Trading Update

RNS Number : 3544T

Empiric Student Property PLC

03 October 2014

 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES OF AMERICA, CANADA, JAPAN, AUSTRALIA OR SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS ANNOUNCEMENT OR ANY COPY OF IT.

3 October 2014

Empiric Student Property plc

("ESP" or the "Company" or the "Group")

Trading Update

The Board of Empiric Student Property plc (LSE: ESP) announces an update on its trading activities since its admission to the Premium Segment of the Official List of the Financial Conduct Authority and to trading on the Main Market of the London Stock Exchange on 30 June 2014 ("IPO").  On IPO, the Company raised gross proceeds of £85 million through the issue of ordinary shares at a price of £1 per share.

Property Portfolio

The Company has acquired all four initial student accommodation assets highlighted in its IPO prospectus (dated 16 June 2014).  The Company has also acquired a further six student accommodation assets including one joint venture development property (in Southampton), a forward funded asset (in Edinburgh) and four standing assets (in Birmingham, Aberdeen, Nottingham and Southampton).  In addition, missives have been concluded (equivalent to exchange of contracts in England), subject to planning, in relation to a seventh asset, being another development property (in Glasgow) which it is intended will be acquired by the Group and developed as a joint venture following receipt of planning consent.  The aggregate consideration paid (or committed in terms of forward funded assets) for the portfolio to date is approximately £81.4 million.

Date	Asset Type	Location	Number of beds	Cost
Jul-14	Standing	Bristol	84	£10.0m
Jul-14	Standing	Cardiff	87	£9.6m
Jul-14	Standing	Exeter	102	£11.4m
Jul-14	Forward funded	Edinburgh	86	£8.5m
Jul-14	JV Development	Southampton	158	£1.8m
Jul-14	Standing	Birmingham	106	£12.0m
Aug-14	JV Development	Glasgow*	158	£0.9m
Aug-14	Standing	Birmingham	77	£8.9m
Sep-14	Standing	Aberdeen	56	£6.5m
Sep-14	Standing	Nottingham	98	£8.2m
Sep-14	Standing	Southampton	46	£3.6m
Total			1,058	£81.4m

* Assuming planning permission is received and the asset is acquired by the Group.

As shown above, the Company's portfolio now comprises 1,058 beds, across eight standing assets (656 beds) and three assets under development (402 beds), assuming the Group acquires the development asset in Glasgow.

The Company's standing assets are over 99 per cent. occupied for the 2014/15 academic year generating a gross annual rent of approximately £6.1 million, in line with the Directors' expectations.

The Company has identified a strong pipeline of potential properties, with an aggregate value in excess of £110 million, which are in various stages of progress and due diligence. The Directors anticipate that the Company would be able to acquire such assets (or similar suitable alternatives) in the short term.  The Company is also considering a further strong pipeline of suitable new investment opportunities of a similar value for potential acquisition in the medium term.

Proposed Debt Facility

The Company, through a wholly owned subsidiary, Empiric Investments (One) Limited, is in the process of agreeing a £35.5 million term loan facility (the "Loan"), to be secured against the Company's current portfolio of standing assets.

The anticipated interest rate of the Loan is expected to be less than that anticipated in the IPO prospectus, with a term of five years from draw down.

The amounts drawn down under the Loan will be segregated and non-recourse to the Company, and will not have the effect of increasing the Company's financial exposure to Empiric Investments (One) Limited or the standing operating assets of which it is the holding company.

In addition to the Loan, a non-recourse facility has been arranged in respect of the Brunswick House joint venture development in Southampton for £9.35 million.

As set out in the IPO prospectus, the Company will maintain a conservative level of aggregate borrowings of no more than 40 per cent. of the gross asset value of the Company (calculated at the time of draw down).

Proposed Fundraising

The Company has successfully invested, or committed, substantially all of the net proceeds of its initial £85 million fundraise at IPO, with appropriate levels of debt to be drawn down against the standing assets in line with its stated investment policy.  As set out above, the Directors believe that there is a strong pipeline of suitable new investment opportunities which are in various stages of progress and due diligence.

The Company is, therefore, considering the introduction of a 12 month share issuance programme which will allow the Company to tailor future equity issuance to its immediate pipeline, thereby providing flexibility and minimising cash drag.  The initial tranche of the share issuance programme, in an amount to be determined, is currently expected to close before the calendar year end.  A further announcement providing details of the proposed share issuance programme, which will be subject to shareholder approval, will be issued in due course.

Paul Hadaway, Chief Executive of Empiric Student Property plc, commented:

"The Company has been very active in achieving the goals set out at the time of its IPO and we are pleased to report that we have substantially invested or committed the net proceeds from the IPO well within our target timeframe.  We have acquired a portfolio of high quality, purpose-built student accommodation operating assets as well as a number of development and forward funded assets, all of which meet our strict investment criteria.  Since IPO, we have continued to source a strong pipeline of suitable new investments, making use of our established network. With the support of new and existing investors, together with the Company's access to debt, we look forward to driving the growth of the Company going forward."

For further information on the Company, please contact:

Empiric Student Property plc	(via Newgate Communications)
Paul Hadaway (Chief Executive)
Tim Attlee (Chief Investment Officer)
Michael Enright (Chief Financial Officer)
Akur Limited (Joint Financial Adviser)	Tel: [phone]
Tom Frost
Anthony Richardson
Siobhan Sergeant
Jefferies International Limited (Joint Financial Adviser and Broker)	Tel: [phone]
Gary Gould
Stuart Klein
Alex Collins
Newgate Communications (Financial PR)	Tel: [phone]
James Benjamin	Em: [e-mail]
Clotilde Gros
Georgia Lewis

Further information on ESP can be found on the Company's website at www.espreit.co.uk.

Notes:

Empiric Student Property plc (incorporated in England & Wales) is an internally managed real estate investment trust ("REIT") investing in modern, premium, student accommodation, with a focus on quality and with assets generally in prime city centre locations in top university cities in the UK.  The Company listed on the premium listing segment of the Official List of the Financial Conduct Authority and was admitted to trading on the main market for listed securities of the London Stock Exchange on 30 June 2014. 

This announcement does not constitute an offer or solicitation to any person in the United States or any other jurisdiction to purchase or sell any investment. No information set out in or referred to in connection with this announcement is intended to form the basis of any contract of sale, investment decision or any decision to purchase any securities, nor should such information be construed as providing financial, investment or other professional advice. This announcement should not be considered by the recipient as a recommendation relating to the acquisition or disposal of investments. It is recommended that recipients of this announcement seek their own independent legal, tax, financial and other advice. This announcement does not contain sufficient information to support an investment decision and investors should ensure that they obtain all available relevant information before making any investment.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". In some cases, such forward-looking statements can be identified by the use of forward-looking terminology, including the terms "targets", "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. Any forward-looking statements are only made as at the date of this announcement, and the Company neither intends nor assumes any obligation to update forward-looking statements set forth in this announcement whether as a result of new information, By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The Company's actual performance, results of operations, financial condition, liquidity and distributions to shareholders may differ materially from the impression created by any forward-looking statements contained in this announcement.

The opinions expressed are those held by the Company at the date of this announcement and are subject to change. Neither the Company nor any of its affiliates accept any liability or responsibility whatsoever for the accuracy or completeness of, nor make any representation or warranty (express or implied) with respect to, the information contained in these materials or any publicly available information.

 

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