterspersedwithdoubleglazedpanels.ThefrontagetoKillermontStreetincorporatesaglazedatriumfeature.
Theconvertedformerlifestyleboutiquehotelhasbeeninoperationasstudentaccommodationforapproximatelytwoyearsandcomprisesatotalof133en-suitestudiounitsincorporating140beds.Thesearearrangedassinglelevelstudiounitsofbetween20and28sqm,splitlevelstudiosbetween31and35sqmandtwobedroomunitsknownas“twodios”measuring47sqmplus.Thebedroomsprovidedaresignificantlylargerinsizethantypicalstudentbedroomsandarerentedonanallinclusivebasis,toincludeallutilitybills,TVlicenceand12MBbroadband.
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William Harley Library
2
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Concert Hall
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19
150
Multistorey Car Park
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Building
8
13
249
2
13
108
17
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The Galleries
236
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Hotel
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165
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Shelter
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Area : 0.111 ha (0.275 acres)
0m 25m 50m 75m
The Gallery Apartments, 2 Port Dundas Place, Glasgow, G2 3LD
Ordnance Survey © Crown Copyright 2013. All rights reserved. Licence number 100022432. Plotted Scale - 1:1947
NOTE:ReproducedfromtheOrdnanceSurveyMapwiththepermissionoftheControllerofH.M.StationeryOffice.©Crowncopyrightlicencenumber100024244Savills(UK)Ltd.
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A C C O M M O D AT I O N
ThestudiosarefinishedtoahighspecificationandsizewhichsignificantlyexceedsthatofotherexistingstudiosofferedtotheGlasgowstudentaccommodationmarket.Theaveragebedroomsizeis27.14sqm.Itisourviewthatnootherschemesarecomparableinspecificationoramenity.Allbedroomsincludekingsizedbed,wallmountedflatscreentelevisionandlargebathroom.Finishestofixturesandfurnishingsincludehardwoodveneeredwardrobesandclothesstorage,highglosslacqueredkitchenunitsandopenstoragefinishesandhardwoodtimberlaminatefloorsthroughout.
Commonareasincludegym,cinemaroom,commonroom,studyroom,laundryandcyclestore.
Thecommercialunitsareongroundandbasementlevels.TheSainsbury’scomprises277sqm(2,981sqft)ofgrossretailspaceatgroundfloorlevelwithafurther128sqm(1,382sqft)ofbasementstorage.TheAskRestaurantscomprisesatotalgrossinternalareaof411sqm(4,424sqft)withacustomerareaof277sqm(2,981sqft).
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Room Type Number of Beds
Studio 9
ClassicStudio 77
LargeStudio 12
DeluxeStudio 8
SplitLevelStudio 14
PremiumSplitLevel 6
2bedapartment 14
Total 140
Typical upper floor
StudiosCore
A C C O M M O D AT I O N S C H E D U L E
Nottoscale-foridentificationpurposesonly
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I N C O M E
Student Accommodation
Themajorityofbedroomsareletdirectlytostudentsandsubjectto‘standard’formshortassuredtenancyagreementsfor44and51weekoccupancyterms.Thereare16roomsundernominationagreementtotheUniversityofGlasgowfor2013/14.TheUniversitypay£136,765whichisinlinewithdirectletrentsachievedatthescheme.
Thepropertyisfullyletforthe2013/14academicyear,asitwasfor2012/13andanincomesummaryisshowninthetableopposite.
CRM,thelargestthirdpartymanagerofstudentaccommodationintheUK,currentlymanagethescheme.ThecontractwithCRMisdeterminableonchangeofownership.
Forfurtherinformationontheirmarketingofthisscheme,pleasegoto:
www.crm-students.com/crm-accommodation/glasgow/gallery-apartments/
Theestimatedrangeofoperatingcostsinrunningthepropertyincludingmanagementfeeisbetween£2,300-£2,500.
Thepropertycurrentlybenefitsfrom‘HallsofResidency’statusandisthereforenotsubjecttocounciltax.
Bedroom Type No.Average
TermAverage Rent
Per WeekOccupancy Rent
Studio 9 51 £155.00 99% £70,434
ClassicStudio 77 47.8 £172.85 99% £630,066
LargeStudio 12 49.3 £194.39 99% £113,736
DeluxeStudio 8 51 £210.00 99% £84,823
SplitLevelStudio 14 48.5 £218.24 99% £146,703
PremiumSplitLevelStudio 6 51 £250.00 99% £75,735
2BedApartment 14 48 £151.96 99% £101,099
ProjectedSundryIncome £4,490
ProjectedSummerIncome £45,092
Total Gross Income £1,272,177
ManagementCostsat£2,400perbedperannum -£336,000
Total Net Income £936,177
Retail Units
ThetwocommercialunitsongroundfloorarelettoSainsbury’sSupermarketsLimitedandAskRestaurantsLimitedrespectively.
