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TheOystercatcher
Port folio
A Diverse Residential Investment Portfolio
2 | Oystercatcher Portfolio
The Oystercatcher Portfolio
Executive Summary
A stabilised regional portfolio comprising seven residential
assets. This is a rare opportunity to buy into a Private
Rented Sector portfolio consisting predominately of
freehold, unbroken blocks. The portfolio offers both a
diverse income stream and the opportunity of a break-up
to the owner occupier and buy-to-let investor markets.
Following a period of circa 18 months of extensive
refurbishment, the owners have appointed Savills (UK)
Ltd to market the Portfolio for sale.
Portfolio Performance
The occupancy level as at 1st September 2015 was 97%.
As at the same date the passing rent per annum shows
a 7.65% increase on the total gross income received
over the course of 2014.
The Portfolio is managed by Touchstone Residential
Ltd. In total the operating costs including maintenance,
management, utilities and write offs over the year
01/06/14 - 31/05/15 accounted for 38.4% of the estimated
rental value.
The current owners have undertaken a programme of
refurbishment over the last year to position the portfolio
for sale, this has significantly increased the occupancy
rate from 85% as at 31st August 2014 to 97% as at 1st
September 2015.
We would anticipate an incoming investor over the short
to medium term to be able to further reduce the gross to
net income leakage closer to the IPD index for ‘All AST’s’
(34.3% in 2014).
The table below sets out the operating cost items as a % of
the estimated rental value (a more detailed breakdown is
contained within the dataroom):
Annual Operating costs
(01/06/14 - 31/05/15) Cost
% of ERV
(01/09/15)
Maintenance £173,849 20.1%
Management £101,891 11.8%
Utilities £22,326 2.6%
Ground Rent & Service
Charge£27,915 3.2%
Write Offs £219 0.03%
Other & Unallocated £5,806 0.7%
Total £332,006 38.4%
The Opportunity
The Portfolio represents an opportunity to acquire a well
balanced residential investment portfolio situated across
England. The assets are located across the North West,
North East, West Midlands, East Midlands and Yorkshire &
Humberside. It provides an incoming investor with a core
income stream, whilst also being well positioned for an investor
to benefit from anticipated future house price growth. This
gives an incoming investor the opportunity to also pursue
a phased break-up of the individual apartments to both the
owner occupier and buy-to-let markets, with the added benefit
of the creation of ground rent income on the freehold assets.
The assets are located in strong local rental locations close
to a mix of universities, employment and leisure hubs. The
apartments are offered for rent at competitive price points
in the local markets. The Portfolio presents the opportunity
for an incoming investor to acquire the assets beneath
reinstatement value.
The Residential Market
Hometrack House Price Cities Index for July 2015 reports
an average UK year on year increase of 6.2%. The report
highlights that the “northern powerhouse” cities, including
Manchester, Newcastle and Sheffield, have registered a
pick-up in growth since 2013, however average prices are
still below those of 2007. Growth over the last 3 months
(+4.3%) is at the fastest rate for 11 years. There remains further
upside for house prices in regional cities outside London. The
table below reflects Savills’ capital growth forecast for the
next 5 years.
