victus european student accommodation fund - Victus Capital

VICTUS EUROPEAN STUDENT ACCOMMODATION FUND

An opportunity to invest in European Student Accommodation

www.victus-capital.com

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To provide investors with diverse investment in the Student Accommodation market in Europe

SUMMARY An opportunity to invest in an open-ended Student Accommodation fund, blending a mixture of mature property together with development opportunities. These will be located in the major University cities in Europe, let and managed by experienced professionals, taking advantage of prospects for robust income coupled with excellent growth potential. The Fund is the first of its kind and is targeting a return of 10–12% per annum.

BACKGROUND TO THE FUND The current economic climate has led many investors to seek uncorrelated investments that offer the opportunity to take advantage of assets which offer not only strong rental yields but also the real prospect of long term capital growth. The Student Accommodation market in the major University cities in Europe represents one of the best opportunities to achieve these objectives. The UK currently represents a more mature market, having been established in the mid to late 1990’s, whereas in the rest of Europe this market has only recently begun to emerge. The Student Accommodation market has delivered solid and consistent returns throughout every year of the recent economic downturn, as year on year growth of student numbers across the globe has continued to increase. Within this global increase Europe dominates the international student market, attracting 46% of all international students.1 There are several reasons why this sector of the property market has remained so resilient to the economic downturn experienced across the world. Socially, there is an ever increasing ambition amongst the younger generations to obtain higher education and qualifications which are now recognised across the world. Economically, attending a University offers an alternative to entering an extremely challenging job market and, having completed an education course, there is a perception of better prospects and careers, if successful. In addition, the emergence of a new ‘middle class’ in developing countries has resulted in a growing pool of potential overseas students.


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Europe dominates the Globe in respect of attracting international students 1

STUDENT FUNDAMENTALS By 2025 the number of students worldwide will reach 262m, mainly due to an increase in Asian undergraduates 2 Europe boasts the highest number of students from overseas 1 European universities attract 1,400,000 international students annually, compared to 750,000 in North America and 437,000 in Asia 1 Europe dominates the globe in respect of attracting international students, yet the provision of purpose-built accommodation is 10 years behind that of the UK in its maturity. Demand, however, is similar to the UK 1


There are currently 13.4 million students in Western Europe of which over 7 million live away from home 1 Europe’s student population is growing rapidly. It is a major recipient of internationally mobile students who are forecast to reach eight million by 2025 2 With global student mobility increasing, and European institutions actively recruiting more non-EU students, purpose-built student accommodation comes into its own. Private student housing operators providing a one-stop shop for secure, quality accommodation, may find themselves with a commercial edge 2

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We believe the argument for investment in Europe’s best university cities is now compelling 1

BACKGROUND TO THE FUND The maturity and supply of purpose-built Student Accommodation across Europe is many years behind that of the UK.1 In the UK, Student Accommodation is now recognised by most observers as a standalone asset class able to attract international equity and debt. Across Europe there are only a few localised private operators and they have yet to gain significant momentum. A key difference is that, unlike in the UK, Student Accommodation does not have, nor does it require, a separate Planning Use. This means that Student Accommodation is treated no differently to residential and the two currently co-exist without impacting on each other. This will, in our opinion, enable the creation of purpose-built Student Accommodation in Europe to be achieved more quickly and efficiently, translating to a quicker return on capital to the fund.

Student population in Europe Number of students

Sweden

United Kingdom 2,500,000 Netherlands Germany 1,250,000

Belgium

250,000 Austria Domestic European

Switzerland

Other international

FFrance France rance Spain

Breakdown of non-domestic students by global region

6%

Italy

3%

7% 26% 7%

Western Europe and Nordic countries Eastern Europe and the CIS Middle East and North Africa

9%

China Africa

19% 11%

South Asian Sub-continent Pacific Asia

12%

Latin America North America


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Latest research by Jones Lang LaSalle shows how over the last decade, the student accommodation market has started to emerge as a significant mainstream global investment category. The Global student housing report highlights the phenomenal growth predicted in student numbers globally and increasing number of students who look to study overseas. Its also identifies the key markets for future growth and predicts a rise in institutional investment.

“The forecast of the conference of culture ministers on first year student figures for 2012 is now already being significantly exceeded,” said International Campus Chairman Horst Lieder. “We are therefore expecting growing student numbers, which will further boost demand. As such,the demand shown by CBRE for almost 50,000 additional high quality apartments will see a further significant increase in the coming years.” Property Investor Europe News - 12/04/13

European student housing is a widely undiscovered attractive alternative asset class, profiting from growing student numbers and cross-border mobility, says property investment manager Bouwfonds REIM, part of the Dutch Rabobank group. Property Investor Europe News - 09/08/12

In The Netherlands, 80,000 new units will be required by 2020 to meet rising demand; student registrations are set to rise by 150,000 over the next seven years. The Dutch government last November introduced plans to lift building regulations to facilitate construction of 16,000 new student rooms by 2016. Property Investor Europe News - 12/10/12

