SMART CITY HOSTEL
40-5 0 BLACKFRIARS STREET
EDINBURGH EH1 1NE
SMART
CITY
HOSTEL
40-50
BLACKFRIARS
STREET
EDINBURGH
EH1 1NE
1
SMART CITY HOSTEL
40-5 0 BLACKFRIARS STREET
EDINBURGH EH1 1NE
INVESTMENT
C O N S I D E R AT I O N S
> 132 bedroom / 615 bed hostel and student
accommodation scheme in the heart of Edinburgh’s
Old Town
> Prime Edinburgh location, adjacent to the Royal Mile
> 49 en-suite bedrooms, providing 272 beds, are available
365 days a year for hostel use
> 81 single en-suite bed spaces are leased to the
University of Edinburgh for 39 weeks per year
> The University rooms are available as 2 - 8 bed
hostel rooms for the remainder of the year (13 weeks),
providing an additional 343 hostel beds
> Existing lease to Edinburgh University generating
£312,000 pa with 12 years unexpired with yearly RPI
reviews
> The asset benefits from consent for interchangeable use
between hostel and student accommodation
> Spacious bar, lounge, storage and kitchen amenities
provided with vacant possession
> Potential to secure full vacant possession subject to
negotiations with the University
> High reversionary value and ERV uplift
> Exceptional opportunity for branding
> Savills are instructed to seek offers in excess of
£15,000,000 (Fifteen Million Pounds) for the
heritable interest in the property.
2
EDINBURGH CASTLE
PRINCES STREET
EDINBURGH SCHOOL OF ART
SCOTT MONUMENT
GRASSMARKET
ST GILES CATHEDRAL
WAVERLEY STATION
NATIONAL MUSEUM OF SCOTLAND
ROYAL MILE
COWGATE
OLD COLLEGE (SCHOOL OF LAW)
BLACKFRIARS STREET
UNIVERSITY OF EDINBURGH, ST CECILIA’S HALL
MCEWAN HALL & BRISTO SQUARE CAMPUS
FESTIVAL HALL
SCHOOL OF GEOSCIENCE
3
SMART CITY HOSTEL
40-5 0 BLACKFRIARS STREET
EDINBURGH EH1 1NE
Bar 50
Reception
Hostel Room
Bar 50
4
Internal Courtyard / Bar 50
SMART CITY HOSTEL
40-5 0 BLACKFRIARS STREET
EDINBURGH EH1 1NE
LO C AT I O N
EDINBURGH - CITY OVERVIEW
FESTIVAL CITY
HIGHER EDUCATION
Scotland’s capital city is a major tourism centre, a key UK visitor
destination and the favourite tourist destination in Scotland, with more
than 50% of tourists coming to the country visiting the capital city.
Edinburgh is world famous for its festivals, such as The International
Festival and The Fringe, presenting a stunning programme of worldclass classical music, dance, theatre, opera, comedy and literature.
Edinburgh is internationally recognised as a city of learning, with
five universities accommodating 56,500 higher education students,
of which 47,000 are full time.
Scotland’s capital city and UNESCO world heritage site
12 official festivals each year
Ninth largest city in the UK
The Fringe Festival: the world’s largest arts festival
University of Edinburgh is 22nd in the UK (2015) and 17th in the
QS World rankings
2nd most visited UK city: 10 million visitors annually,
generating £1.2bn to local economy
Six Nations rugby international games attract c.1m visitors
First-class shopping with over 2.9m sq ft of retail
New Year’s Eve Hogmanay celebrations for which over 80,000
tickets are sold.
c. 17,000 international university students in the city (excl.
Festival students)
6.4% rise in international students since 2013 (HESA)
Internationally renowned galleries and museums
10th highest population of students in the UK
Edinburgh Castle attracts 1.2m visitors p.a.
Only 30% of full time students are provided with purpose built
student accommodation
ECONOMICS
The city has a strong economy, balancing financial and business
services with software, biotechnology and creative industries
making Edinburgh the UK’s strongest regional economy outside of
London.