Savills House Price Forecast
2015 2016 2017 2018 2019 5 year
North East 1.0% 3.5% 3.5% 2.0% 2.0% 12.6%
North West 1.0% 4.0% 4.0% 2.0% 2.0% 13.7%
Yorkshire & Humberside 1.5% 4.5% 4.5% 2.5% 2.5% 16.5%
West Midlands 2.0% 4.5% 4.5% 3.0% 3.0% 18.2%
East Midlands 2.0% 5.0% 5.0% 3.0% 3.0% 19.3%
Source: Savills Research, 2015
The rising demand for rented housing over the past decade
and lack of new housing supply has driven the price of
housing beyond the reach of a large segment of the
population. Our expectation is that the PRS will continue to
expand for the remainder of the decade, to 6.6m households
in the UK by 2019, which is around 250,000 new PRS
households per annum. Savills rental growth forecast for the
UK (excluding London) for the next 5 years is as follows:
Savills Rental Growth Forecast
2015 2016 2017 2018 2019 5 year
Mainstream Markets (excluding London) 2.0% 2.5% 3.0% 3.0% 3.5% 14.8%
Source: Savills Research, 2015
Oystercatcher Portfolio | 3
Summary
Block Location TenureNo. of units
Passing Rent/PA
ERV/PA ERP
1 42-56 Caversham Place Sutton Coldfield Leasehold 8 £64,560 £69,600 £1,000,000
2 Eastwood & Stoneleigh Court Manchester Freehold 26 £179,820 £185,640 £3,050,000
3 Sharrow View Sheffield Freehold 20 £133,560 £138,000 £2,340,000
4 91-107B Gell Street Sheffield Freehold 26 £167,280 £179,400 £2,920,000
5 9-24 Foundry Court Newcastle Freehold 16 £87,036 £91,200 £1,350,000
6 1-22 Langley Mere Newcastle Freehold 22 £100,860 £123,600 £1,680,000
7 Manor Court Grimsby Leasehold 16 £76,500 £78,750 £1,240,000
Total 134 £809,616 £866,190 £13,580,000
ERV - Estimated Rental Value. The amount a property in good, lettable condition can be rented for annually on the open market.
A1(M)M40
M6
M180
A1(M)
M1
London
Manchester
Sheffield
Birmingham
Sutton Coldfield
Grimsby
Newcastle
42-56 Caversham Place 1
Eastwood & Stoneleigh Court2
91-107B Gell Street
8-46 Sharrow View
4
3
9-24 Foundry Court
1-22 Langley Mere
5
6
Manor Court 7
ERP - Estimated Realisation Price. The amount the asset could be sold for with vacant possession, in good condition and assuming a reasonable marketing period. The ERP includes a price assuming the freehold interest is sold separately from the leasehold interests on the freehold blocks. This assumes a ground rent income of £250 PA / unit, capitalised at 3.5%.
Sutton Park
Perry Common
Sutton Coldfield
Birmingham
TheBelfry
42-56 Caversham Place
M6
M6
M6
M42
4 | Oystercatcher Portfolio
Oystercatcher Portfolio
42 – 56 Caversham Place Sutton Coldfield, B73 6HY
Units 8
ERP £1,000,000
Passing Rent (pa) £64,560
Occupancy 100%
ERV (pa) £69,600
Tenure Leasehold
Description
• Unbroken block comprising apartments subject to
999 year leasehold interests from January 2001
• 8 x two bedroom flats
• Held subject to 8 x AST’s
• Parking
• Ground rent of £400 per annum (£50/ apartment)
currently payable in addition to a service charge.
1
Location
Caversham Place comprises a single block of eight self contained flats with an enclosed car park at ground floor level, and four upper floors. Sutton Coldfield train station (with regular services into Birmingham New Street station in 20 minutes) is within walking distance (0.7 miles) along with accessible bus routes from Birmingham Road.
The current average asking rent (Zoopla) for a two bedroom flat in the B73 post code area is £634 pcm, c.6.5% beneath the average 2 bedroom rent passing in Caversham Place.
Birmingham PRS Overview
In autumn 2013, Birmingham City Council approved its Housing
Growth Plan, which foresees a need for 80,000 new homes in
Birmingham by 2031. Over the last ten years, the PRS has
continued to expand, doubling in size, and now representing
20% of homes in the city of Birmingham.
Operating Costs
Operating costs
(01/06/14 - 31/05/15) Cost
% of ERV
(01/09/15)
Maintenance £4,973 7.1%
Management £7,924 11.4%
Utilities £1,359 2.0%
Ground Rent & Service Charge
£20,903 30.0%
Write Offs £0 0.0%
Other & Unallocated £0 0.0%
Total £35,159 50.5%
One unit was partially refurbished in 2015 at a cost of c.£500. A
further £1,500 was spent on replacing domestic appliances.
