Hadrian's Tower, Rutherford Street Project Overview

Rutherford Street Science Central Newcastle City project overview report april 2017

Contents

3

The High Street Group

6

asset and liability statement

8

biographies

9

company structure

10 the private rental sector 14 the scheme 16 site context & analysis 22

newcastle: a student city

rutherford street project overview

2

the high street group introduction The High Street Group of Companies is a leading financial and property group and one of the North East’s most recognised and respected brands. Conceived in 2006 by Gary Forrest, The High Street Group has gone on to grow successful businesses in a variety of sectors; it is now focussing on the growth of its large scale building and development portfolio.

The High Street Group has expanded rapidly and now employs more than 50 people at its head office in Newcastle upon Tyne. As a result, the company has adapted its core principles: being open and honest, approachable and flexible. The company’s adopted mission statement is ‘Diversification through Innovation’.

All Saints Living is the High Street Group’s property development company which works primarily in the

residential sector throughout England, Wales and Scotland. Since its launch in 2013, All Saints Living has grown rapidly and substantially, having undertaken projects in excess of £50 million. All Saints Living’s landmark development is Larbert House & Country Estate in Falkirk, Stirlingshire. The development includes full restoration and sensitive conversion of the derelict Larbert House and stable block into luxury apartments.

It also includes four new build sections comprising of a mews block to mirror the existing stable; eight luxurious detached homes nestled within the walled garden; eight detached properties to the west of the walled garden; and a group of three large distinctive detached properties settled within mature trees on the east site.

This development has won the award for Best Renovation Project of Scotland 2015 and continues to be nominated for prestigious property awards.

To view further details of Larbert House & Country Estate, please visit the links below; http://www.larberthouseestate.com/ https://www.youtube.com/user/thehighstreetgroup

larbert house & country estate, STIRLINGSHIRE to complete summer 2018 rutherford street project overview

3

the high street group introduction In 2016 The High Street Group acquired The Walled Gardens development in Gosforth, within the grounds of Newcastle Racecourse. The ÂŁ11 million project is being delivered by sister company All Saints Living and will create 14 four and five bedroomed, contemporary, executive homes in this unique setting.

This development is situated across two walled gardens; the northern walled garden contains eight, four bedroom semi-detached properties that have been designed to a contemporary finish, incorporating large south facing windows maximising capture of natural light.

The southern walled garden contains a further six, five bedroom semi-detached properties. These properties will be finished in a more traditional style in order to complement the surrounding dwellings.

Further developments have been completed in Durham City Centre (26 units), Whitehaven, Cumbria (14 units),

Rennington, Northumberland (5 units), Harrogate, North Yorkshire (5 units), Richmond, North Yorkshire (4 units) and Hexham, Northumberland (7 units).

The development in Hexham, known as Burn Brae House was a beautiful old building in a state of disrepair; in converting it back to a residential building All Saints Living gave the building a new life. It has been renovated and restored, rejuvenating the front of the building and enhancing the main road into Hexham. Burn Brae House has been short-listed for 2 categories at the North East Property Awards 2017; Refit & Refurbishment of the Year and Residential Development of the Year.

All Saints Living is undertaking further residential development projects in Helensburgh, Durham City, Whitley Bay and a further 4 units at Rennington, Northumberland.

To view further details of All Saints Living development projects, visit www.allsaintsliving.com

the walled gardens, gosforth rutherford street project overview

4

the high street group introduction The High Street Group have identified Private Rental Scheme (PRS) projects to be a significant opportunity in coming years and, as such, have entered into the sector with the development of 139 units in Milton Keynes. The previous developers had failed in their attempt to obtain planning for the project. The High Street Group planning team re-designed the scheme and successfully obtained planning on 3rd March 2017; this project has been sold to Grainger Trust PLC for ÂŁ30,150,000.

Having purchased and started the development of a 139 unit project in the Milton Keynes, the company has gone on to secure projects in the north east and north west of England which will provide around 550 residential units.