TheretailunitislettoSainsbury’sSupermarketLimitedfor15yearsfrom10April2012oneffectivefullrepairingandinsuringterms,subjecttoatenantonlybreakatyear10onsixmonthswrittennotice.Rentreviewsare5yearlytoRPIsubjecttoacapandcollarbetween2-4%.Thecurrentpassingrentis£90,000.Therewillbeaminimumupliftto£99,369inApril2017.AsatOctober2013,Sainsbury’sSupermarketLimitedwasratedbyDun&Bradstreetas5A1representingaminimalriskofbusinessfailurewithtangiblenetassetsestimatedat£4,509,000,000.
TherestaurantislettoAskRestaurantsLimitedfor25yearsfrom7November2011oneffectivefullrepairingandinsuringterms,subjecttoatenantonlybreakatyear15onsixmonthswrittennotice.Rentreviewsareupwardonly5yearly.Thecurrentpassingrentis£90,000,whichequatestoalowpassingrentofonly£20.34/sqft.AsatOctober2013,AskRestaurantsLimitedwasratedbyDun&Bradstreetas5A1representingaminimalriskofbusinessfailurewithtangiblenetassetsestimatedat£137,816,000.
T E N U R E
HeritableInterest
P L A N N I N G
Underplanningdecisionnotice(ref:10/02753/DC)dated10thMarch2011,fullplanningconsentwasgrantedfortheParkInnHotelforthe‘Useofhotelandrestaurant/barasstudentresidenceswithrestaurantandretailunitatgroundfloorlevel’.Furtherinformationcanbeprovidedonrequest.
E P C
TheEPCratingforthestudiobedroomsisF85.Thecommercialunits,lettoSainsbury’sandASKRestaurants,currentlyhavearatingofE71andG177respectively.TheEPCcertificatesofeachindividualunitareavailableuponrequest.
VAT
Providedthebuyercomplieswiththerelevantconditions,thesaleofthepropertyshouldqualifyasaVAT-freetransferofagoingconcern(TOGC)andassuch,noVATshouldbepayableontheacquisition.
StudiosCore
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P R O P O S A L
Savillsareinstructedtoseekoffersinexcessof£16,500,000 (sixteen million five hundred thousand pounds) fortheheritabletitleoftheproperty,whichreflectsanetinitialyieldof6.40%onthestudentincome,6.00%fortheSainsbury’sand6.75% ontheAskunit,assumingpurchaser’scostsof5.80%.Theassetisforsaleinclusiveorexclusiveoftheretailelement.TheSPVisalsoavailabletopurchaseanddetailscanbeprovidedonrequest.
C O N TA C T S
Marcus Roberts 0207016379907807999187mroberts@savills.com
Cheryl Jackson 0131247372607967555829cjackson@savills.com
C A P I TA L A L L O WA N C E S
Thereisanunclaimedpoolofcapitalallowancesintheorderof£2,200,000andthesecanbeacquiredsubjecttonegotiation.Furtherdetailsonrequest.
S D LT
ThepurchasershouldbeabletoclaimMultipleDwellingsRelief(MDR)withrespecttothestudentaccommodationelementandwewouldadviseseekingtheappropriateprofessionaladviceinthisregard.ThetableoppositedemonstratesthepotentialimpactonyieldshouldMDRbeclaimed.
D ATA R O O M
Forfurtherinformationpleaseregisterat:
www.savills.com/galleryapartments
James Hanmer 0207016371107967555897jhanmer@savills.com
Bruce Patrick 0141222587307870555816bpatrick@savills.com
Important Notice
Savills,theirclientsandanyjointagentsgivenoticethat:
1.Theyarenotauthorisedtomakeorgiveanyrepresentationsorwarrantiesinrelationtothepropertyeitherhereorelsewhere,eitherontheirownbehalforonbehalfoftheirclientorotherwise.Theyassumenoresponsibilityforanystatementthatmaybemadeintheseparticulars.Theseparticularsdonotformpartofanyofferorcontractandmustnotberelieduponasstatementsorrepresentationsoffact.
2.Anyareas,measurementsordistancesareapproximate.Thetext,photographsandplansareforguidanceonlyandarenotnecessarilycomprehensive.Itshouldnotbeassumedthatthepropertyhasallnecessaryplanning,buildingregulationorotherconsentsandSavillshavenottestedanyservices,equipmentorfacilities.Purchasersmustsatisfythemselvesbyinspectionorotherwise.
DesignedandProducedbySavillsMarketing:02074998644|November2013
Est. costs at£2,400/bed
Net Initial Yield
Reversionary Net Yield*
No MDR Purchasing Costs Value (2013/14) (2014/15)
StudentAccommodation 5.80% £13,821,991 6.40% 6.74%
AskRestaurant 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%
Assuming MDR
StudentAccommodation 2.80% £13,821,991 6.59% 6.94%
AskRestaurant 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%
* Note
-Studentaccommodation:itassumestoincreasetheweightedavg.rentby4%andmovetheweightedavg.termto50.3weeks;Costsareassumedtoincreaseby2.5%onavg.
-Retailunits:assumedRPIincreaseat3.3%p.a.
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