A57(M)
A6010
A5103
Manchester
Manchester Grammar School
Manchester University Fallowfield Campus
Manchester High School for Girls
University of Manchester
Manchester Metropolitan
University
Manchester Piccadilly Station
Eastwood & Stoneleigh
Court
Oystercatcher Portfolio | 5
Oystercatcher Portfolio
Eastwood Court and Stoneleigh Court Manchester, M14 6JU
Units 26
ERP £3,050,000
Passing Rent (pa) £179,820
Occupancy 100%
ERV (pa) £185,640
Tenure Freehold
Description
• Two freehold unbroken blocks
• 26 x two bedroom flats
• Held subject to 25 x ASTs & 1 x Assured Tenancy
• Communal garden space
• Parking
2
Location
The property comprises two adjacent blocks of flats arranged
over ground floor and rising to three upper levels. It is situated
in the heart of the popular area of Fallowfield. The property
is ideally located for easy train and bus access to Manchester
City Centre. Both the University of Manchester and Manchester
Metropolitan University campuses are within a 10 minute walk.
The current average asking rent (Zoopla) for a two bedroom
flat in the M14 post code area is £690 pcm, c.20% above
the average 2 bedroom rent passing in Eastwood Court and
Stoneleigh Court.
Manchester PRS Overview
The PRS in Manchester accounts for 30% of all households,
higher than the proportion in London. This is mostly driven
by young adults, with 69% of 25 – 34 year old households
renting privately. There is a shortage of private rental
accommodation in the city which is forecast to worsen.
Operating Costs
Operating costs
(01/06/14 - 31/05/15) Cost
% of ERV
(01/09/15)
Maintenance £23,151 12.5%
Management £24,029 12.9%
Utilities £8,661 4.7%
Write Offs £68 0.04%
Other & Unallocated £0 0.0%
Total £55,909 30.1%
All 26 flats have undergone full refurbishment over the last 5
years. Following a health and safety report, recommendations
were implemented at a cost of £3,900 and £1,650 was spent
on roof works.
Sheffield
Sheffield Railway Station
The University of Sheffield
The University of Sheffield
Moor Market
Crook Valley
Park
A61
A57
A625
Sheffield Hallam
University
Orchard Square Shopping Centre
Sharrow View
6 | Oystercatcher Portfolio
Description
• Freehold, unbroken block
• 20 x two bedroom flats
• Held subject to 20 x AST’s
• Parking
Oystercatcher Portfolio
Sharrow View Sheffield, S7 1ND
Units 20
ERP £2,340,000
Passing Rent (pa) £133,560
Occupancy 100%
ERV (pa) £138,000
Tenure Freehold
3
Location
Sharrow View comprises a purpose built block of flats
arranged over ground floor and rising to third floor level.
It is a private, freehold development accessed off Sharrow
Lane. Tesco, numerous pubs and restaurants are only a
short distance from Sharrow Vale, Ecclesall Road and
Sheffield City Centre, are approximately 1 mile to the north
east.
The current average asking rent (Zoopla) for a two bedroom
flat in the S7 post code area is £595 pcm, c.6.8% above the
average 2 bedroom rent passing in Sharrow View.
Sheffield PRS Overview
The PRS in Sheffield has doubled in the past 10 years. There
are now around 36,000 households in the city’s private rented
sector (16% of the city’s housing stock). Savills Research
believe that due to a growing population, circa 16,600 homes
need to be delivered annually to meet the growing demand.
Operating Costs
Operating costs
(01/06/14 - 31/05/15) Cost
% of ERV
(01/09/15)
Maintenance £31,309 22.6%
Management £16,539 12.0%
Utilities £3,915 2.8%
Write Offs £0 0.0%
Other & Unallocated £756 0.5%
Total £52,519 37.9%
10 out of 20 flats at Sharrow View have been fully
refurbished over the past five years. 50% of these have
been refurbished in 2015, at a total cost of c.£8,600.
Sheffield
Sheffield Railway Station
Sheffield Hallam
University
Orchard Square Shopping Centre
A61
A57
A625
The University of Sheffield
Moor Market
Gell Street
Oystercatcher Portfolio | 7
Description
• Freehold, unbroken block
• 26 x two bedroom flats
• Held subject to 25 x ASTs & 1 void
• Parking
Oystercatcher Portfolio
91 – 107b Gell Street Sheffield, S3 7QT
Units 26
ERP £2,920,000
Passing Rent (pa) £167,280
Occupancy 96%
ERV (pa) £179,400
Tenure Freehold
4
Location
The property comprises an ‘L-shaped’ building offering
twenty-six residential flats over ground floor, first and
second floor levels. It is accessed via a pend off Gell Street.