The company have exchanged contracts and secured an option on a further two projects in Newcastle and Warrington. The Newcastle project is a 26 storey PRS development containing 162 units. The Warrington projects consists of a large residential development of 284 apartments within a 7 storey building.

The High Street Group has a pipeline of potential development schemes which will take projects under management in excess of ÂŁ200,000,000 in 2018.

The Group has recently expanded into the hospitality sector, offering exclusive serviced apartments and hotels in highly desirable locations across the UK. For more information on this, visit www.allsaintsstays.com

For more information about The High Street Group visit www.thehighstreetgroup.com

stamford lea, rennington, northumberland rutherford street project overview

5

asset and liability statement gary forrest personal assets Assets

Value

Mortgage

MORTGAGE

£700,000

£412,000

Audi Q7

£70,000

Audi A5

£40,000

Land Rover Defender

£25,000

Caravan

£25,000

Cash at Bank

£325,000

Total

£1,185,000

£412,000

high street group ltd assets Company Name

Burr Living One Ltd 09245685

Hubertus Developments Ltd 09073795

Ownership Asset

100%

45 St Georges Road Harrogate X4 Apartments utilised as Execulets Hotel x 32 Rooms 3 x Leases to South American Style restaurant, Verdina and Parade Pub/Nightclub

Value £1,035,000

£2,000,000

Mortgage

Annual Income

£581,000 Together

£93,600

£490,000 Together

£220,000

100%

Land with Planning to build 14 Houses

£3,500,000

£1,200,000 Heritable

N/A

Cuthbert Developments Ltd 08815893

100%

5 Frenchgate House Frenchgate Richmond X2 Apartments utilised as Execulets

£520,000

£311,476 Together

£32,700

Engelbert Developments Ltd 08920673

100%

X 4 New build units rented out

£520,000

£344,791 Together

£24,000

£260,000

£168,937 Together

£14,400

£880,000

£431,400 Together

£43,000

£8,000,000

£937,000 Lowry N/A Capital

All Saints Property Investments Ltd 09759805

100%

Drogo Developments Ltd 08920717

90%

rutherford street project overview

X2 Units at Seaham X 11 Units Rented out Larbert House - 56 Homes

6

Company Name

Ownership Asset

Lindus Developments Limited 10265183

100%

Frideswide Developments Ltd 09073799 BrighStone Developments Ltd 09912548 High Street Corporate Finance 09396359

Value

Mortgage

2 X Refurd terraced cottages 1 x New build Detached 3 bed property

£320,000

£186,000 Lowry Capital

100%

26 x Properties (5 Apartments, 21 x Houses, Belmont)

£4,265,000

£1,500,000 Heritable

100%

100%

£750,000

£402,000 BLG Clearwell Capital

100%

Land to build 10 x Bungalows £500,000

Total Reclaim 07075294

12 x Apartments

Annual Income

£25,000 Goldentree

PPI Company

Profit forecast 2017 £1,000,000

All Saints Construction 09659115 100%

Construction Company

Profit from Jan 2016 to October 2016 £241,621

All Saints Commercial Plc 09571862

100%

Property Group holding Company

N/A

N/A

N/A

100%

Property Group Holding Company

N/A

N/A

N/A

100%

Property Group Holding Company

N/A

N/A

N/A

All Saints Asset Management PLC 09571877 All Saints Developments (NE) Limited High Street Commercial Finance Ltd 07841268 Nilus Developments Ltd 10265273

65%

Specialist Lender

100%

Milton Keynes

£7,100,000

Rutherford Street Newcastle

£250,000

Warrington

£50,000

Olympius Developments Limited 100% 10594675 Palmus Developments Limited 10694418

Balance Sheet as of Dec 2016 £250,000

100%

Total

£32,121,521

£10m

N/A

£4,340,000

£11,297,604

£527,700

NET ASSETS £20,823,917 rutherford street project overview

7

biographies introduction

gary forrest

gavin fraser

Gary Forrest has over 30 years experience in financial services and instruments, initially in the mortgage sector and subsequently in investments. Gary successfully grew his lending business from a £100m lender to a £1bn lender in 5 years, and sold his company, High Street Home Loans in 2003 to GMAC-RFC.

