Investment proposalInvestment proposal

Student Accommodation in the UK

June, 2011

Table of Contents

AXIO Capital 3 - 5

Student Accommodation Market Information 6 – 14

Current Projects 15 - 26

The Deal organization 27 The Deal organization 27

Exit Strategy 28

Contacts 29

AXIO Capital

June, 2011 2

AXIO Capital

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AXIO Capital

AXIO Capital

� Investment company, which attracts and invests in various real estate projects in

Latvia and UK.

� More than 10 years of experience in the Latvian market and 4 years of experience in

the United Kingdom market.

� Andis Riekstins. Axio Capital founder. Before that he worked and formed Latvian

largest leasing company SIA Swedbank Līzings. Since 2002 works in private business,

fund raising and investment management. Attracted funding for implementation of

various projects more than 80 million EUR in Latvian and Russian markets. Has various projects more than 80 million EUR in Latvian and Russian markets. Has

experience with projects in sectors such as real estate, food processing, shipping,

airports, retail, etc.

� Juris Lujans. 8 years experience in the financial sector and six years experience in

real estate development. Was the chairman of Mortgage Bank of Latvia and the

Minister of Economics. Since 2003 was the founder and manager of Latvian largest

residential villages developer company, the realizing more than 300 private houses

building and selling process.

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AXIO Capital

AXIO Capital partners and experience

AXIO Capital cooperation partners

� RE&RE. Second largest construction company in Latvia with annual turnover of EUR

80 million.

� Nordic Construction UK (50%) RE&RE. The activities was begun in UK in 2009 year.

ExperienceExperience

� More than 15 years experience of the construction in Latvia (www.rere.lv)

� Southampton. Two detached blocks of flats

� Construction of a leisure development in French Alps – 2 projects (40 residential

units)

� Exeter, Devon. 4 storey, 33 studio flats development

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AXIO Capital

Student Accommodation

Market InformationMarket Information

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AXIO Capital

UK market situation the Key Points

� UK higher education is No. 1 in the world

� Student growth is 5-8% in recent years

� Deficit of special purpose halls of residences is constant

� The existing halls of residences are full to 100%

� Average 30 - 50% of students live in inadequate accommodation

buildings

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AXIO Capital

Universities in the UK

� Total number of Universities -

118

� Total number of Students - 2,49

million (2009-2010)

� London has 40 higher education

institutions and has a student

population of more than 400 000

� The maximum tuition fee

Rank Institution Total students

1 The Open University 209 705

2 University of Manchester 40 400

3 Manchester Metropolitan University 35 730

4 Sheffield Hallam University 35 410

5 University of Nottingham 34 120

6 University of Leeds 33 585

7 University of the West of England 32 840

8 University of Central Lancashire 32 295

TOP 20 UK universities by size (2009-2010)

� The maximum tuition fee

(students from UK and ES) a

university or college can charge

is:

£3290 for 2010-11

£3375 for 2011-12

£9000 for 2012-13

� Tuition fees for overseas students

– from £8750 (2009-10)

depending on the course

8 University of Central Lancashire 32 295

9 University of Plymouth 32 200

10 Northumbria University 31 425

11 University of Birmingham 30 125

12 Cardiff University 29 685

13 Teesside University 29 055

14 University of Warwick 28 870

15 University of Greenwich 28 805

16 Leeds Metropolitan University 27 865

17 University of East London 26 930

18 Liverpool John Moores University 25 860

19 University of the Arts London 25 750

20 London Metropolitan University 24 335

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AXIO Capital

Rankings of Universities in the UK (2010)TOP 30

Rank Name Rank Name

1 Oxford University 16 Loughborough University

2 Cambridge University 17 King's College London, University of London

3Imperial College of Science, Technology &

Medicine 18 The University of Sheffield

4 University of St Andrews 19 Southampton University

5 London School of Economics and Political Science 20 The University of Nottingham

6 The University of Durham 21 Sussex University 6 The University of Durham 21 Sussex University

7 University College London 22 The University of Birmingham

8 University of Warwick 23 University of East Anglia

9 University of York 24 Glasgow University

10 Lancaster University 25 Newcastle University

11 Edinburgh University 26 Leeds University

12 Exeter University 27 School of Oriental and African Studies (SOAS)

13 The University of Bath 28 Liverpool University

14 University of Bristol 29 Aston University

15 Leicester University 30 The University of Manchester

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AXIO Capital

The Student Accommodation in UKMarket Information

Demand

� The total number of people in higher education

has grown from 1.8 million in 1996-7 to

approaching 2.49 million in the academic year

2009-10.