Second largest financial centre in the UK
Edinburgh has led the national recovery (Centre for Cities)
Highest city for private sector job creation outside of London
(Centre for Cities)
Leading UK destination for new businesses (Startups)
Strong and growing R&D sector, including new £60m Roslin
Institute for University of Edinburgh and £600m landmark
development of Edinburgh Bio Quarter.
5
TRANSPORT
Scotland’s largest airport, with 40 airlines serving 120
destinations worldwide
Edinburgh International Airport is undergoing a five-year £125
million investment programme to terminal & security hall
Edinburgh Waverley rail station provides regular, direct links to
London, Aberdeen, Glasgow and the south.
Waverley Station has benefitted from a £130m refurbishment to
improve facilities and increase capacity
In excess of 19.2m people pass through the station each year
A new 14km tram route linking the city centre direct to Edinburgh
Airport in 40 minutes.
SMART CITY HOSTEL
40-5 0 BLACKFRIARS STREET
EDINBURGH EH1 1NE
S I T U AT I O N
40- 50 Blackfriars Street lies in the heart of
Edinburgh’s historic Old Town, adjacent to the
Royal Mile, the most sought after location for
hotel, hostel and student accommodation use in
the city.
The property is situated just 130 metres from the
Royal Mile and the city’s finest tourist attractions.
At the top of this famous street is Edinburgh
Castle and St Giles Cathedral, whilst to the west
is Holyrood Palace, the Scottish Parliament and
Dynamic Earth. Other nearby attractions include
the National Museum of Scotland and the Festival
Theatre.
6
Princes Street, Edinburgh’s prime retail offering is
just half a mile away. Waverley Station is situated
600 metres to the North.
The property benefits from secondary frontage
onto the Cowgate, a popular night spot for visitors
and local students, with a wealth of bars and clubs
along the Cowgate and adjacent Grassmarket.
The property is well located for university
campuses and amenities; the main University of
Edinburgh campus at George Square and it’s
associated Student Union buildings are 600
metres to the south, while the University’s music
facility is located adjacent to the property.
Edinburgh College of Art is approximately 1 km to
the west of the property.
Royal Mile
Blackfriars street
SMART CITY HOSTEL
40-5 0 BLACKFRIARS STREET
EDINBURGH EH1 1NE
PROPERTY DESCRIPTION
The hostel was purpose built in 2007 and is laid
out over lower ground, ground and six upper
storeys. The building provides 132 bedrooms,
with interchangeable use between hostel and
student accommodation. There are 49 bedrooms
in permanent hostel use, providing 272 beds in a
mixture of private and dormitory rooms ranging
from two to twelve beds. All bedrooms are ensuite and are an average of 24 sq m.
There are 81 student bedrooms, occupying part
of the 1st – 5th floors and all of the 6th floor and
are based at the rear of the property in a new
purpose built building. Each student floor is
accessed by secure key card. A double kitchen
on each floor serves up to 10 bedrooms. Some
kitchens have separate sitting / dining rooms.
The student bedrooms are c.14 sq m and are basic
in specification. They all provide a wet-room ensuite, desk, wardrobe and single bed. All rooms
are provided with WiFi and hard-wired cabling
and internal telecoms to the University network.
During the summer months (June – August) the
student accommodation is converted to hostel
bedrooms. Two floors have a separate common
room for students, which are also converted
to bedrooms, creating an additional 83 hostel
bedrooms and 343 beds, totaling 615 hostel beds
during these months.
The reception is located on Blackfriars Street.
Secondary access is also provided on Cowgate
with a courtyard and a split-level terrace adjoining
the bar during bar opening hours.
Bar 50 provides food throughout the day for
breakfast, lunch and dinner alongside the cocktail
bar. The bar provides a spacious area for games
and relaxation with a separate lounge area at
reception. The hostel facilities also include a 24 hr
reception, lockers, kitchen and laundry facilities.
A one-bedroom, ground floor warden flat, situated in
the north west corner of the property is held under
separate ownership and does not form part of the
sale. There is parking for two cars within the inner
courtyard; these spaces belong to the University of
Edinburgh.