Gavin Fraser is a specialist consultant working with The High Street Group, helping identify and bring forward investment opportunities in the UK residential market.

Gavin’s skill is to identify specific locations with a high investment case, identify land opportunities, and bring forward designs tailored to the investment case.

The High Street Group of Companies was conceived in 2011, it has recently focused on alternative investment strategies and development finance. Entering into the construction and development sector in 2014. In this short space of time, Gary has successfully steered the company to become one of the largest in the North East. With upcoming projects valuing excess of £120m.

Winning various awards such as Best Medium Sized Builder - UK and Best Renovation Project - Scotland. Gary is now focused on large PRS schemes across the UK, and the opportunity this presents to both the company and investors.

Gavin has worked in the construction and development field for over 25 years, holding senior leadership and director positions at Ballast Nedam, Rok Plc and Balfour Beatty. Gavin was a National Housing Director for Rok Plc, helping grow the business from £250m to £1bn turnover in 10 years, including £300m per annum of residential projects for the Private Rental and Affordable Housing sectors. More latterly, Gavin has performed various roles as a non-executive adviser to Directors at Kier, Macquarie, United Living and Forrest Construction, helping to grow their businesses thorough the creation of investment grade products in residential and energy.

rutherford street project overview

8

company structure

high street grp ltd gf

High Street Commercial Finance

All Saints Developments (NE) Ltd.

All Saints Commercial plc Cyprus

All Saints Asset Management plc Gibraltar

All Saints Construction Ltd

Genevieve Hexham

Olympius Developments Ltd Rutherford

Drogo (Larbert) Cuthbert (Richmond)

Major Works

Englebert (Seaham) Burr Living (Harrogate)

Minor Works

Brighstone Morar House Management Companies

Hubertus Walled Garden

Raskelf

Frideswide Belmont ASPI Rental Properties Whitehaven Seaham

45 St Georges Road Management Company

Palmus Developments Warrington

(Maintenance)

Maxima Developments Hotel 52

Stansfield House (Stanley) Ltd (Stanley)

Lindus Developments Ltd Sunderland Bridge

Burn Brae House Management Company

High Street Claims Total Reclaim Bramhall Hospitality Ltd Loca / Verdina Bramhall Exports Ltd (Exporting)

French Gate House Management Company

High Street Corporate Finance Rennington x2 Nilus Development Milton Keynes

rutherford street project overview

9

the private rental sector overview According to the English Housing Survey Private Rented Sector Report 2014-15, the private rental sector has undergone rapid growth in the last 10 years and overtook the social rented sector as the second largest sector in 2012-13. Since then, the sector has continued to grow.

KEY FACTS • In 2014-15, 19% of all households were private renters, which equates to 4.3 million households.

• The private rental sector is also the fastest growing sector between 2005 – 2015 it has grown from 11% to 19%.

• The private rented sector has a higher proportion of younger people than other tenure types. In 2014-15, 70% of private renters were aged between 24 – 44. The rise of ‘Generation Rent’ will continue.

• It is predicted by 2025 7.2 million households will rent privately (based on cumulative increase of 2.3 million in 2001, 5.4 million in 2014).

rutherford street project overview

10

The housing sectors trends in tenure, 1980 to 2013-14

rutherford street project overview

11

the private rental sector our approach The High Street Group employs a number of key factors when researching Private Rental Schemes.

These include identifying beneficial locations and guaranteeing strong sustainable demand.

