HUBB INVESTMENT 101

Property Loan Note (Secured)

£1,300,000
Fully Funded

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60
Month Term

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8.25%
Annual interest

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£50,000
Minimum Investment

INVESTMENT SUMMARY

Hubb Investment 101 is an exciting opportunity to acquire a 94-bedroom student accommodation residence with a strong track record, in the centre of Lincoln.

The accommodation is split across 24 cluster flats; 1 x two bed, 6 x three beds, 12 x four bed, 4 x five beds and 1 x six bed. All bedrooms are equipped with a small double bed, desk, wardrobe and a swivel office chair. The flats benefit from gas central heating, UPVC double glazed windows and superfast WiFi throughout.

Lincoln is a Cathedral City and is the county town of Lincolnshire – one of the UK’s largest counties. Part of the East Midlands, Lincolnshire sits on the East coast of England, to the north of Norfolk and the south of Yorkshire. Investment 101 is located centrally and just a stone’s throw to Lincoln College, a two minute walk to the city centre, and a 15 minute walk to the University of Lincoln.

There are approximately 5,981 student beds to accommodate just over 16,000 students in the city of Lincoln, and so, with only 37% of full-time students having access to accommodation, the property is in high demand and supports its 100% occupancy rate for the last 5 years.

Under the supervision of our in-house asset management team, our plan is to maximise the asset’s rental income over the course of the loan term by a further 15%, and to carry out an extensive refurbishment scheme so the residence caters for the needs of the modern student.

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PHOTOGRAPHS

THE OPPORTUNITY

Hubb Investment 101 Limited, is a special purpose vehicle (SPV) which is 100% owned and controlled by Hubb Property Group Limited.  This SPV was solely set up to acquire and manage this asset and no further assets will be held within the company throughout the duration of the term.

Fund Size: £1,300,000

Funding: Secured Loan Note (also known as a coupon or bond).

Projected Loan Term:  60 months (5 years)

Minimum Investment: £50,000

Interest Rate: 8.25% pa

Incentive Scheme / Annualised Rate of Return:

Subject to the asset value at the end of the project term, the company will pay the below bonuses.

  • A ‘Long term Incentive bonus” if you have invested for more than three consecutive anniversaries prior to the loan maturity date. This is calculated at a rate of 1.25% pa for each year invested.
  • A ‘Loyalty bonus’ if you have invested for the full term. This is calculated at a rate of 0.5% for each year invested.

To put it simply, if you invest for the full project term (5-years), the projected rate of return is 10% pa.

Composition: 94 student bedrooms arranged over 24 cluster flats. Each flat benefits from a full furniture pack, a shared kitchen and lounge, a WC and shower.

Latest RICS Valuation: £3,000,000

Exit Strategy: To retain the asset within the Group and potentially re-launch as a new investment opportunity to our investors, or to sell as a single holding to an investor or institution.

Security: Investor funds are secured as a 2nd legal charge on the SPV.

Liquidity: Loan note certificates are transferable but note there is no guarantee of a secondary market so investors should plan to invest for the full term.

Interest: Interest is paid on a quarterly basis. With overseas investors, any interest paid may be subject to a 20% Withholding Tax, as required by UK law.

Lettings and Management: A local student letting and management company have been appointed to work alongside Hubb Property Group’s asset management team to ensure the property is fully occupied and managed successfully throughout the term.

Asset Management: The property will be asset managed to provide further security and maximise its potential to which would increase net income, yields and capital value. A building survey and Planned Preventative Maintenance (PPM) report has been carried out to proactively maintain, manage and improve the investment over future years.

Due Diligence: The financial projections for this opportunity have been calculated with consideration to the current climate. Integrated contingency lines have been included to ensure that the figures presented represent a realistic and achievable return-on-investment. As part of the asset management process, due diligence is carried out on tenants and their guarantors to ensure affordability and successful rental payments. The local student market has also been carefully researched, including the local universities to identify their plans and the potential growth balanced against the current supply of student accommodation. In our view, taking into account our research and due diligence, Hubb Investment 101 is an attractive and safe investment for investors.

Rental Information: The property is currently 100% let, achieving a rental income of £375,888.  There is a strong rental history and has been fully let since 2012. Despite its 100% track record for the last 5 years, we stress test each of our student acquisitions at a 75% occupancy rate and this opportunity successfully passes.

FLOORPLANS

ARCHITECTURAL VISUALISATIONS

THE AREA

Lincoln has two higher education institutions; The University of Lincoln and Bishop Grosseteste University, with a combined total of 16,329 students in the Academic Year 2018/2019.

The University of Lincoln is the city’s largest employer and the primary driver of inward investment in the city. With 14,105 students – 12,060 full time – it has seen a 35% increase in school leaver enrolments in the past two years.

The University of Lincoln is placed 20th out of 125 universities for student experience and has won national recognition for its collaboration with businesses and industries. The university’s Five-Year Strategic Plan will see an additional 4,600 students join the university with the addition of a £21m medical school.

Bishop Grosseteste University (BGU) is a smaller university with over 4,000 students, known for its arts and social science courses. The university’s Five-Year Plan includes growing their student numbers and increasing turnover from £18m to £37m. While the current demand for student accommodation comes largely from the University of Lincoln, an increase in student numbers at BGU will further increase this.

The property is also well placed for the commuter being accessible to both Junctions 16 and 17 of the M4 which provides fast access to the East and West where it links with the M5. There are regular main line train services from Chippenham, Kemble and Swindon to London Paddington taking just over 60 minutes.

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THE FINANCIALS

The figures below represents the financial breakdown for the student academic year 2019-20.

Occupancy Rate:
100%

Annual Rent Reserve:
£375,888

Operational Costs*:
£110,672

* includes maintenance and repair costs, lettings and management fees, safety testing and certification, PPM reserves, property insurance, utilities and rates, cleaning, marketing and advertising costs

LOCAL AGENTS COMMENTS

“The student accommodation market in Lincoln has seen unprecedented continual growth since 2011. Last year the university increased student intake by over 6% awarding a further 900 first year students a place at the institution.

This has seen a large external investment in both infrastructure and accommodation in the city to cope with the new demand. The university itself has invested heavily in accommodation for its first-year intake, failing to be able to build accommodation fast enough to cope with demand. The university has a 2025 masterplan which will see an additional 4,600 students join the university, currently only an additional 2,200 bed spaces are planned and thus we estimate there will be an accommodation shortage should the university continue to grow at this pace.

In the last 4 years we’ve had occupancy rates at 100% based on 51-week contracts across our portfolio of managed bed spaces and have already received over 300 enquiries for accommodation for 20/21.”

Harry Conti, Co-Founder and Director of Student Housing, Lincoln

FAQS

You can find our most frequently asked questions by clicking the link below, or email us at investments@hubb.co.uk if you have a different question.

Hubb Property Group does not offer investment advice. The figures provided are projections, not facts, and you should not rely on them. Property prices can fall as well as rise, and it is possible you could lose money on an investment with us. Risk Statement