Student Property Fund
STUDENT PROPERTY AUTHORISED INVESTMENT FUND (PAIF)
Following the successful establishment of the MISTORIA investment and lettings and sales model over the last 12 years, MISTORIA would like to further leverage its expertise and agency contacts in and around the north of England. MISTORIA is looking to launch a Student Property Authorised Investment Fund to invest in second-hand, refurbished student properties.
Student Haus Capital is seeking to raise £100 million of equity to launch its high yielding, high growth, student accommodation fund. The fund will purchase and renovate approximately 440 houses with an average investment of £204,750 for each house. The fund will run for 10 years at which point the portfolio will be sold and investment returned.
The target areas are predominantly in and around growing student, professional cities in the North West of England. All properties will be located 30 minutes from either a growing university or hospital and all areas are set to benefit from large scale infrastructure and regeneration projects.
All properties will be developed into high-end shared units to be let on a room by room basis thereby significantly increasing yields – the fund is targeting a 10% plus gross yield on properties.
MISTORIA understands the student and professional market and has a proven track record sourcing properties below market value, refurbishing them quickly and efficiently whilst also successfully managing the lettings with low void rates.
The properties will be purchased by an SPV which will be owned by the equity contributors and can be held offshore depending on the equity participant’s status. The fund manager, MISTORIA Capital, will have a management agreement with the company. The property management will be dealt with by MISTORIA Estate agents a specialist lettings, sales and property management company.
What are the PAIF’s investment objectives & policy to be?
Residential property is one of the largest asset classes in the UK. Compared to commercial or retail property, it attracts little institutional sized investment. This is partly due to the complexity and size of individual transactions and the specialization of ongoing management.
However, one of the largest barriers to entry for institutional sized investment is the lack of companies capable of managing all aspects of the investment; BMV sourcing, operations, renovations, lettings, finance.
MISTORIA has a proven track record over the past 14 years sourcing, refurbishing and letting student properties. Each property will typically generate a 10-12% gross yield. This figure is validated by our property transactions to date.
The fund’s objective is to provide a tax-efficient pension vehicle that can grow a portfolio of high yielding student properties. After 10 years the portfolio will be sold. The intention is to sell with an exit premium valuing the properties on their income rather than vacant possession value. This could add a further 10-15% to the value of the properties.
Identify market size by reference to any research
The UK student market has been growing steadily since the mid-1990s. There are currently 3.5m students and numbers are predicted to rise to 5 m by 2030. This demand is being driven by consecutive government’s plans to increase students benefitting from higher education as well as an influx of foreign students.
It is well known the purpose built student halls (Unite) have become popular in recent years. Notwithstanding, there are 60,000 student houses across the UK and this number is rising. The majority of these houses are owned and managed by private landlords with small portfolios. As a result, the quality is variable. There are few brand names in the industry and those present have a chance to become industry leaders in coming years. MISTORIA has a strong presence in Manchester, Liverpool, Salford, Liverpool, Bolton, Walkden and Cheadle and is known for high quality, well built houses. With investment, MISTORIA can become one of the first brand names in student and professional residential lets.
MISTORIA has commissioned research in over sixty UK locations with growing universities. This research showed that there was strong demand in 55 of 60 areas, that the average price in each area has been rising and that rental expectation per room was rising faster than purchase prices. Further research has shown that 2 of our 3 current areas are in the top 10 areas of potential investment opportunity as ranked by Knight Frank, with support from HESA, and that the general climate of potential student growth, international student growth, and the ratio of accommodation provision to student and professionals looks highly attractive across the majority of the 60 locations.
Describe the general profile of properties to be acquired
The properties suited to student and professional lets are good quality, well located (30 mins walk from universities or hospitals) terraced houses. The average MISTORIA house is a four or five bedroom with a purchase price of £150,000 to £175, 000 Most are Victorian properties of standard construction. New builds are generally not considered, due to their unsuitability for HMO conversion as well as room size. We do not consider properties that require major construction work due to the uncertainty of timescale and cost.
Identify the geographical spread of properties
The fund is expected to target the following areas in the North West :
The vibrant North West is home to several student cities. Manchester is one of the largest student cities in the UK, with a student population of over 80,000 and a thriving city centre. Nearby Salford is an up and coming area, with the BBC moving in 2011 being a good example of large employers coming into the region. Salford’s university population has been growing, and the hospital has knocked down its accommodation. This creates more demand for multi-let accommodation. More infrastructure is coming online to reflect this, with the largest Tesco in Europe being built and a toll road between Salford and Manchester. Salford Quays also continues to attract investment.