KEY FACTORS • Strong local demand, using specialist data analysis, ensuring demand is sustainable and deep • Mature local regeneration, city or fringe city

beneficial locations • Commuter belt, no more than 15 minutes from public transport links • Within 15 minutes’ walk of city centre amenities • Growth of inner city culture enhanced by senior student population

rutherford street project overview

12

the private rental sector our approach Once identified, The High Street Group ensures all PRS projects fit a strict set of criteria. These include: size of project, advantageous gross yields and flexible exit strategies.

project criteria • Scale must be between 100 - 300 units • Investment value £10 million - £50 million • Gross yields • Regions 6.5 - 7.5% • Discount to GDV delivered at 10%+ • Design to fleible exit strategies • Vacant possession breakdown • Buy to Let markets • Institutional exit (with yield compression) • Location is key - commuter friendly city location with access to amenities

rutherford street project overview

13

the scheme design & product The local market place contains a mass-market at senior student and postgraduate levels. The Rutherford Street scheme would include up to 112nr 2 bed units and 50nr 1 bed units. We have provided a majority of 2 Bed units, as it aligns more to the market absorbency in the City Centre, and facilitates flat sharing.

The 2 bed units have mass-market appeal, as over half the units are ‘dumbbell’ layouts. This provides a flexible balance and good fit for the postgraduate market place.

For example, shared accommodation in the lower-mid floor levels will cost each party as low as £121 per week.

There are 1,800 students on the Science Park alone, who are only guaranteed their accommodation for the first year. The students on the Science Park must then seek accommodation for later years and their intern time in the specialist research centres and the University Hospitals. We anticipate that this block will be filled with a combination of postgraduate professionals and the top decile of the traditional private rental market.

Appendix 1 of the report shows the majority of student schemes across the city, for comparison. It sets out the minimum rates the students pay currently.

Direct comparison can be made with Liberty Plaza and The View and Verde, which are both based on the adjacent Science Park. The closest block (Liberty Plaza) has published the pricing levels for next year for the following comparable units: • Superior Studio (46m2 quite similar to the size of our 1 bed units) - £209 per week or £239 with double occupancy. This has £10 per week worth of broadband included with some other capital events (such as furniture). Taking this into account it equates to £997 per month which compares to £906 on our scheme.

• Double Ensuite (27m2 - a pair of units remain a poorer product than a 2 bed unit in our block) - £169 per week or £179 for double occupancy. Again with £10 per week adjustment for broadband etc this equates to £1,472 per month for a 2 bed unit, which compares to an average £1,529 on our scheme.

Appendix 2 shows the vacant possession value of the units achieved. Based upon the rents contained in Appendix 1 then the block has an investment value of £42m, plus the freehold value.

newcastle science park rutherford street project overview

14

the scheme general layouts The consented scheme comprises 162 apartments in a single 26-storey tower block. There are no affordable units and all units meet the new national Space Standards.

The floor layouts are efficient in terms of gross to net floor areas in the order of 79%. All apartments have open plan lounge, dining and kitchen areas.

1 BED APARTMENT

LIVING AREA

BEDROOM

1 BED APARTMENT LAYOUT

BEDROOM

2 BED APARTMENT LAYOUT

2 BED APARTMENT

LIVING AREA rutherford street project overview

15

site context & analysis newcastle city regeneration newcastle city Newcastle City has undergone significant regeneration over the last 20 years. The key regeneration areas in context of the City are as follows: • Green – University Estates, student residences, Hospital and Civic Centre. Locked in by central motorway and Retail City Centre.

• Yellow – Retail City Centre, including Intu Shopping Centre (Eldon Square). Locked-in by Universities, central motorway and St James’ / Leazes Park.

• Red - St James’ Park , including Leazes Park.

Regeneration of St James’ Park, completed in the late 1990s, provided a new skyline for the adjacent zones and locks value into the City.

rutherford street project overview

• Blue – Newcastle Science Central Park. Regeneration zone brought forward between 2010 and 2020. The latest regeneration zone based upon High and Mediumrise development. Our site is located between this zone and the retail city centre.

