Mansion Student Accommodation Fund - The Mansion Group

Mansion Student
Accommodation Fund
“Student Housing continues to offer investors attractive investment returns, long term income streams, rental
growth prospects and high occupancy rates”
Source: Savills 2009

Contents
• The Student market
• Mansion - Who, what and where
• The Fund
• Summary

Growing
demand
• Student numbers have increased by 13% over the last five years , 33% over the last decade
• There are currently 1,545,000 full time students
• London remains the region where demand is strongest
• Student numbers have increased in London by 18% over the last five years, 35% over the last decade
• UCAS are reporting a 22% increase in applications for this year 2011/2012
“The number of people trying to secure places at UK universities is at an all time high”
Source: Savills, HESA
01

Number of additional students per annum
Source: Savills
02

The foreign
student factor
• International students account for 30% of all students in London up 9% last year
• Compared to a national average of 20%
• The UK remains a destination of choice for students
• There are 4 British universities in the worldwide top 10 and 2 London universities in the top 5
• These students are more affluent and often less price-sensitive than UK peers
• Many prefer to live in halls as opposed to HMO
Source:Times Higher Education World Uni rankings, Knight Frank, Savills
03

World university rankings by country – top 200
Source:Savills
04

Postgraduates
• In 1997 post grads accounted for 21% of all students
• Over the following ten years proportions increased to 24%
• This year (2011/2012) has seen an increase of 63% for people over 25 applying to universities
• These students are less price-sensitive
• Post graduates are much more likely to want to live in operated halls as opposed to HMO
Source:Times Higher Education World Uni rankings, Knight Frank, Savills
05

Postgraduate student numbers in the UK
“Postgraduate numbers have been rising over the past few years and UK projections show a further
increase.......the rise in postgraduate and overseas students will place additional pressure on student
accommodation....”
Source: HEFCE 21 st January 2008 interpreted by King Sturge
06

Insufficient
supply
• Nationally, student numbers are increasing at the rate of 10 times the supply, 15 in London
• London can only supply beds to 36% of it’s students
• Compared to the UK average which can still only provide for 65%
• Much existing purpose-built stock is in need of refurbishment
• 70% of purpose built student housing is owned by universities equal to 320,000 beds
• Quality of stock in university sector is old and un-modernised
Source: Knight Frank, Savills 2010
07

Inadequate
supply
% of student hall beds
Source: Savills 2009
08

University funding
• Universities will see their funding cut by £449M (6%)in the next academic year
• As universities see funding cut, they will be need to pursue other methods of funding
• Disposal of assets
• The HEFCE have said “The majority of universities have a high proportion of stock which is dated and in
need of investment”
• Law, Architecture and Property related degrees will see decline and funding cuts
• Institutions offering STEM (Science, Technology, Engineering and Maths) will see the strongest demand
and are less likely to suffer from funding cuts
Source: Knight Frank, Savills,HEFCE
09

Top 15 Universities offering STEM
Source: Savills 2010
10

Rental growth
resilience
• 2009/10 average weekly student accommodation rental cost stands at over £97
• 12% increase since 2007/08
• There remains an incredibly low supply ratio
• As a result rental growth is still consistently strong
• Outperforming RPI and other property sectors
Mansion has achieved 9.8% growth and 100% occupancy across its managed sites in 2009/10
Source: Savills 2010
11

Average rental growth
over last 2 years
Source: Savills 2010
12

Annual property sector rental growth
%
Source: CBRE
13

Mansion – Who are we
• Mansion was formed in Feb 2007 as a limited company in the UK
• The group is privately owned by Shankar Ramanathan (CEO) and a private investor
• The senior management were brought together to create a team that had specialised in property, banking,
financial services and asset management
• Supported by a 70+ person organisation (200% up over last 12 months)
• Offices in Manchester and London
14

The Mansion Team
• Shankar Ramanathan – Chief Executive Officer
• Andrew Freeth – Director of Fund Development and Administration
• Cyril Ogunmakin – Director of Asset Management
• Angela Dillon – Director of Finance and Operations
• Adam Davis - Director of Sales
• Mark Stubbs - Director of Business Development
15

Mansion – What do we do
•
• We are property developers , asset managers and advisers that specialise in student accommodation
• As a developer ,we refurbish existing halls of residence
• As an asset manager, we manage and operate halls of residence for property funds and institutions
• As an adviser, we advise the Mansion Student accommodation Fund on the sector by offering market
intelligence and acquisition opportunities
• We also act as property adviser to a number of institutions
16

Mansion Property
Management
High quality refurbishment:
• Internet Access
• Plasma screens
• Fully fitted kitchens and bathrooms
• Separate bedrooms with vanity units or en suite.
• www.mansionstudent.co.uk
17

The Mansion product
18

Mansion Property
Management
Let directly, predominantly to post 1 st year students
Managed by MPM:
• Provide on site hospitality
• Maintenance of property
• Manage rental payments and chase arrears
• Provide security – 24/7 and CCTV
19

