1. Student accommodation A strategic investment Philip Hillman FRICS Higher Education Team

3. £6.5 billion £13.75 billion £202 billion Overall Value of the Student Accommodation Sector as at September 2007 All Other Property Sectors (estimated IPD Capital Values) University Owned Student Accommodation Privately Owned Student Accommodation

4. Driving demand for student beds… Increasing numbers participating in HE Overseas student market Increasing proportion of postgraduates Higher student expectations

5. As an investment class… Strong rental growth High occupancy Lack of quality product available Non cyclical nature of the asset City centre or campus locations

6. The evolving market… A sector in its own right Not residential, not commercial Private sector developer / operator / investors Sufficient transactions to benchmark values…

7. MOORFIELD PORTFOLIO

8. BASE PORTFOLIO

9. University of Birmingham Three halls of residence 903 student bed spaces £47 million Liberty Living

10. University of Birmingham Refurbishment works 2007 £3k per bed

11. University of Manchester Two halls of residence Manchester conference centre and hotel Sold July 2007 £51 million

12. KX200

13. MX100

14. A market that is still evolving… Credit crunch – ‘prime’ narrows, ‘secondary’ widens Greater variation in room types ‘Standard’ product not suitable for all locations Direct let in strong demand locations, lease or nominations in locations, where direct let not viable Little in the way of private sector affordable offering

15. The next phase… Private sector provincial developments will be more scarce Private sector focussing on London market 320,000+ beds in the HE sector – more than 2.5x what the private sector has built! The redevelopment of the HE residential estate

16. The HE residential estate Often in prime, on-campus locations Universities can make schemes work that the private sector couldn’t – unique marketing & allocation position However much ageing stock – functional & economic obsolescence Banks often keen to lend, but FD doesn’t always want to increase loans on balance sheet. HEFCE involvement.

17. Refurbish or redevelop? Economic / functional life of the building? Value as is v site value (with additional density) The student experience – how is that quantified? Cosmetic refurb v comprehensive refurb’ Retain as affordable offering or create premium product?

18. DIY or 3 rd Party involvement? Banks keen to lend at competitive long term rates Opportunity to make a development profit in return for development risk To reduce risk, consider pre-sale of completed scheme or to review ownership & financing options on completion of development University operation & control ?

19. 3rd Party involvement Risk transfer – development, occupancy and operational costs Capital receipt Nomination agreement – initial rents, rental growth, who does what, how are the beds marketed A long term partner - 30 to 50 years! How do/will the students perceive it?

20. 3 rd Party Deal structures 35 – 50 year ground lease Creation of LLP or charity vehicle Vehicle can allow university equity participation Phased redevelopment Off balance sheet issues

21. City University, London Five halls of residence 978 beds Redevelopment potential 1000 + beds Marketing late 2007

22. City University, Finsbury and Heyworth 3 halls 462 beds non en suite University sports centre Current rents £92.47 - £99.54 per week, 37 weeks Significant development potential

23. University of Exeter, Lawfrowda

24. Looking ahead… HE residential estate attracting worldwide interest Balance of capital receipt / student experience DIY has been successfully achieved by HE bodies. Banks keen to lend and valuable assets can be created. Others will prefer to transfer risk to 3 rd party Status quo will rarely be an option.