German universities offer tuition in English and demand low (or no) fees. Is it any wonder more and more British students are signing up? All of a sudden, we Brits are taking an interest in universities that are neither Russell Group nor red-brick, but positively Continental. It’s something that would have been unthinkable 20 or 30 years ago, but increasing numbers of young people - both undergraduates and postgraduates - are now travelling for their higher education to mainland Europe. The Telegraph - Why British students are heading to Germany - 09/01/13

OBJECTIVES To provide investors with diverse investment in the Student Accommodation market in Europe, whilst only investing in major University countries and cities To invest in a mixture of new developments and mature properties that will provide a combination of strong rental yields, initial added capital value and anticipated ongoing capital growth To achieve target return of 10–12% p.a. before tax To invest in Europe alongside local student operators/developers through partnership and joint venture arrangements, sharing risk with these operators/developers who have successful track records in their localities

To provide further diversification and risk reduction through: - A geographical spread across major University cities in Europe - Inclusion of ‘affordable’ older schemes without en-suite accommodation - Inclusion of newer schemes with en-suite accommodation (including studio flats) at higher rental levels - Inclusion of new purpose-built accommodation - A mix of undergraduate and postgraduate students - A mix of domestic students and international students - A variety of occupational agreements, including university leases and direct lets

WHY VICTUS

Victus and its partners have a wealth of experience in purpose-built Student Accommodation across Europe. Victus has the relationships, knowledge and skill to capitalise on current European market conditions for the benefit of investors.


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PROPERTY ADVISOR – Crosslane Property Advisor (Guernsey) Limited Established in 2008, Crosslane have a wealth of experience in acquiring and developing Student Accommodation. The key personnel within Crosslane have a combined expertise of over 60 years in the Student Accommodation sector; three of the team having held senior roles within the Unite Group. To date, Crosslane have concentrated on providing exposure to the Student

Accommodation market for institutional clients, utilising their first two funds; Crosslane Student Accommodation Fund No.1 and the St. Regent Fund. Crosslane currently manages property valued at over £50m with a total of over 1,000 beds.

ADVISORS Promoter – Crosslane Fund Managers LLP

Tax – Grant Thornton Limited

Property Advisor – Crosslane Property Advisor (Guernsey) Limited

Custodian – Royal Bank of Canada (Channel Islands) Limited

Administrator – JTC Fund Administration (Guernsey) Limited

Legal Advisor Guernsey – Carey Olsen Legal Advisor UK – Squire Sanders (UK) LLP

Audit – BDO Limited

FUND CODES ISIN Code

WAYS TO INVEST SEDOL Code

Direct

GBP share class A GG00B7Y62286 B7Y6228

Offshore Bonds

EUR share class A

GG00B8B1Y492 B8B1Y49

SIPP/SSAS

USD share class A

GG00B7MTS109 B7MTS10

QROPS

CHF share class A GG00B8XTJR98 SEK share class A

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B8XTJR9

GG00B8NBV792 B8NBV79

Trusts Custodians


KEY FACTS Fund is registered with the Guernsey Financial Services Commission and listed on the Channel Islands Stock Exchange Accumulation share classes Maximum fund gearing of 100% of Net Asset Value (equivalent to 50% of overall Assets)

Minimum initial subscription – GBP 10,000 or equivalent in other currencies Minimum additional subscription – GBP 3,000 or equivalent in other currencies Currencies – GBP, EUR, USD, CHF, SEK Charges

Dealing frequency – monthly Dealing day – 2nd business day of each month Valuation point – last business day of each month

- Allocation: 100% of initial investment - Redemption: Year 1 – 5% Year 2 – 4% Year 3 – 3%

Valuation announcement – within five business days of the relevant dealing day Contract notes – issued within seven business days of the relevant dealing day Final day for receipt of investment application form – 20th of month or nearest earlier business day Final day for receipt of investment – two business days prior to the month end before the relevant dealing day Redemption notice period – 60 days prior to the relevant dealing day


Year 4 – 2% Year 5 – 1% Year 6 onwards – Nil - Annual Management Charge: 1.50% of NAV Withdrawal facility – up to 8% p.a. of initial investment can be withdrawn once every year, after investment has been held for one year, free of redemption charge Performance fee - 20% of any outperformance over 10% p.a., aligning the interest of the Property Advisor with that of the Investor

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REFERENCES 1 2

Knight Frank International Student Property Report 2012 Savills Spotlight on European Students 2013

IMPORTANT The information contained in this document is for investment professionals only and is not to be viewed by or used with retail investors. For full information please refer to the Victus European Student Accommodation Fund IC Limited Information Memorandum. Produced July 2013

For further information, please telephone

+44 (0)161 499 7871 email us at [email protected] or visit www.victus-capital.com

Victus Capital ICC Limited Frances House Sir William Place St Peter Port Guernsey GY1 4HQ