Outside of Manchester and Salford, the North West boasts several conurbations of 125,000 or more. Bolton’s university is expanding. We have strong, local, and long-established contacts that can be leveraged to increase our market share. Other North West universities are also expanding; Preston’s university is going from strength to strength, and although we are relatively new to the area MISTORIA already has good contacts established.
The student housing market is resilient, responding only to increased number of students. Students numbers have been rising consistently for 15 years and look set to continue rising in light of government policy.
Most residential property let to students is owned and managed by small landlords. Few people have been able to introduce a trusted brand to the market. We contend that factors such as lack of capital, expertise, and an expandable business model are the main factors behind this lack of a household name.
The benefit of student and key worker lettings comes from the ability to rent each property on a room-by-room basis. Compared to a single let, a multi-let house generates between 1.5 and 2 times rental income.
Similarly, key workers are often looking for a room to rent, but do not wish to live in studio flats, or one bedroom flats, preferring instead the companionship that comes from sharing a house.
Profile a typical investor for whom the scheme is designed
MISTORIA provide an all-encompassing property investment service that allows wealthy individuals to invest in property without the need for a day-to-day hands-on role. We have mastery of the three aspects to one of the last aspects of the UK property market that still provides genuine, high yield returns. Our core competences of sourcing, refurbishment and lettings under the same business banner allow us to offer one of the UK’s leading ‘armchair investment’ packages for people aiming to increase their passive income.
Our typical investor is someone looking to buy into the positives of the investment who would otherwise struggle to put all aspects of the deal together. The PAIF will extend this and allow investors greater liquidity and security than they would otherwise enjoy in this asset class.
Advise on industry average charges for sourcing, renovations and lettings as separate offerings
Sourcing fees in property are erratic, and can range from 1% at estate agency level through to 20% for introducer fees. 2-5% is acceptable for high-yielding, specialised aspects of the market such as HMO student, key worker and professional property.
30% on total costs for renovations is again a normal margin. It is not uncommon to find refurbishments costing £10k charged at £20k, but the 20-30% region is standard practice and would see MISTORIA make £3k per property on work costing £10k.
Lettings fees are perhaps the most standardised with 10%-12% being the industry norm. Full management, which MISTORIA would be providing to the PAIF, usually commands a 12% fee, making our 8% a very fair price. For 8% it is common to only receive a let/deposit/rent collection service, rather than the entire management of maintenance etc.
Name :– Student Haus Capital FundRegistered Address : Mistoria House, 10 Broughton Road, Salford. M6 6LS
Main Point of Contact – Mish Liyanage. CEO and Founder of The Mistoria Group
Capital Amount – £100M
Minimum Investment – £5M
Rent Payment Dates – March 31st, June 30th , September 30th and December 31st
Investment Term – 10 years
Investor Security – Share capital
Solicitor – Blacks Solicitors LLP
Accountants – MCC Accountants Ltd
Student Haus ensures the management of everything, your investment is completely hands free
We will consider early withdrawal requests and accommodate where possible. This however is not guaranteed, and investment should not be made if there is a high likelihood that funs will need to be accessed before the 10 year maturation
This is due to the types of properties we invest as HMOs generate a higher yield than buy-to-lets
After 10 years the portfolio will be sold
Identify anticipated opportunities for the business and the sector
Future growth will come from the addition of revenue streams in resale and maintenance, which will exploit core competences in sourcing discounted property deals and renovations management.
The general cyclical nature of the property market will also mean that good yields from the normal, single let units should also arise towards the back end of the PAIF’s lifespan. This will provide the opportunity to upscale the business to significant volume transactions while maintaining the sustainable business model of sourcing BMV properties that are cashflow positive.
Propose a possible lifespan for the PAIF
The PAIF is being created with a 10 year life span as its target. This will give investors a definite timescale and will allow the investment enough time to achieve the target yield. The fund will aim to spend all investment in its first two years, giving 8 years minimum of rental growth to move well into the 8-10% yield that is the PAIF’s goal for resale into larger funds.
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The Mistoria Group comprises a selection of bespoke companies committed to servicing the needs of clients who demand the very best possible results in all aspects of UK property investment and management.
Specialising in the high-yield student property and professional accommodation market, The Mistoria Group offers investors a comprehensive turnkey property solution from property sourcing right up to taxation.
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