� The majority of key university towns reported

nearly 100% occupancy for the last academic

Higher education student

population (million)

2,25

2,3

2,35

2,4

2,45

2,5

2,55

nearly 100% occupancy for the last academic

year, with private halls targeting affluent

domestic students, overseas students and

mature students, the latter two of which are

growing in number.

Rental growth is of 5% per annum over the last six years in the student accommodation

sector, compared to 0,6% for commercial property.

2,15

2,2

2,25

Source: Higher Education Statistics Agency

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AXIO Capital

The Student Accommodation in UKMarket Information

Accommodation options

� Institution maintained property

� Private-sector halls

� Parental/Guardian home

� Own residence

� Other rented accommodation

Other

Approximate average costs for students

per year

Tuition fees £ 9 000

Accommodation £ 5 500

Living costs (food, bills etc.) £ 6 500

TOTAL £ 21 000

Supply

� The supply of privately run purpose built student accommodation continues to be

dominated by the largest four service providers – UNITE, UPP, Opal and Liberty

Living.

� Although there has been substantial development, existing supply levels still mean

the vast majority of students are not able to take the option of a privately operated

room. Only 26% of London’s higher education students are able to access halls, with

only 3% having access to private sector halls.

� Other TOTAL £ 21 000

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AXIO Capital

University Partnership Programme (UPP)Market information

� University Partnerships Programme (UPP) is the UK’s leading provider of on-campus

managed university accommodation

� UPP specialises in establishing long-term partnerships with universities to fund,

develop and operate student accommodation. With more than a decade of

experience, UPP delivers risk-free property solutions which are fully funded by UPP

UPP is owned and actively supported by funds managed by Barclays Infrastructure� UPP is owned and actively supported by funds managed by Barclays Infrastructure

Funds, part of Barclays Capital

� 39 000 students in 126 properties across 33 towns and cities across the UK

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AXIO Capital

DefinitionsMarket Information

Standard room – room without private bathrooms

En suite room – room with private bathrooms

Studio provide a modern approach to self contained accommodation where students

have their own facilities. The accommodation comprises a combined living and

bedroom area, en suite shower room and kitchen facilities.

Cluster Flat – apartment consists of standard rooms or en-suite rooms with sharedCluster Flat – apartment consists of standard rooms or en-suite rooms with shared

kitchen

Catered hall of Residence - Dining facilities are either in the Hall or in another Hall

close by and are canteen style service.

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AXIO Capital

Links PageMarket information

� Unite Plcwww.unite-students.com/home

� UPP Limitedwww.upp-ltd.com/

� Opal Property Group Limited

http://opalstudents.com/http://opalstudents.com/

� Plymouth University (Accommodation)ww.plymouth.ac.uk/pages/view.asp?page=25302

� Exeter University (Accommodation)

http://www.exeter.ac.uk/accommodation/

� AXIO

http://www.axio.lv/

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AXIO Capital

Current Projects

� St. Augustine’s Project in Plymouth

� Sidwell Street apartments in Exeter

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AXIO Capital

Location

Plymouth

Exeter

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AXIO Capital

St. Augustine’s Project in Plymouth

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Project descriptionSt. Augustine’s Project in Plymouth

It is planed to develop fully equipped student accommodation for students of Plymouth

University with 84 studio rooms with internet access, bike storage and CCTV.

� Alexandra road, Plymouth

� 6 floor modern building

� Total space 2880 sq m

7 flats and 77 studio� 7 flats and 77 studio

� St. Augustine’s apartments are within 15 min walking distance of the University

� Letting period 43 or 51 weeks

Estimated price (equivalent market prices)

� Studio – 170 GBP– 190 GBP per week

� Flat – 120 GBP – 170 GBP per week

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AXIO Capital

Market informationSt. Augustine’s Project in Plymouth

Accommodation options

� University allocated accommodation:

◦ University-managed hall of residence (are managed by UPPL) total number 6

(468 standard rooms, 1168 en-suite rooms, 122 large en-suite rooms and 14

studio rooms)

◦ University-allocated cluster flats (owned and managed by Unite plc) total

number 4 (108 standard rooms, 639 en-suite rooms, 14 studio rooms)

� University approved accommodation

� Agencies and Managing Agents

Current Uptake 100%

The University of Plymouth has over 30 000 students and an annual income of around

£160 million.