UNIVERSITY
LEASE SUMMARY
The student accommodation is leased to the
University of Edinburgh during the academic
period. A summary of the lease is below:
Tenant: The University Court of the University of
Edinburgh
Term: 8th September 2007 to 31st May 2027
Demise: 81 en-suite study bedrooms with
associated kitchens and common rooms
Academic Period: 37 weeks and a variable
number of days
Passing Rent: £312,000 pa
Reviews: Annual review, upward only inline with RPI
Landlord obligations: Repair and maintenance
Full details are available on the data room.
7
Hostel bedroom
SMART CITY HOSTEL
40-5 0 BLACKFRIARS STREET
EDINBURGH EH1 1NE
EDINBURGH HOSTEL MARKET
ST
RGE
GEO
10
11
Marker
A1
A1
ST
RGE
GEO
ST
RGE
GEO
The map and table below detail the current supply
of bedrooms in Edinburgh city centre.
EDINBURGH
A1
CALTON RD
NEW
EDINBURGH
ST
9
’S
ARY
ST
14
RD
Brodie 2
2
Royal Mile Backpackers
3
High Street Hostel
4
Cowgate Tourist Hostel
5
Budget Backpackers Hostel
6
Kick Ass Hostels
7
Castle Rock Hostel
8
Edinburgh Backpackers Hostel
9
St Christopher's Inn
10
Princes Street East Backpackers
11
CODE Hostel
12
Caledonian Backpackers
13
Edinburgh Nights Hostel
14
Smart City Hostel
and
Source: AM:PM Hotels
53
35
63 to
67
51
Clo se
inbu rg
45 to
Can t's
DW
234
236
Hall
of E d
cilia's
33
e rsi ty
S t Ce
(U n iv
2 6 to
00
A7
S
CR E
59
53 to
h)
8
36
32 to
L
CH P
CLEU
BUC
61
IV E
Hostel
BROWN ST
E RD
NIGHTINGAL
N LOAN
SIMPSO
57 to
EN’S DR
50
31
Car Park
55
QUE
EET
STR
LAURISTON PL
ANCE
PLEAS
N
SO
OL
NIC
ST
ST
W
RRO
TTE
PO
N
OD
DUMBIEDYKES
RD
ST
ERS
MB
CHA
6
PL
OT
RI
HE
LE
MP
SE
R’S
ENE
RD
GA
LA
UR
IST
O
T
POR
O
LYR
VIEWCRA
IG G
AR
DENS
4
GATE
COW
G
ST
WE
BREAD ST
B700
M
ST
RD
R IN
DLA
Y ST
5
HO
A7
ON
J O H N ST
ACE
RR 7
TE
3
S ST
NG
’S
TE
ST
RR
AB
LE
AC
S
E
GE
BRID
KI
E IV
L
ST
CA
OAD
IAN R
LOTH
E
L
2 1
R
KFRIA
BLAC
LEHIL
CAST
RG
GEO
13
C OCKBURN S
T
T ST
E
ID G
RKE
MA
T
ILE
LM
OYA
HE R
39
12
8
E MARKET ST
R
TH B
NOR
ET ST
MARK
Hostel
1
2 12
2 14
2 20
56
T
LE S
AST
NC
L
YN P
ALB
The hostel market currently totals 17 units and 491
bedrooms with Smart City being by far the largest
hostel in the city and holding over 21% of total
bedroom supply. The Edinburgh hostel market is
predominantly independently owned .
52 to
The hostel market in Edinburgh has seen very
little growth in supply and, in spite of significant
demand for hostels in the city, there are no current
planning applications for future supply, offering
the incoming purchaser stable market conditions
within which to grow the business.
230
e S t An
P an m ur
SMART CITY HOSTEL
40-5 0 BLACKFRIARS STREET
EDINBURGH EH1 1NE
EDINBURGH MARKET
Global youth travel volumes
All international arrivals
6%
Youth international arrivals
5%
Ave growth per annum
The market in Edinburgh is an extremely
attractive one with year round demand from
both leisure and business visitors. Occupancy is
strong particularly during the festival period and
occupancy levels reached 92.8% in the city in
August 2014.
4%
Edinburgh is one of the UK’s leading hotel
markets, having consistently achieved one of the
3%
highest Revenues Per Available Room (RevPAR) in
the UK, surpassed only by London and Aberdeen
2%
and has one of the highest RevPARs in Europe.