• Purple – Quayside office and leisure areas, developed during the 1980s, 1990s and 2000’s. Regeneration is now complete and has spread to the Gateshead side of the river.

There are no remaining unregenerated areas of the city centre. New areas of regeneration are focussed on the Gateshead side of the river and other suburbs of the city.

16

site context & analysis newcastle city regeneration newcastle science central Newcastle Science Central is the current regeneration zone in Newcastle City Centre. It comprises of the regeneration of the former Newcastle Breweries site, St James’ Metro station and St James’ Boulevard.

The area is divided as follows:

Regeneration begun in the 00’s but has been expedited since 2010. It is about 60% complete and over 80% contracted.

• Science Central – Science and Civic Zone (Blue) contracted

Our site is located just off St. James’ Boulevard facing the Science Central – Science and Civic zone. The site is coloured red and is located on St James’ Boulevard between the new regeneration and the retail city centre of Newcastle.

rutherford street project overview

• St James’ Boulevard. (Green) - complete • Science Central – Business School Zone (Yellow) complete

• St James’ Park Metro Station (Purple) – contracted • Science Central – Residential Zone (Brown) – not yet funded

17

site context & analysis newcastle city regeneration St james’ boulevard St James’ Boulevard was commenced as a regeneration corridor in the late 1990s. The corridor was completed by 2010 and includes the construction and completion of a 12 storey car-park, a hotel (Waterloo Square), residential/ commercial accommodation (Citygate) and leisure facility (Dance City).

The new corridor extended the gateway to the City out from its old City Wall line and land-locked the retail zone.

The only site that remains undeveloped along the City side of St James’ Boulevard is the Rutherford Street site.

The view from the Northern Approach to St James’ Boulevard

The view from the Southern approach to St James’ Boulevard

rutherford street project overview

18

site context & analysis newcastle city regeneration science central business school zone The Business School Zone is part of the Science Central Regeneration project. The project brought large-scale regeneration to the former Newcastle Breweries site. The Business School Zone included the creation of a highrise campus (up to 19 storeys). The entire development includes the Sandman Signature Hotel, Newcastle Universities’ Business School and circa 1,800 student accommodation units, amongst other retail and leisure assets.

rutherford street project overview

Students of Newcastle University are guaranteed priority of a first-year place in the campus and rates for the accommodation are as follows: • Studios let from £675pcm • En-suite rooms let from £560 - £630pcm This phase of regeneration is now complete and fully operational, and has been delivered in just over 5 years.

19

site context & analysis newcastle city regeneration science central - science & civic zone The University has secured funding from various sources to contract the construction of the Science and Civic phase of the Science Park in next few years.

The project is worth £350m and takes in 24 acres to create a mixed-use development with over 50,000 sq ft of office space.

Separately, there are over 450 homes to be constructed on the northern edge of Science Central.

rutherford street project overview

Legal & General are a long term investment partner on Science Central, alongside Newcastle City Council and Newcastle University. Legal & General Capital’s initial £65 million investment will fund completion of two buildings on premium plots 1 and 2 offering over 200,000 sq ft of Grade A office space.

The Rutherford Street development site is location between Science Central and the City Centre on St James’ Boulevard.

20

site context & analysis newcastle city regeneration science central - science & civic zone The investment is the biggest deal seen in Newcastle for decades, and Legal & General Capital’s investment follows recent announcements that a National Centre for Energy Systems Integration will be built on site.

Newcastle University delivered the first research labs in The Key which opened in February 2016.

This is the third national centre of excellence secured on Science Central - along with the National Centre for Ageing Science and Innovation, and the National Institute for Smart Data Innovation - bringing the total investment to £90m since the beginning of the year.

The Key (with our site in the background) And construction of the university’s £58 million Urban Sciences Building is also well underway, and will open in summer 2017 This builds on work that has already begun on Science Central, part of Newcastle’s Accelerated Development Zone, which has seen significant progress over the past year. The landmark building The Core opened in November 2014 and is full to capacity

Urban Sciences Building

The Core rutherford street project overview

In addition, design work is underway for a Learning and Teaching Centre and Newcastle Laboratory which will offer high quality, incubation and grow-on accommodation specifically geared to science-based commercial activities.

