the oystercatcher portfolio - oystercatcher portfolio  · the oystercatcher portfolio executive

Download The Oystercatcher Portfolio - Oystercatcher Portfolio   · The Oystercatcher Portfolio Executive

Post on 06-Sep-2018

222 views

Category:

Documents

0 download

Embed Size (px)

TRANSCRIPT

  • 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 ASTs

    (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

    Charge27,915 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 ASTs

    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 avera