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Grosvenor House

141/143 Drury Lane & 20/22 Wild Street, London,

WC2B 5TB

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Investment Considerations > Prime central London student accommodation

property

> Rare opportunity to acquire a Covent Garden Freehold

> Located 300m from the London School of Economics and Political Science (LSE) Houghton Street campus, 450m from Holborn Underground Station (Piccadilly and Central lines) and 650m from Leicester Square Underground Station (Piccadilly and Northern lines)

> 169 student bedrooms, across a mix of studio units and one bed flats

> Total area of 46,627 square feet (GIA) over basement, ground and six upper floors

> London has the world’s largest student population for any single city and is ranked third in the global list of best student cities, with a total of 39 universities and four of the world’s top 100 Higher Education Institutions including LSE (2018 QS World University Rankings)

> There are 294,605 full time students in London (HESA 16/17) and only 29% students have access to dedicated student accommodation

> There is a London-wide restrictive planning regime with respect to delivery of new purpose built student accommodation that insulates existing use values

> The property benefits from a lease to the LSE from 20 March 2006 expiring 24 September 2027, subject to a mutual break on 20 March 2021

> Current rent of £1,827,839.42 per annum subject to annual upward only rent reviews on 20 March to RPI with a collar of 1.5% and a cap of 3.5%

> The LSE let the bedrooms to postgraduate students, academics and staff during term time and summer schools and the public during summer. A nursery operates on part basement level and is included under the lease

> Key asset management initiatives include exercising the mutual break to take advantage of the super reversion. Savills believe the ERV is in the order of £3,859,000

> We are instructed to seek offers in excess of £55,000,000 for the Freehold interest in Grosvenor House

141/143 Drury Lane & 20/22 Wild Street, London, WC2B 5TB

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LocationLondon is the capital city of the United Kingdom, with excellent inter-city and international travel links. The M25, which encircles the city, connects directly to routes to the North (M1, M11, M40), West (M4), South (M3, M23) and East (M2, M20) of the country. The city is supported by eight main railway stations including Kings Cross St Pancras, which connects directly to mainland Europe via the Eurostar network.

The city is supported by several major international airports including Heathrow (20 miles), Gatwick (28 miles) and Stansted (40 miles). All are easily accessible via public transport, namely coach services and express train routes. Heathrow is also linked directly to the London underground network via the Piccadilly Line (journey time from Leicester Square approximately 50 minutes).

London is the largest metropolitan area in the European Union and in demographic terms its population rate increased from 7,172,091 to 8,173,900 between 2001 and 2011; an increase of 14%. During this period the population of Westminster increased from 181,286 to 219,396; an increase of 17.3%.

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The Regent’sPark

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Victoria Embankment Upper Thames St Lower Thames St

Victoria St Lambeth Rd

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1 Farringd

on St B

lackfriars Rd

Waterloo Rd

York

Rd

Stamford St Southwark St

Westway A40 Marylebone Rd A501 Euston Rd A501 Pentonville Rd A501 City Rd A501 Commercial St Tow