There remains a 40% shortfall of available accommodation for first-year students.

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AXIO Capital

St. Augustine’s location

“St. Augustine”

Alexandra road,

Plymouth

All approved student

accommodation is within the

highlighted area, and is

therefore within walking

distance of the main campus.

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AXIO Capital

Financial informationSt. Augustine’s Project in Plymouth

Total planed investments 4.2 m GBP

Land 0.6 m GBP

Construction 2.9 m GBP

Other 0.7 m GBP

Equity 1.28 m GBPEquity 1.28 m GBP

Construction period 12 months

Estimated sales price 5 m GBP

Sales period One year after construction

Estimated IRR 19%

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AXIO Capital

Sidwell Street apartments in Exeter

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AXIO Capital

It is planed to develop fully equipped student accommodation for students of Exeter

University with 96 rooms: 67 en suite rooms in cluster flats, 26 studio and 3 double

bed flats with internet access, cycles storage, Laundry and CCTV.

� Sidwell Street 69 - 73, next to the cinema Odeon, in the centre of Exeter

� The existing building will be demolished

� 6 floor modern building in the centre of Exeter

� 67 en suite, 3 flats and 26 studio

Project descriptionSidwell Street apartments in Exeter

� 67 en suite, 3 flats and 26 studio

� Retail area for rent on Ground Floor

� Sidwell Street is located midway between the Streatham Campus and St. Luke’s

Campus

� Letting period 43 or 51 weeks

Estimated price (equivalent market prices)

� En-suite room 140 GBP per week

� Studio 170 GBP – 190 GBP per week

� Flat 120 GBP – 170 GBP per week

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AXIO Capital

Sidwell Street apartments Location

69 – 73 Sidwell

Street, Exeter

Sidwell Street 69 – 73 is

located midway between

the Streatham Campus

and St.Luke’s Campus

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AXIO Capital

Market informationSidwell Street apartments in Exeter

University accommodation is accommodation owned, managed or approved by the

University of Exeter

� Catered Halls of Residence total number 5 (1423 single rooms and 117 twin

(shared) rooms)

� Self – Catering Residences total number 13 (1159 en-suite rooms, 1174 standard

rooms and 258 studios rooms)

Current Uptake 100%

UPP has entered into a long-term partnership with the University of Exeter to provide UPP has entered into a long-term partnership with the University of Exeter to provide

additional student accommodation on the university’s Streatham Campus. The three-

year construction project started in 2009. Investment - £130 million. Occupancy: 100%

at start of academic year 2009/2010.

UPP’s partnership with the University of Exeter involves the transfer of 980 rooms of

existing accommodation, of which 621 will be retained and operated by UPP Asset

Management. The remainder will be redeveloped to provide 1948 new en suite rooms,

built using UPP’s Eco Residence model.

The University of Exeter has 15 700 students and an annual income of around £227

million.

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AXIO Capital

Financial informationSidwell Street apartments in Exeter

Total planed investments 6.9 m GBP

Land with existing building 2.5 m GBP

Construction 3.5 m GBP

Other 0.9 m GBP

Equity 3.4 m GBP

Construction period 12 months

Estimated sales price 8.4 m GBP

Sales period One year after construction

Estimated IRR 22%

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The Deal organization

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Exit Strategy

� After construction to sell to operator

◦ UNITE

◦ UPP

◦ Opal

◦ Liberty Living etc.◦ Liberty Living etc.

� After construction to sell to financial investor

◦ Investment funds

◦ Pension funds etc.

� After construction to operate from 1 to 2 years, to get rental income and then to sell

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AXIO Capital

Contacts

Andis Riekstins

� phone: +371 29 455 355

AXIO Capital UK Ltd.

� London, 37 Knox rd, GU2 9AH, Guildford, Surrey

� phone: +44(0) 07515253095, fax: +44(0) 1483243501 � phone: +44(0) 07515253095, fax: +44(0) 1483243501

e-mail: office@axiocapital.eu / juris.lujans@axiocapital.eu

SIA AXIO Capital

� Mārupes nov., Mārupe, Kārļa Ulmaņa gatve 119, LV-2167, Latvija

� phone.: +371 67 244 122, fax: +371 67 504 614

e-mail: office@axio.lv

� www.axiocapital.eu

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AXIO Capital