Located in the Devonshire Green Quarter of the City, it is
within 0.5 miles of Sheffield City Centre. The University
of Sheffield is 0.5 miles to the north of the property and
Sheffield Hallam University is 0.7 miles to the west. The two
universities have a combined count of 59,700 students,
of which 47,500 (80%) are full-time and likely to require
accommodation.
The current average asking rent (Zoopla) for a two
bedroom flat in the S3 post code area is £777 pcm, c.40%
above the average 2 bedroom rent passing in Gell Street.
Operating Costs
Operating costs
(01/06/14 - 31/05/15) Cost
% of ERV
(01/09/15)
Maintenance £60,877 33.9%
Management £20,476 11.4%
Utilities £3,936 2.2%
Write Offs £45 0.05%
Other & Unallocated £756 0.4%
Total £86,090 47.7%
12 of the 26 units at Gell Street have been fully refurbished
during the past five years. Last year this amounted to
c.£19,000 whilst a further £18,000 was spent on electrical
works including replacing extractor fans in all bathrooms.
Newcastle
Newcastle University
Library
Northumbria Business
School
Newcastle Railway Station
A167(M)
Baltic Centre for Contemporary Art
St Peters Marina
Quayside
Foundry Court
8 | Oystercatcher Portfolio
Oystercatcher Portfolio
9 – 24 Foundry Court Newcastle, NE6 1UG
Units 16
ERP £1,350,000
Passing Rent (pa) £87,036
Occupancy 100%
ERV (pa) £91,200
Tenure Freehold
Description
• Freehold, unbroken block
• 8 x one bedroom flats & 8 x two bedroom flats
• Held subject to 15 x AST’s & 1 x Assured Tenancy
• Parking
5
Location
The property comprises two adjacent blocks, each providing eight flats arranged over ground floor and three upper levels. It is approximately 1 mile from Newcastle City Centre. The property also benefits from excellent road links and Byker Metro Station (0.6 miles) provides convenient access to the city centre. In the NE6 postcode area, the current average asking price (Zoopla) of a 1 bedroom flat is £415 pcm and £532 pcm for a 2 bedroom flat. This is c.4.8% below and c.12.9% above the current average passing rents of 1 and 2 bedroom
flats respectively in Foundry Court.
Newcastle PRS Overview
The PRS accounts for 13.2% of households in Newcastle. The average house price in Newcastle according to Hometrack in July 2015 was £123,200, a rise of 10% from 2009, whilst house
prices have risen by 2.5% over the last 12 months.
Operating Costs
Operating costs
(01/06/14 - 31/05/15) Cost
% of ERV
(01/09/15)
Maintenance £22,755 24.9%
Management £9,776 10.7%
Utilities £1,330 1.5%
Write Offs £106 0.1%
Other & Unallocated £4,294 4.7%
Total £38,261 42.3%
9 of the 16 apartments have been fully refurbished, of which
three were carried out over 2014/2015 at a total cost of
c.£11,000.
Newcastle Railway Station
Town Moor Park
Quayside
Benton Metro
Station
Newcastleupon Tyne
A16(M)
Langley Mere
Oystercatcher Portfolio | 9
Oystercatcher Portfolio
1 – 22 Langley Mere Newcastle, NE12 7FN
Units 22
ERP £1,680,000
Passing Rent (pa) £100,860
Occupancy 86%
ERV (pa) £123,600
Tenure Freehold
Description
• Freehold, unbroken block
• 14 x one bedroom & 8 x two bedrooms flats
• Held subject to 16 x AST’s & 3 x Assured Tenancies
• Parking
6
Location
The property comprises terraced houses split to provide
twenty two flats over two levels incorporating single garages.
Langley Mere is located in Forest Hall, a popular suburb
of Newcastle-upon-Tyne. Benton Metro Station is situated
0.6 miles from the property offering access into the City Centre
and Universities. There is also easy access to local shops and
amenities at Springfield Park.