British Hospitality Trends and Development
1%
2012 predicted a 23% increase in the value of
Edinburgh hotels between 2012 and 2016, the 2nd
0%
3yr ave
5yr ave
10yr ave
highest in the UK after Birmingham. Edinburgh
Source: UNWTO; Staywyse; Savills
had a strong performance in 2014, retaining its
position as one of the best performing cities in the
Hostel bed supply in key European cities
UK.
18,000
16,000
14,000
12,000
Hostel beds
In the hostel sector, Edinburgh has fewer hostel
beds than its European counterparts, with just
5.7 beds per 1,000 visitors compared with 13.1
beds in Berlin. In the last three years, international
youth arrivals have increased globally faster than
all international arrivals. The hostel and youth
market segment is expected to continue to grow
apace and with c.21% of Edinburgh’s hostel beds
provided by Smart City, the hostel is well placed
to benefit from this budding market segment.
10,000
8,000
6,000
4,000
2,000
0
Berlin
London
Barcelona
Amsterdam
Paris
Dublin
Edinburgh
Source: Savills; AMPM
9
Bar 50
SMART CITY HOSTEL
40-5 0 BLACKFRIARS STREET
EDINBURGH EH1 1NE
EDINBURGH STUDENT
AC C O M M O DAT I O N M A R K E T
Edinburgh is a globally recognised higher
education city with a total of 48,715 full time
students. The city is home to five universities,
including the historic University of Edinburgh
(UOE), which receives 47,000 applications each
year.
> Five universities
> Three further education colleges
> 48,715 full time students
> University of Edinburgh is the third most
popular UK university by applications
The University of Edinburgh (including Edinburgh
College of Art) has almost 25,000 full time
students, is ranked 22nd in the UK (The
Times guide 2015) and is the 17th in the world
according to the latest QS World University
Rankings. The asset lies just off the Royal Mile
and amongst numerous University of Edinburgh
academic buildings making it an ideal location
for all year round tenants.
University
Accommodation
Private
Accommodation
Other universities in Edinburgh include Herriot
Watt University, Edinburgh Napier University,
SRUC and Queen Margaret University.
UK-wide, the 2014/15 student intake has been
positive and the most recent data from UCAS
has indicated that there was a 9% upturn in
accepted university places. The overseas student
population has steadily increased over the past
decade. There are currently 17,215 international
students studying at universities in the city,
representing 36% of total HE students which
is a far higher proportion of overseas students
than the UK average of 19%. This growth looks
set to continue, with the most recent HESA data
showing a 6.4% rise in international students
from the previous year. Scotland’s fee exemption
policy for EU students continues to support
the attractiveness of the city for such eligible
students. International student population
growth is beneficial for the studio market in
particular. Schemes such as this are especially
appealing to international students because of
their high quality accommodation and excellent
locations. International students tend to prefer
to live in purpose built accommodation and
are generally willing to pay higher rents, often
annually in advance.
P U R P O S E B U I LT S T U D E N T
AC C O M M O DAT I O N I N E D I N B U R G H
There is currently a provision of 14,382 purpose
built student bed spaces throughout the city,
of which 10,065 are university operated and
4,317 are privately operated. The remaining
34,000 students live within the private sector,
either in Houses in Multiple Occupation (HMOs)
or at home. This means that only around 30%
of full-time students are able to access purpose
built student accommodation in Edinburgh.
This supply and demand imbalance is likely to
Student’s living in
HMO’s/ at home
10
Example Student Room
be intensified by an increasingly restrictive and
challenging planning environment which will limit
future student accommodation development and
consequently insulate rents and values of well
located existing assets. In addition, we expect a
continuation in the trend of migration of students
from the HMO sector to purpose built housing
as legislation tightens and the price differential
between the two remains narrow.
