Regulated Business

SPV1027

Ipswich, Suffolk, IP3
177 Units | Sell For Profit Strategy

101.98%

Targeted ROI

£11,206,703.87

of £12,439,203.87

Investment Term

24 months

Funded

90.09%

Investment Opportunity

JaeVee has agreed a joint venture with Estateducation in offering equity investors the opportunity to invest in the development of a Purpose Built Student Accommodation block based in Ipswich, Suffolk.

The Developer, Estateducation, has an established student accommodation brand known as Velocity Student, www.velocitystudent.co.uk.

The development involves the erection of a 177 bedroom Purpose Built Student Accommodation block and associated landscaping and external works. The PBSA block will consist of cluster flats with 5-7 en-suite bedrooms per flat with their own kitchen. The planning application reference number is 21/01171/FUL.

The PBSA block will also consist of additional amenities on the site including a management team, reception area, gym, laundry room and student lounge.

The block will be sold on the open market as a fully let asset for the projected GDV of £16,925,625. This is based on the property generating an annual rent of £1,194,750 with a deduction allowed of £179,212.50 which covers voids, maintenance and rental arrears.

Your exit and targeted returns are based on the sale of the PBSA block. The total investment required for this project is £1,342,500 with a targeted return on investment of 101.98% (net of corporation tax), making the annualised return as 50.99% (as the investment turnaround is 24 months).

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Property Summary

Duke Street is located within the vibrant marina area of the university town of Ipswich within the county of Suffolk and is a 5 minute walk to the popular Waterfront complex situated on Neptune Marina. The site is located close to the busy town centre where a variety of leading national retailers and a range of leisure activities including ten pin bowling, cinemas bars and restaurants are located. The site is also located close to the popular Marina complex and is ideally located for University of Suffolk which opened as recently as 2007 and already accommodates circa 8,000 students. With nearby amenities including convenience stores, cafe's, bars, restaurants and the University of Suffolk this area is popular with students. Transport links are strong in the area as the train from Ipswich is just over 1 hour into London.

The supply of PBSA supply in Ipswich has slowly increased over the years with the introduction of Athena Hall however the supply has not kept up with the demand for PBSA bed spaces. The University of Suffolk has increased rapidly in recent years with around 8,000 students currently studying, this is likely to increase further and there is already a bed to student ratio of 1:3.

This therefore creates a strong demand for our 177 bed purpose built student accommodation block.

Athena Hall is made up of a variety of different rooms which range from smaller en-suite rooms to larger studios. The rental figures for Athena Hall which is the best comparable to use for our student scheme, ranges from £127.20 - £174.76 per week depending on size and room types. We have estimated £135 per week when determining the annual rent of £1,194,750 therefore meaning it is inline with the market student room rental rates. The Head of Estates at the University of Suffolk has expressed that they are nearing capacity at their existing accommodation and that this development would appeal to a number of students.

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Exit Strategy

The exit strategy for this project to sell the Purpose Built Student Accommodation (PBSA) block on the open market with the target demographic being investment and pension funds. The profits generated from the sale of the block will then be used to repay equity investors their initial investment and targeted return of 101.98%.

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Operational Delivery

With all JaeVee development projects, the SPV (in its role as the client) enters into a JCT 2016 design & build construction contract whereby the responsibility in delivering the project rests with the Principal Contractor.

The Principal Contractor has agreed to a fixed total contract sum of £7,329,600 in delivering the project within the set time frame of 18 months.

As the Principal Contractor is holding the design and build contract, it will procure sub-contractor packages to assist in delivering the project. The SPV has the right to request copies of the JCT subcontractor contracts which will be taken care of by JaeVee's in-house project management team. This forms part of JaeVee's role as Employers Agent, overseeing the project from inception through to completion (the pre, during and post construction phases) assisting the property developer throughout.

As per UK Finance regulations, a structural warranty will be issued after the building regulations completion certificate of work. This will provide a 10 year structural warranty which is a mandatory UK Finance requirement for mortgage lenders to be able to lend. The cost of this is covered via the allocated professional fee fund.

The Property Developer will also be uploading monthly construction updates to the JaeVee system throughout the duration of the project thus allowing investors to see the progress in real time.

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Development Team

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Financials

The following financials are calculated against our Sell For Profit model.
End Market Value £16,925,625.00
Total Cost £12,439,203.87
Purchase Price £2,500,000.00
Stamp Duty £0.00
Construction Cost £7,329,600.00
Furnishing Cost £0.00
Professional Fees £732,960.00
Contingencies £366,480.00
Legals £20,000.00
Surveys & Searches £20,000.00
Building Regs £0.00
Insurance £10,000.00
Council Tax £0.00
Business Rates £0.00
Utilities £0.00
Senior Debt Interest £1,060,863.87
Mezzanine Interest £256,800.00
Affiliate Fee £0.00
Sourcing Fee (1.0%) £25,000.00
Equity Raise Fee (5%) £92,500.00
Boost Fund (1.00%) £25,000.00
Gross Profit £4,486,421.13
Selling Fees -£169,256.25
Exit Fee -£91,790.40
Corporation Tax (19%) -£802,821.15
Net Profit £3,422,553.33
Net Profit Margin 27.51%
Targeted ROI (40% of Margin) 101.98%

What happens next after investing?

  1. Your funds will be held in trust by MangoPay until the total raise is achieved
  2. Once the total raise is achieved, the funds will be automatically transferred to the SPV bank account
  3. The shareholders agreement is issued for signature (electronically)
  4. Once signed by all parties, the development agreement is issued for signature by the developer (electronically)
  5. Once the development agreement is signed, shares are issued in the SPV
  6. Project commences
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Investment

Targeted ROI

Share Price (1%)

£33,562.50

% Share

0.60%

All the above figures are targeted and subject to taxation based on personal circumstances. Corporation tax has been taken into account, based on a rate of 19%. Capital at risk: before investing please read the risk warning.

How do we mitigate risk?

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Location

Proposed Plans

Ground Floor.jpg First Floor.jpg Second Floor.jpg Third Floor.jpg Fifth Floor.jpg Elevations _3.jpg Elevations _2.jpg Elevations _1.jpg Fourth Floor (1).jpg

Team Behind It

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Investing in JaeVee involves risk, including loss of capital and illiquidity and it should be done only as part of a diversified portfolio. Investments made through JaeVee are not covered by the Financial Services Compensation Scheme (FSCS). Please read our full risk warning before deciding to invest.

Capital at risk. Read our full risk warning.