The education sector is currently one of the most dynamic property sectors, attracting attention from estate managers and private investors alike. For the former, property is a marketing tool. For the latter, it offers the prospect of superior returns in comparison with many other sectors.
Gerald Eve has one of the largest education teams in the sector whose depth of expertise is reflected in the statistics below. In the last three years it has provided a range of advice to:
- 40 universities
- 15 colleges of further or higher education
- 45 independent schools
- over 50 charities or religious orders
- 15 local authorities
- 10 investors and lenders
Estates strategy advice has become of increasing importance to education providers, which includes keeping operating costs (such as rents and rates payment) down. We have advised Universities UK/SCOP on the basis of valuation for the rating of higher education institutions in revaluations since 1973 and played a leading role for independent schools. Many schools have benefited from our advice on rent reviews, including Arnold House School, St Edward’s School in Cheltenham, Dulwich College Preparatory School and Holmewood House School, saving them thousands of pounds.
Estates strategy also includes looking at innovative ways to maximise the potential of their sites, including the creation of new facilities. We’ve done this for King’s College London, the University of Sheffield, University of Westminster, Said Business School, St Mary’s College Twickenham and Dunstable College, for instance. If new development requires funding, we have experience in acting for both lenders and developers in this capacity including the University of Lancaster, Froebel Education Institute, Grosvenor House Developments, University of Kingston, Lloyds TSB and Barclays. Our valuations have helped to secure PFI arrangements and sale and leaseback funding, as well as more conventional loans.
When it’s time to move on we have acted in strict confidence on the sale of many schools or institutions, including the high profile transactions that come to the market. The Douai School is a good example – it included over 50,000 sq ft of listed buildings located in rural Berkshire. We advised on its redevelopment for a major residential scheme.
In the last five years or so, the independent schools market has matured quite rapidly. Venture capitalists and other financial institutions have recognised opportunities for investment in independent schools, particularly through acquisition of businesses or sale and leaseback. Read here for a recent article published in Acquisition Finance.
We have advised Alpha Plus over many years in support of the development of the business into a leading provider of independent schools and colleges. We have undertaken valuations for acquisition and re-financing, provided planning consultancy for new school premises and helped to minimise business rates liability. We have also provided valuation and property due diligence advice to the purchaser of the company and their funders in the £110m transaction completed in December 2007.
We expect the sector - which is dominated by charity providers - to continue to consolidate, offering further opportunities for Alpha Plus and others. Our education team has been at the forefront of this trend. It has recently agreed a letting of two charity schools in Swansea to Cognita, together with a transfer to them of the business, and the sale of two freehold interests, one in South Wales and one in North London, also to Cognita. All transactions were completed off market and in confidence.
The property assets are a key driver of value. For LaSalle Investment Management, we have recently provided property due diligence, consultancy and valuation advice on the acquisition of two schools in London, subject to new long-term leasebacks to the operator. The price reflected a sub 6% initial yield.
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