er Bridge Rd

Essex R

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sland R

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reditch H

igh St

Hackney Rd

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York R

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5200

Camden Rd

Cam

den H

igh St H

amp

stead R

d T

ottenham

Co

urt Rd

Chalk Farm Rd Eversholt St

Hendon Way Finchley Rd A41 W

ellington Rd

Bayswater Rd A402 Oxford St A40 Oxford St Holborn Cheapside Lower Thames St

Birdcage Walk

Cromwell Rd A4

Brompton Rd A4

Piccadilly

Park Lane A4202

Kensington Rd A315 Knightsbridge

Exhibition Rd

Ken

sing

ton

Chu

rch

St

Westbourne Grove A4206

A5 Maidavale Edgw

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N C

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ular Rd

Baker St

Grosvenor S

t

Regent St

Shaftesb

ury Rd

Haymarket

Wo

burn P

lace King

sway

Guildford St

Theobalds Rd London Wall

The Mall

Sloane St

St John’s

Wood Rd

BrentCross

SouthHampstead

MaidaVale

NottingHill

Bayswater

Marylebone

Bloomsbury

Camden

King’sCross

Islington

Hackney

Shoreditch

The CityOf LondonCovent

Garden

Clerkenwell

Hoxton

SohoMayfair

Southwark

BoroughLambeth

Belgravia

Knightsbridge

BRONDESBURYSTATION

ACTONSTATION

PADDINGTONSTATION

NOTTING HILL GATE STATION

HAMMERSMITHSTATION

EARLS COURTSTATION

VICTORIASTATION

WATERLOOSTATION

KINGS CROSSST PANCRASINTERNATIONAL

LIVERPOOL STREETSTATION

WEST HAMPSTEADSTATION

MARYLEBONESTATION

EUSTONSTATION

BRENT CROSSSTATION

LONDONBRIDGESTATION

Higher Education Institution1 Royal Central School of Speech

and Drama

2 The Institute of Contemporary Music Performance

3 London Business School

4 University of Westminster - Marylebone

5 University of Westminster - Regent Street

6 ESCP Europe Business School

7 University College London - Gower Street

8 London College of Fashion

9 University of Westminster - New Cavendish Street

10 University of Westminster - Wells Street Campus

11 King’s College London - Waterloo

12 Birkbeck College

13 University College London - Bedford Way

14 SOAS - Bloomsbury

15 Architectural Association School of Architecture

16 London South Bank University

17 University College London - Brunswick Square

18 King’s College London - Guy’s Campus

19 Central St Martins

20 Regent London

21 Queen Mary University of London - Lincoln’s Inn Fields

22 BPP University Law School

23 London School of Economics

24 University of the Arts - High Holborn

25 King’s College London - Strand

26 The Courtauld Institute of Art

27 SOAS - Vernon Square

28 Queen Mary University of London - Charterhouse Square

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1

2

3

4

19

7

12

15

9

10

8

20

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16

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SituationGrosvenor House is situated in the heart of Covent Garden within the London Borough of Westminster. The property is located on Drury Lane, a prime Covent Garden location with dual frontages onto both Drury Lane and Wild Street to the rear. Drury Lane runs from High Holborn (A40) at the north down to The Strand (A4) at the south.

The property is ideally situated for a number of universities; it is within easy walking distance of the London School of Economics & Political Science, Kings College London, University College London and Westminster University.

Grosvenor House has unrivalled public transport links. It is located within a 4 minute walk (0.2 miles) of Covent

Local Universities

Garden Underground Station (Piccadilly Line), a 6 minute walk (0.3 miles) of Holborn Station (Central and Piccadilly Lines) and within a 7 minute walk (0.4 miles) to Leicester Square Underground Station (Northern and Piccadilly Lines). Charing Cross Station is also located within 13 minutes’ walk (0.6 miles) to the south west. Tottenham Court Road Station is also within a 13 minute walk (0.6 miles), with Crossrail services scheduled to commence in December 2018 providing links to Canary Wharf (12 minutes), Bond Street (2 minutes), Heathrow Terminal 5 (36 minutes) and Woolwich (20 minutes).

0.3 miles

6 minutes

3 minutes

0.5 miles

10 minutes

5 minutes

0.9 miles

17 minutes

7 minutes

1.9 miles

35 minutes

15 minutes

Source: Google

Source: Transport For London (TFL)

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Distance/Method and Journey Time

Intercity Transport Links International Transport Links Landmark Destinations

Liverpool Street

Euston Waterloo Kings Cross St Pancras

Heathrow Airport Terminal 5

Oxford Circus

Embankment

Covent Garden 14 minutes 9 minutes 8 minutes 6 minutes 55 minutes 6 minutes 6 minutes

Holborn 7 minutes 7 minutes 11 minutes 3 minutes 57 minutes 3 minutes 9 minutes

23.8m

23.5m

StationCycle Hire

TCBs

Sports Court

TCB

BO

WILD STREET

MEWS

GREAT

QUEEN

STREET

Lane

Play Area

Drury

Gardens

19

Peabody Estate

15

28

1 to 50

6

79

Crown Co

Mag

istra

tes

Cour

t

Bow

Stre

et

1 to 29

150

30

151

39Bu

17

42

1 to 40

(United Grand Lodge

8 to24

55

1 to 29

Crown Court

Martlett

Crown Court

Block F

Hall

of England)

