TIDMESP
RNS Number : 5614E
Empiric Student Property PLC
31 October 2022
Empiric Student Property plc
("Empiric" or the "Company" or, together with its subsidiaries,
the "Group")
BUSINESS AND TRADING UPDATE
Strong operational metrics and resilience of higher education
sector underpin outlook
Empiric Student Property plc (ticker: ESP), the owner and
operator of premium student accommodation across the UK, is pleased
to provide a business and trading update.
Highlights
-- Record high revenue occupancy of 98% achieved for academic year 2022/23
-- Growth in like for like average weekly rent of 5.2%
-- Adjusted EPS for financial year 2022 is expected to be
broadly in-line with consensus at 3.2 pence per share
-- Contracts exchanged on 20 October 2022 for the disposal of a
further non-core property generating GBP13.0m, which is above book
value
-- Minimum like for like rental growth of 5.0% targeted for academic year 2023/24
Duncan Garrood, Chief Executive Officer of Empiric Student
Property plc, said:
"We enter the 2022/23 academic year in a strong position, driven
by the improvements we continue to make to our operational platform
and portfolio. This is underpinned by resilient demand for high
quality student accommodation. We have achieved record high revenue
occupancy and are effectively full at 98 per cent, ahead of
previous guidance. Against the backdrop of rising inflation, we
have delivered like for like average weekly rental growth of 5.2
per cent."
"The wider economic outlook remains uncertain, however the
higher education sector is known for its resilience and we expect
UK universities to remain attractive to both domestic and
international students. We are firmly focused on our premium
accommodation offering and believe our approach to high quality
customer service delivered through our Hello Student brand places
us in a strong position."
Academic year 2022/23
We are pleased with the strong performance at the start of the
academic year 2022/23 ("AY22/23") having achieved a record 98 per
cent revenue occupancy across our portfolio (AY21/22: 86 per cent)
and like for like average weekly rental growth of 5.2 per cent.
This is the highest revenue occupancy we have recorded in the
Company's history, reflecting the strong demand from students for
our premium accommodation combined with high levels of customer
service through our Hello Student platform. This has exceeded the
revenue occupancy guidance range provided on 11 August 2022 of
between 90 to 95 per cent.
The Group currently has a greater proportion of UK students than
in previous years, the result of targeted marketing during the
period of the pandemic. UK students now represent 50 per cent of
bookings, the balance being 29 per cent Chinese and 21 per cent
other international. This compares to our pre-pandemic breakdown of
approximately one third each for UK, Chinese and other
international.
Developments
St Marys, Bristol (153 bed scheme) has been completed and
delivers a best in class building next to the University of
Bristol, with our residents having moved in on schedule in
September. The property provides great student wellbeing amenities
and strong sustainability credentials, with a BREEAM Excellent
accreditation expected.
South Bridge, Edinburgh (59 bed scheme), located adjacent to
University of Edinburgh, has been largely pre-let and has been
extensively refurbished to deliver our first bespoke Post Graduate
product with completion on target for November.
Given the current market volatility we have largely paused our
development and acquisition pipeline.
Disposals
Contracts were recently exchanged for the disposal of a non-core
property in London for GBP13.0 million, which is above book value.
Completion is set for mid-November.
Since March 2021, including the above, the Company has generated
GBP57.6 million from the disposal of non-core assets. A further
GBP30 million remains under offer, however we do expect current
market conditions to impact the timing of the residual disposal
programme.
Debt
As at 30 September 2022, LTV was 29.7 per cent (based on 30 June
2022 valuations) with a weighted average cost of debt of 3.7 per
cent, and a weighted average term to maturity of 4.8 years. Two
thirds of our debt is fixed and one third floating. Cash and
undrawn committed facilities totalled GBP100.6 million.
We are in active and constructive discussion with lenders in
respect of refinancing requirements. The only refinancing
requirement in 2023 is in respect of a GBP20 million facility which
falls due in March.
Dividends
Adjusted earnings are expected to be broadly in-line with
analyst consensus of 3.2 pence per share for the year ended 31
December 2022. In this context, the Board reconfirms its intention
to pay a minimum 2.5 pence for the financial year to December 2022.
The Company intends its dividend to be progressive, however given
the significant recent change in macro-economic outlook, in
particular the impact of inflation and rising interest rates, it is
prudent to keep forward looking dividend targets under review at
this time. We'll provide further guidance during the first quarter
of 2023.
Change in Chief Financial & Sustainability Officer
Further to the Company's announcement on 4 August 2022, Donald
Grant joined the business on 12 September 2022 and has been working
closely with Lynne Fennah on an orderly transition during the past
seven weeks. Lynne will step down from the Board later today and
will no longer be involved in the day-to-day operations of the
business. Lynne will however remain available to support the team
as necessary into the new year. The Board once again extends Lynne
its sincere thanks and very best wishes for the future.
Financial Year 2023
For the academic year 2023/24 we expect revenue occupancy to
remain strong. We target like for like weekly rental growth of at
least 5 per cent, offsetting the impact of inflationary pressure.
The Company's energy costs will remain hedged throughout AY23/24.
Based on current forward interest rates and debt profile, we
anticipate the weighted average cost of debt to be in the range of
4.3 to 4.5 per cent.
We will provide further guidance alongside our annual results in
March 2023.
FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:
Empiric Student Property plc (via FTI Consulting below)
Duncan Garrood (Chief Executive Officer)
Donald Grant (Chief Financial & Sustainability
Officer)
Jefferies International Limited 020 7029 8000
Tom Yeadon
Andrew Morris
Peel Hunt LLP 020 7418 8900
Capel Irwin
Carl Gough
FTI Consulting 020 3727 1000
Dido Laurimore empiric@fticonsulting.com
Eve Kirmatzis
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(R) 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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END
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