Trading Update

RNS Number : 3000B

Empiric Student Property PLC

06 October 2015

 

6 October 2015

Empiric Student Property plc

("Empiric" or the "Company" or, together with its subsidiaries, the "Group")

Trading update on commencement of the 2015/16 academic year

The Board of Empiric Student Property plc (ticker: ESP) is pleased to provide the following update on commencement of the 2015/16 academic year.

Development assets now operational

The Board confirms that the following five properties, which were previously under development, reached practical completion during September 2015 in time for the start of the 2015/16 academic year:

·     Brunswick House, Southampton (173 beds) (a direct development by the Company in a 50:50 joint venture with Revcap Advisors Limited);

·     Kingsmill Studios, Huddersfield (98 beds);

·     Library Lofts, Exeter (61 beds);

·     The Registry, Portsmouth (41 beds); and

·     333 Bath Street, Glasgow (70 beds).

A sixth property, Claremont Place, Newcastle (88 beds) is expected to become operational during the final quarter of 2015.  The Company benefits from a 100% rental guarantee from the developer on this property for the 2015/16 academic year.

In aggregate, these assets will represent the addition of 531 beds to the operational assets of the Company by the end of 2015.  The Board expects to report an uplift in valuation for the assets which were previously being developed or forward funded by Empiric following the next full valuation of the portfolio, which will be as at 31 December 2015.

A further 970 beds currently under development are contracted to be operational from September 2016, with a further 897 beds contracted to be operational from September 2017.

Fully let across the entire operating portfolio for 2015/16

The Company's property portfolio currently comprises 4,820 beds across 51 assets in 25 cities, 36 of which are operating assets and 15 are forward funded or development assets.  The entire operating property portfolio for the 2015/16 academic year comprises 2,953 beds and is fully let⁽¹⁾. 

The gross annualised rent for the operating property portfolio is £23.3 million, most of which has been collected upfront in September, as is typical for the Group given the high proportion of international student customers, who generally pay their full year's rent in advance.  The average rental growth for the 2015/16 academic year was 3.25%⁽²⁾.

Pipeline

The Company has a very strong pipeline comprising a mix of operating properties and properties under development across multiple locations in the UK representing, in aggregate, over 2,500 beds.

Debt financing

The Company has agreed a further security package with The Royal Bank of Scotland ("RBS") which has enabled the Group to draw down £19.1 million of the £20 million additional RBS facility agreed in February 2015.  Following draw-down, total drawn debt (including the Group's share of joint venture debt) is £107.9 million.

Dividends

The Company confirms an annual dividend target of 6 pence per Share for the financial year commencing 1 July 2015.  Thereafter, dividends are expected to grow by not less than the RPI inflation index⁽³⁾.  The Company's stated intention is to pay these dividends on a quarterly basis.

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

"September was a key month for the Group with the start of the academic year and the completion of a range of assets under development to coincide with that date. Those properties under development which have commenced operations form a key component of the revenue growth inherent in the Group's portfolio.  There has been strong demand for beds across Empiric's operating portfolio, which is fully let for the new academic year."

Notes:

(1)  The Company budgets and models on the basis of 97.5% occupancy. Occupancy or income of the operational portfolio to this level and in excess is considered fully let.

(2)  Represents the average increase in gross rent on assets controlled by the Company in November 2014.

(3)  The target dividends stated above are targets only and not profit forecasts. There can be no assurance that these targets will be met and they should not be taken as an indication of the Company's expected or actual future results.

For further information on the Company, please contact:

Empiric Student Property plc	(via Newgate below)
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 (PR Adviser)	Tel: [phone]
James Benjamin	Em: [e-mail]
Alex Shilov
Andre Hamlyn

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

Notes:

Empiric Student Property plc (incorporated in England & Wales) is an internally managed real estate investment trust ("REIT") investing in modern, direct-let, premium, student accommodation, both standing and development assets, with a focus on quality and with assets generally in prime central locations in top university cities and towns 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 in June 2014.

 

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