1to24

Drur

yHo

use

Cour

t

Broa

d Co

urt

Peabody Estate

141 to 145

8 to18

44to46

4

9

1 to 40

8

Freemasons' Hall

40

Hotel

26

13

Fletcher Buildings

Charter House

PH

1 to 23

Bank

158

6

4

PH

69to 76

Block H

Beaumont Buildings

Sheridan Buildings

149

148

157

1to10

(1 to 35)

41to

44

77

Block G

Design Council

45

1 to 29

39

34

4078

37

38

43

21

Weld

House

(site

of)

22.2m

Chy

TCB

Wild

Cou

rt

WILD STREET

1 to24

1 to24

58

34to

43

Bloc

k CBlock E

Block D

Connaught Rooms

1 to 29

Block N

Block M

Block L

1 to 29

65

1 to 10

1 to

24

1312

British Museum

Covent Garden Market

Royal Opera House

Seven Dials

Soho

Mayfair

Covent Garden

Tottenham Court Road

Holborn

Central Saint Giles

Regent’s Park

Centre PointOxford Street

Russell Square

1514

1716

The property provides 169 student bedrooms, broken down as 56 single rooms, 26 queen rooms, 49 double rooms, 33 twin rooms and 5 accessible rooms. Room sizes range from 147 sq ft up to 499 sq ft

DescriptionGrosvenor House was originally built in the early 20th Century as two separate buildings (fronting Drury Lane and Wild Street). The two were later merged to form a single office block which was then converted in 2004 following the granting of a change of use consent to student accommodation. At this time two additional floors were added to the building adding an additional 6,778 sq ft of GIA. The property was then leased to the London School of Economics with its initial intake in 2006.

The property provides 169 student bedrooms, broken down as 56 single rooms, 26 queen rooms, 49 double rooms, 33 twin rooms and 5 accessible rooms, arranged from the ground to sixth floors. All rooms include a bed, study area, kitchen and private bathroom with a shower, wash basin and WC.

The lower ground floor comprises a student common room and lounge, computer room, laundry room, and storage facilities. The lower ground floor further comprises a nursery (D1) which is not rentalised and was a requirement under the Section 106 agreement. The nursery totals 5,113 sq ft.

The property also has 24 hour security with secure door systems and CCTV cameras.

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Accommodation

Floor Plans

Ground Floor

Drury Lane

Sixth Floor Bedrooms

Fifth Floor

First - Fourth Floors

Bedroom Areas Summary

Floor G 1 2 3 4 5 6 Total

Single 10 11 11 11 11 0 2 56

Queen 0 6 6 2 2 5 5 26

Double 7 6 6 10 10 9 1 49

Twin 3 6 6 6 6 4 2 33

Accessible 1 1 1 1 1 0 0 5

Total 21 30 30 30 30 18 10 169

Room size ranges (sq ft GIA) Total

147 - 175 33

181 - 203 66

207 - 249 38

251 - 349 22

369 - 499 10

2120

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London Student MarketLondon is home to 39 universities. The total student intake of these universities is 367,235 (HESA 2016-17) of whom 294,605 study full time. Within these full time students, there are 217,650 (74%) undergraduate students and 76,955 (26%) postgraduate students. Internationals students make up 36% of the full time student population (29% of the total).

In general, international students prefer purpose built or dedicated student accommodation, as they value the centrality, amenities, services and security that this type of accommodation offers. Given London’s international reputation as a centre of academic

excellence, we expect demand for bespoke student accommodation from international students to remain strong.

The capital has experienced significant growth in student numbers over the past 15 years recording an average full time student population growth rate of 3.00% per annum and 33% in total (HESA). Over the same period, the international student population has increased by 60% and now stands at 105,395. Just 29% of full time students currently have access to purpose built student accommodation.