21

newcastle: a student city overview Newcastle is home to a diverse and cosmopolitan international community, with almost 20,000 overseas students from over 110 countries choosing to live and study in Newcastle and the surrounding region. Investors have access to a highly-educated and multi-lingual workforce providing international businesses with the essential skills and knowledge to operate globally from a North East base.

Newcastle University has grown significantly in the last few years, expanding its existing campus in the heart of the City on to The Science Central site.

Ranked in the Top 100 universities in the world for life sciences and medicine, Newcastle University has been a catalyst for the sector in the city. Newcastle upon Tyne Hospitals NHS Trust, the Biopharmaceutical Bioprocessing Technology Centre and the International Centre for Life showcase our city’s position at the forefront of activity in personalised medicine, rare and age-related disease research and digital health.

Newcastle Laboratory, 76,000 sq. ft. of lab, office and meeting space, will meet the growing demand for life science and biotechnology R&D space in the city.

rutherford street project overview

Based on Science Central and due to open in spring 2018, the facility will offer a range of bespoke services to occupiers, and unbeatable proximity to other companies, researchers and academics based on site.

Experts in Newcastle are leading the way in demonstrating practical solutions for global sustainability. Newcastle University’s Urban Sciences Building, due to open on Newcastle Science Central in 2017, will become a living laboratory and test-bed for large-scale products and services that underpin smart cities.

Newcastle University is ranked number one in computing science research impact and has an international reputation for cloud computing and big data, information systems, VR and digital media. Northumbria University is leading the way in computer forensics and security, gaming and visual effects.

One of only six designated UK Science Cities, Newcastle has an internationally-renowned reputation for medical sciences and the North East is home to 250 companies operating in the sector. Those businesses, in conjunction with Cities three large specialist hospitals, lead to one of the highest post-graduate and student retention rates in the UK.

22

newcastle: a student city accommodation Newcastle is a magnet for young people, being named the UK’s ‘Best University City’ in MSN Travel’s survey for three years running.

As a student city Newcastle punches above its weight.

The QS Best Student Cities place Newcastle in their top eight Cities in the UK, alongside London, Birmingham, Edinburgh and Manchester. The Best Student Cities index assesses on a number of indicators, including ‘student mix’, ‘rankings’ and ‘employer activity’.

For example, Manchester has 100,000 students and an estimated 20,000 post-graduates, in a City that is 2.5 times the size of Newcastle. There is a similar proportion of foreign students.

Current Accommodation The City has a good number of student accommodation blocks that have been developed over the last 15 years, to cater for the students as they arrive from various parts of the UK and the world, and progress with their undergraduate studies. Details of those schemes are provided in Appendix 1 of this report. Particular focus should be given to Verde, Liberty Plaza and The View, as they are located on Science Central campus, adjacent to our site.

The student accommodation is almost exclusively ensuites / clusters, with a small number of studios. The studios are typically 20m2 units and cater for an individual student. Also security of tenure in the student blocks is limited since priority must be given to freshers each year.

In Manchester, the city centre population has grown from 8,000 to 25,000 over the last 10 years. In the last five years alone 15,000 PRS units have been developed and another 13,000 homes are in the pipeline, to cater for post-graduate and working young people. In Newcastle, there has been no corresponding development to provide accommodation for general PRS, the postgraduate market-place, or the more affluent foreign students. Unlike Manchester, PRS in the city comprises of two schemes, including ours.

rutherford street project overview

23

The High Street Group of Companies 2nd Floor Cuthbert House All Saints Business Centre Newcastle upon Tyne NE1 2ET www.thehighstreetgroup.com | 0191 211 4120 | info@thehighstreetgroup.com