SMART CITY HOSTEL
40-5 0 BLACKFRIARS STREET
EDINBURGH EH1 1NE
FLOOR PLAN
LOWER GROUND FLOOR
11
T Y P I C A L F L O O R L AY O U T
SMART CITY HOSTEL
40-5 0 BLACKFRIARS STREET
EDINBURGH EH1 1NE
INCOME
SUMMER REVENUE
POTENTIAL
Historical Trading Performance:
2012 Actual
2013 Actual
2014 Actual
Rooms Revenue
1,608
60%
1,625
60%
1,595
58%
Student Income
299
11%
305
11%
313
11%
Other Revenue
756
28%
765
28%
819
30%
Total Revenue
2,663
Gross Operating Income
1,740
65.4%
1,813
67.3%
1,774
65.1%
EBITDA
976
36.6%
1,060
39.3%
1,078
39.5%
2,695
2,727
Source: Hostel Management
In £ 1,000’s
Edinburgh benefits from a unique market to drive
additional hostel income from the asset from
summer visitors. There are 23 major festivals held
throughout the year with c. 5 million attendees.
The largest of these is the Edinburgh Fringe
Festival which attracts an estimated 2.6 million
attendees in August. Other festivals and events
such as the Royal Edinburgh Military Tattoo,
Edinburgh International Festival and Edinburgh
International Book Festival and the Royal
Highland Show bring additional visitors both from
the UK and internationally.
Fuelled by the festival market, summer occupancy
is notably high across the city, with rates often at
a premium. This demand is further strengthened
by the city’s exceptionally strong language
school market operating primarily during July
and August. Considering the location, the asset
is superbly positioned to benefit from summer
demand.
POTENTIAL
STUDENT INCOME
(ASSUMING VP)
Student accommodation rents in Edinburgh for
the 2015/2016 academic year are between £135 £335 per week. For a full schedule of comparable
rents, please see the marketing website at www.
savills.co.uk/smartcityhostel
For the University leased (14sqm) cluster bed
spaces, we would expect rents in this location to
achieve a minimum of £175 per week over the full
year. This would equate to c.£723,000 gross
before 3% void allowance.
Were the hostel rooms to be converted to student
accommodation, the rooms (15-30sqm) should
achieve a rent between £220-£320 per week per
room on a 51 week basis. This would equate to
c.£570,000 before 3% void allowance.
The combined gross income, assuming VP and
assuming refurbished to provide a high standard
of student accommodation could provide
c.£1,300,000. We would expect that £1,700£1,800 per bed space per annum would be a
sufficient management cost (subject to third party
management budgets). This would result in a net
income of c.£1,000,000.
An appropriate capitalisation rate for this
scenario would be 5.75% and would reach a
Capital Value of £19,000,000 after full costs.
This would be before any refurbishment costs are
deducted to bring the specification up to a quality
commensurate with boutique, high end student
accommodation which would be expected on the
Royal Mile.
12
Courtyard and rear access to Bar 50
Reception
SMART CITY HOSTEL
40-5 0 BLACKFRIARS STREET
EDINBURGH EH1 1NE
TENURE
VAT
D ATA R O O M
C O N TA C T S
Heritable Interest.
VAT will apply. However, provided
that the buyer complies with relevant
conditions, the sale of the property
should qualify as a Transfer of a Going
Concern (TOGC).
Please register at
www.savills.com/smartcityhostel
for further information.
Robert Stapleton
Director
Hotel Investment
07972 000 230
[email protected]
Lizzie Whetman
Associate Director
Student Accommodation Investment
07807 999 174
[email protected]
Kirsty Perrin
Associate
Hotel Investment
07807 999 500
[email protected]
Mark Fleming
Director
Investment, Edinburgh
07815 799 638
[email protected]
Subject to a lease over 81 student
rooms to the University of Edinburgh
with 12 years unexpired.
PLANNING
Consented use for hostel and student
accommodation with interchangibility
between uses. The façade at 50
Blackfriars Street is category B listed.
EPC
The EPC rating for the property is F.
The EPC certificate is available in the
dataroom.
LBT T
Payable at c. 4.45%. Multiple
Dwellings Relief on the student
element of the property may be
available subject to agreement with
HMRC.
PROPOSAL
Savills are instructed to seek offers
in excess of £15,000,000 (Fifteen
Million Pounds) for the heritable
interest in the property along with the
operating business and benefit of the
secure leased income from Edinburgh
University.
Available free of hostel management
or with the benefit of the existing
management team.
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 | April 2015
13