Student Numbers for Selected London Institutions

University Borough Total Full Time UG FT PG FT Total

International Times Ranking

2018

Imperial College London

Kensington and Chelsea

17,685 16,350 9,520 6,830 8,900 5

University College London

Camden 37,905 30,640 17,405 13,235 15,725 6

London School of Economics

Westminster 11,205 10,730 4,725 6,005 7,630 8

Kings College London

Southwark 30,560 24,095 16,515 7,580 9,990 27

School of Oriental and African Studies

Islington 6,360 5,205 3,245 1,960 2,910 35

Queen Mary University, London

Tower Hamlets

18,885 17,590 13,620 3,970 5,970 40

City University of London

Islington 19,400 15,920 9,245 6,675 7,560 50

University of the Arts, London (London College of Fashion)

Holborn 18,290 17,340 14,565 2,775 8,385 109

University of Westminster

Westminster 19,650 15,110 12,775 2,335 6,155 117

London South Bank University

Southwark 17,985 10,515 8,545 1,970 1,800 120

London Metropolitan University

Islington 12,145 9,250 8,055 1,195 1,230 127

The main universities within the close vicinity of Grosvenor House are detailed below:

London School of Economics and Political Science

The London School of Economics is one of the foremost social science universities in the world. In 2017 the school received 18,000 applications for 1,500 undergraduate places, a ratio of 12 applicants per place. It is currently ranked second in the world for social sciences (QS World University Rankings 2018), and 8th in the Times Good University Guide 2018. In 2016/17 the university had a total of 11,205 students, comprising 4,725 full time undergraduates and 6,005 full time post graduates. 7,630 of these were International students coming from 133 countries around the globe.

The school has a long history of political involvement with 31 alumni and former staff who are currently MPs and 42 current members of the House of Lords. More than 30 past or present heads of state have either been LSE students or academics, as have 16 Nobel Prize winners in economics, literature and peace.

King’s College London

King’s College is one of the top 25 universities in the world (2018 QS) and the fourth oldest university in England. It was ranked 27th in the Times Good University Guide 2018. King’s College has over 30,000 students from over 150 countries around the globe made up of 16,515 full time undergraduate students and 7,580 full time post graduates. Between 2011 and 2015 King’s added over 1,500 new places to the undergraduate intake as a result of increased applications. Once known primarily for science, King’s now has a distinguished reputation across eight schools, including humanities, law and social sciences. The King’s campus is currently undergoing a £1 billion redevelopment programme and since 1999 over half the university’s activities have been relocated to new and refurbished buildings.

University of Westminster

The University of Westminster draws its students from over 169 countries, more than any other university in the UK. It was ranked 117th in the Times Good University Guide 2018 with a total of 19,650 students, comprising 12,775 full time undergraduates and 2,335 full time post graduates.

The university has recently invested heavily into its buildings and facilities, with major refurbishments taking place at the Regent Campus and Little Titchfield Street. A new fabrication laboratory is currently under construction and will reinforce the faculty’s position as one of the UK’s leading centres.

University College London

University College London is one of the top seven universities in the world as ranked by both QS (7th) and The Times Good University Guide 2018 (6th).

The university is planning to invest £1.25 billion over the next ten years to implement its Transforming UCL masterplan. It is the largest capital investment programme UCL has undertaken since building its original Bloomsbury campus and one of the biggest in UK higher education.

There are currently 37,905 students enrolled at UCL, comprising 17,405 full time undergraduates and 13,235 full time post graduates.

School of Oriental and African Studies (SOAS)

The School of Oriental and African Studies is the only Higher Education Institution in Europe specialising in the study of Asia, Africa, and the Middle East. Their academic focus is on languages, cultures and societies, and it has the largest concentration of academic staff concerned with Africa, Asia and the Middle East in Europe.

SOAS was ranked 35th in the Times Good University Guide 2018 with a total of 6,360 students made up of 3,245 full time undergraduates and 1,960 full time post graduates. The number of applicants has grown by over 25% in the last two years alone with students coming from over 130 countries. The school is currently in the process of taking over the north block of Senate House which is at the western end of the SOAS precinct and will provide space for a new student hub and teaching facilities.

University of the Arts London (London School of Fashion)

The London School of Fashion is a global provider of fashion education, research and consultancy. Teaching and research within fashion design, fashion textiles and technology form the core of their expertise.

