Business and Trading Update

RNS Number : 9802C

Empiric Student Property PLC

23 October 2020

 

23 October 2020

Empiric Student Property plc

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

BUSINESS AND TRADING UPDATE

Empiric Student Property plc (ticker: ESP), the owner and operator of premium student accommodation across the UK, today provides a business and trading update.

All our buildings remain open, staffed, maintained and operating strictly in line with Government guidance, providing Covid-secure homes and critical services for our residents who are commencing their 2020/21 academic year.

Most of our residents have now arrived and are settling into their accommodation. We are continuing to work closely with students, universities and wider stakeholders and in line with Government guidance to ensure that our residents, colleagues, business partners and the communities in which we operate remain safe and secure.

Academic year 2020/21

Despite the challenging conditions, we have achieved a solid performance with occupancy to date at 70% across our portfolio (2019/20: 94%), bookings continue to be made, albeit at lower levels, than in prior years.

Our like for like rental growth to date is 2.4% (2019/20: 3.1% full year) as our direct let model continues to allow us to dynamically adjust our rental contracts, which remains beneficial in a competitive market. 

Our 70% occupancy is net of cancellations and includes just under 10% of occupancy from students still to check-in between now and January 2021. We have a good level of visibility over these bookings with students having re-confirmed their intention to occupy the accommodation. Many of these later check-ins reflect our flexible approach to delaying the start dates to tenancies for the 2020/21 academic year to align with changes in university term start dates, and we are also offering semester lets, both of these have been well received by customers and universities. We continue to see a pipeline of additional bookings with a start date in January 2021 onwards from both direct let customers as well as universities, where several discussions are already underway.

The breakdown of our customers is normally a third from each of the UK, China and other international combined.  The academic year 2020/21 to date sees a slight increase in customers from the UK at 39%, with 29% from China and 32% other international combined.

Robust Financial Position

· The Group has significant headroom and remains fully compliant with its banking covenants, which we continue to monitor.

· The Group's loan to value ratio is 36.8% and based on drawn facilities at 30 September 2020 and calculated on an average basis, the Group's interest cover ratio ("ICR") covenant is 185% compared to actual ICR of 349%.

· Of our total drawn debt of £390 million, £277 million (71%) is at fixed interest rates and £113 million (29%) is at floating rates. The aggregate cost of debt is 2.9%, with a weighted average term to maturity of 6 years.

· We have no refinancing requirements until November 2022 and £48 million of undrawn debt facilities and cash.

Update on dividends and the market

Despite the impact of Covid-19 the fundamentals of increasing structural demand from both domestic and international students for premium, responsibly managed student accommodation focused in high demand UK towns and cities remains strong, whilst the supply of such accommodation continues to be restricted.

Given current uncertainty and in light of the fact that the check-in cycle has extended this year to January 2021, it is too early to commit to the reinstatement of dividends. However, the Board will continue to keep this under review and will provide an update in Q1 2021.

Duncan Garrood, Chief Executive Officer of Empiric Student Property plc, commented:

"Whilst we continue to weather the challenges that have arisen as a result of Covid-19, we continue to trade profitably, and we remain very confident about our long term future.  The long-term fundamentals supporting the student housing sector remain strong and our smaller, more flexible buildings have adapted well to many of the challenges posed by this pandemic. Our philosophy of "homes not halls" has never been more compelling.

Having visited many of our assets over the last few weeks, I am also hugely impressed by, and grateful to, the dedicated operational teams who continue to work in challenging circumstances to keep our buildings open and provide excellent services and assistance to residents who need our support."

FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:

Empiric Student Property plc	(via Maitland/AMO below)
Duncan Garrood (Chief Executive Officer)
Lynne Fennah (Chief Financial & Operating Officer)
Jefferies International Limited	Tel: [phone]
Stuart Klein
Tom Yeadon
RBC Europe Limited (trading as RBC Capital Markets)	Tel: [phone]
Charlie Foster Marcus Jackson
Maitland/AMO (Communications Adviser)	Tel: [phone]
James Benjamin	Email: [e-mail]

The Company's LEI is 213800FPF38IBPRFPU87.

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

Notes:

Empiric Student Property plc is a leading provider and operator of modern, predominantly direct-let, premium student accommodation located in high-demand university towns and cities across the UK. Investing in both operating and development assets, Empiric is a fully integrated operational student property business focused on premium studio-led accommodation managed through its Hello Student® operating platform, that is attractive to affluent growing student segments.

The Company, an internally managed real estate investment trust ("REIT") incorporated in England and Wales, 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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