In the NE12 postcode area, the current average asking price
(Zoopla) of a 1 bedroom flat is £471 pcm and a 2 bedroom
flat is £550 pcm. This is c.10.5% and c.18.5% above the current
average passing rents of 1 and 2 bedroom flats respectively in
Langley Mere.
Operating Costs
Operating costs
(01/06/14 - 31/05/15) Cost
% of ERV
(01/09/15)
Maintenance £18,706 15.1%
Management £13,126 10.6%
Utilities £627 0.5%
Write Offs £0 0.0%
Other & Unallocated £0 0.0%
Total £32,459 26.2%
8 of the 22 units have been fully refurbished over the past
five years. Two full and one partial refurbishments have
been carried out in 2015, totalling c.£9,500.
Grimsby Town Railway Station
Peoples Park
Freshney Place Shopping Centre
Grimsby
A16
A1243
A46
Manor Court
10 | Oystercatcher Portfolio
Description
• Broken block comprising apartments subject to 125
year leasehold interests from October 1994
• 8 x one bedroom flats & 8 x two bedroom flats
• Held subject to 15 x AST’s & 1 Assured Tenancy
• Ground rent of £800 per annum (£50/ unit) in
addition to a service charge
Oystercatcher Portfolio
Manor Court Grimsby, DN32 0SD
Units 16
ERP £1,240,000
Passing Rent (pa) £76,500
Occupancy 100%
ERV (pa) £78,750
Tenure Leasehold
7
Location
Manor Court comprises two, three and four storeys of interlinked
residential flatted accommodation (totalling 30 apartments)
arranged in a U-shape. The property is located in central Grimsby,
0.2 miles to the south of Grimsby Town Station. There is an Asda
supermarket approximately 0.8 miles to the east. In the DN32
postcode area, the current average asking price (Zoopla) of a 1
bedroom flat is £338 pcm and a 2 bedroom flat is £360 pcm. This
is c.12.2% and c.12.6% below the current average passing rents of 1
and 2 bedroom flats respectively in Manor Court.
Grimsby PRS Overview
The 2011 Census showed 19.6% of households in Grimsby
were within the private rented sector, and Savills anticipate
that this is likely to have increased further since this date.
Savills forecasts that capital values in the wider East Midlands
region are set to grow by 19.3% over the next 5 years.
Operating Costs
Operating costs
(01/06/14 - 31/05/15) Cost
% of ERV
(01/09/15)
Maintenance £12,077 15.3%
Management £10,020 12.7%
Utilities £2,497 3.2%
Ground Rent & Service Charge
£6,616 8.4%
Write Offs £0 0.0%
Other & Unallocated £0 0.0%
Total £31,211 39.6%
There has been an ongoing refurbishment programme.
Last year, c.£4,000 was spent on replacing carpets and
repainting works across four units.
Oystercatcher Portfolio | 11
Disposal Process
The Oystercatcher Portfolio is being offered for sale by
means of an Informal Tender process. Further details are
provided within the Sales Process Letter.
Viewing
In order to keep tenant disruption to a minimum no internal
access to apartments will be given prior to Stage 1 bids.
Parties shortlisted and invited to submit Stage 2 bids will
be given the opportunity to internally inspect a sample of
properties within each development prior to submitting
their offer at Stage 2.
Internal photographs of a sample of the apartments are
available within the dataroom.
Contacts
George Hepburne-Scott
Residential Investment
+44 (0)207 016 3761
+44 (0)7968 550 401
Matthew McBride
Residential Investment
+44 (0)207 409 5990
+44 (0)7845 195 512
Peter Allen
Head of UK Residential Investment
+44 (0)207 7409 5972
+44 (0)7968 550 311
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
September 2015
33 Margaret Street,
London, W1G 0JD
Dataroom
A full suite of property information (including EPCs,) is
available in the dataroom: www.savills.com/oystercatcher.
Please contact Matthew McBride to receive login details to
gain access to the dataroom.
Guide price
Offers in excess of £10,000,000 are invited for the whole
portfolio, subject to contract and existing tenancies
representing a gross yield on passing rent of 8.1% and
representing a gross yield on ERV of 8.7%.
12 | Oystercatcher Portfolio