It has been placed among the top five institutions in the world for art and design with a ranking of 109 in the Times Good University Guide 2018. Over the next 5 years the University will invest more than £250 million in student facilities cementing its place as the largest art and design university in Europe.

It currently has a total of 18,290 students comprising 14,565 full time undergraduates and 2,775 full time post graduates.

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IncomeGrosvenor House is currently let to the London School of Economics and Political Science on a full repairing and insuring basis from 20 March 2006 expiring 24 September 2027, subject to a mutual break on 20 March 2021. The current rent is £1,827,839.42 per annum subject to annual upward only rent reviews to RPI with a collar of 1.5% and a cap of 3.5%.

The LSE are ranked 35th in the QS’ World University rankings and have a Dun & Bradstreet rating of 5A1 indicating a tangible net worth of £508,901,000 and a minimum risk of business failure.

It is our opinion that the property is highly reversionary to direct let PBSA rental levels and on a refurbished basis, the ERV would be approximately £3,680,000

on the assumption of rents of between £400 and £700 per week and £2,500 per bed per annum operating costs.

The basement nursery is not currently rentalised under the lease and we believe this has an ERV of £35 per sq ft equating to approximatively £179,000 per annum, subject to planning.

PBSA Rental Comparables

Operator Hall Accommodation Term Length (weeks) Rent Per Week

Scape Bloomsbury

Standard Studio 51 £365

Medium Studio 51 £405

Large Studio 51 £500

Premium Studio 51 £600

Twin Room 51 £550

Two Bed Apartment 51 £735

Private Kirby Street Classic Studio 51 £374

Urbanest Westminster BridgeStudio Room 51 £460

Luxury Studio 51 £569

Pure

Pure Bloomsbury

Bronze Ensuite 51 £383

Bronze Studio 51 £385

2-Bed Flat 51 £401

Silver Ensuite 51 £410

Bronze Studio Plus 51 £425

Gold Ensuite 51 £440

Silver Studio 51 £435

Silver Studio Plus 51 £445

Gold Studio 51 £475

Gold Studio Plus 51 £485

Platinum Studio 51 £525

Platinum Studio Plus 51 £535

Pure Bankside Studio Flat 51 £335

Pure Paris Gardens Studio Flat 51 £365

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Asset Management Considerations> Release super-reversion following

triggering break and modernising of bedrooms

> The estimated rental value of the asset once refurbished is in the order of £3,859,000 per annum

> Excellent sized bedrooms, some capable of sub-division or adding further occupancy

> Potential to use mutual break to re-gear LSE lease

> Creation of additional 7 bedrooms on sixth floor and develop new seventh floor

> Maximisation of income through summer lettings strategy

> Let out nursery on commercial terms

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TenureThe right to buy the Freehold interest in the property is available for purchase.

EPC’sEPCs are available for review on the dataroom.

VATWhilst the Property is opted to tax, this is largely disapplied because of the student accommodation use and the disposal is expected to be structured so that VAT is only applicable to the non-residential use equating to approximately 0.23% of the purchase price.

Proposal Savills are instructed by GH Partnership LLP (the ‘LLP’) to dispose of their contracted position in respect of the Freehold of Grosvenor House. The LLP entered into a contract with Student First Limited dated 27 January 2016 to acquire the Property. A notional deposit (£1) was paid on exchange with the balance of the purchase price payable on completion. Completion is triggered by the LLP serving a completion notice on Student First requiring completion to take place 20 working days after service of the notice but if the LLP does not do so then completion will take place on a longstop date, 28 February 2020. The disposal will be by way of sub-sale, assignment or novation of this contract. Savills are instructed to seek offers in excess of £55,000,000.

DataroomFurther detail can be found by accessing https://sites.savills.com/GrosvenorHouse/ subject to agreeing a non-disclosure agreement.

ContactsJames Hanmerjhanmer@savills.comT: 0207 016 3711M: 07967 555 897

Richard McKennarmckenna@savills.comT: 0207 016 3807M: 07972 000 092

George Bossomgbossom@savills.comT: 0207 299 3036M: 07807 999 615

Disclaimer

Savills, and 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 the 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.

2018 Savills (UK) Limited. All rights reserved. Designed by Savills Marketing: 020 7409 8834 | April 2018

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