Progress
to date
• Mansion have redeveloped property in London, Colchester, Bristol, Liverpool, Newcastle, Manchester,
Nottingham, Oxford, Leicester and Edinburgh
• £155M of development value to date
• 3089 beds under management
• 7.3% average rental initial yield
• 100% occupancy
• 5,000 bed pipeline
20

Mansion – Where are we
21

Mansion Student
Accommodation Fund
• Sub cell of protected cell company
• Guernsey based OEIC
• Listed on Channel Islands Stock Exchange
• Authorised by the Guernsey Financial Services Commission
• Monthly dealing and redemption
• Priced at NAV in £, $ and €
• Initial charge and rear end charge available
22

Mansion Student
Accommodation Fund
• Objective
• To provide investors with exposure to the UK private student accommodation market
• Strategy
• To concentrate on purpose-built halls of residence in the UK’s top 30 student towns and cities. To achieve
capital gains by focusing on sites where a combination of location, supply/demand imbalance and rental
potential is greatest
• Put simply…
• The fund offers the opportunity for your clients to diversify away from traditional asset classes such as
equities, bonds, commercial property or commodities; or for investors with a pessimistic view of these
asset classes to achieve a higher return than cash.
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How does the fund grow
• Jones Lang LaSalle value each acquisition on behalf of the fund
• The fund pays 90% of the valuation, thus creating a profit each time the fund purchases property
• The fund is geared up to 50%, but each property does produce net rental income
• The net rental income is rolled up within the fund and this adds to the NAV
• As rental agreements are secured for the following academic year, the valuer will re-calculate the valuation
of each asset on a monthly basis
• Where possible, the property adviser will seek to add additional bed spaces to existing sites
• This will be achieved by way of new build extension to the existing properties, thus adding additional
revenue to the fund and increasing the NAV
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Performance to date
Cumulative Performance
3 months 6 months 12 months
5.20% 8.54% 30.25%
2009 c/f Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 YTD
Share Price - £1.0991 £0.0991
RTN - 9.91% 9.91%
2010 c/f Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 YTD
Share Price £1.0991 £1.1044 £1.1096 £1.1552 £1.2180 £1.2478 £1.2683 £1.3153 £1.3316 £1.3443 £1.3581 £1.3739 £1.4303 £0.0331
RTN - 0.48% 0.47% 4.11% 5.43% 2.44% 1.65% 3.71% 1.24% 0.95% 1.03% 1.17% 4.10% 30.13%
2011 c/f Jan 11 Feb 11 Mar 111 Apr 111 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 YTD
Share Price £1.4303 £1.4388 £1.4453 £0.015
RTN - 0.60% 0.45% 1.04%
150
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Listing Date
Dec 09
Jan 10
Feb 10
Mar 10
Apr 10
May 10
Jun 10
Jul 10
Aug 10
Sep 10
Oct 10
Nov 10
Dec 10
Jan 11
Feb 11
Mar 11
Apr 11
May 11
Jun 11
Jul 11
Aug 11
Sep 11
Oct 11
Nov 11
Dec 11
* Please remember that past performance is not a guide to future performance.
25

Professional
advisors
• Custodian BNP Paribas (AA Rated)
• Administrator PSG Active Fund Services
• Auditor PriceWaterhouseCooper
• Tax advisor PriceWaterhouseCooper
• Valuation agent Jones Lang LaSalle
• Property adviser Mansion Property Management
• Promoter Dartmoor Capital Management
26

Fund facts
MSAF Euro, Dollar and Sterling – Rear end charge structure
• 100% allocation
• Exit penalty of 5,4,3,2,1% over 5 years
• 7.5% of the original investment can be taken out annually without penalty
• AMC - 1.5% of NAV
• Minimum subscription - £10K with £3K additional subscriptions
- €10K with €3K additional subscriptions
- $15K with $5K additional subscriptions
• Monthly dealing on the last business day of the month
• Applications must be received by the 27 th
27

Fund facts
MSAF GBP initial charge structure
• Initial charge – 2%of the original investment – 98% allocation
• AMC - 1.5% of NAV
• Minimum subscription - £10K with £3K additional subscriptions
• Monthly dealing on the last business day of the month
• Applications must be received by the 28 th
28

Access
• Individual
• SIPPs/SSAS
• Offshore bonds
• Wrap platforms
• ISAs
• Charities
• Trusts
• Corporate
• QROPS
29

Platforms which
accept the Fund
Wrap providers
Offshore Bond providers
30

Summary
• Nationally, student numbers are increasing at the rate of 10 times the supply, 15 in London
• International students account for 20% of all students. UK remains a destination of choice for students
• This year (2011/2012) has seen an increase of 63% for people over 25 applying to universities
• Insufficient supply of accommodation
• Inadequate supply of existing accommodation
• Rental growth is strong and resilient
• Mansion are pioneers in the secondary student accommodation market
• MSAF is the only student accommodation fund offering development gain without development risk
• MSAF has a completely transparent charging structure and valuation process
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