TIDMESP
RNS Number : 0362M
Empiric Student Property PLC
06 May 2020
6 May 2020
Empiric Student Property plc
("Empiric" or the "Company" or, together with its subsidiaries,
the "Group")
TRADING UPDATE
The Board of Empiric Student Property plc (ticker: ESP), the
owner and operator of premium student accommodation across the UK,
is today providing a further business and trading update.
2019/20 academic year
-- The Group's top priority remains the health, safety and
welfare of its residents, employees and wider stakeholders, whilst
protecting the long-term value of the Group. Despite the UK
Government lockdown measures currently in place, the Group's
buildings continue to be staffed and maintained and operated
strictly in line with these measures. The Board remains hugely
grateful to all our colleagues and business partners who continue
to work tirelessly during these challenging times.
-- As announced on 31 March 2020, the Group has looked
favourably on requests from residents - who are either no longer in
occupation or, due to university closures, plan not to return to
their accommodation - to be released from their rent and lease
obligations from 25 April 2020. Accordingly, the Group expects a
total reduction in income for the current academic year 2019/20 of
up to 12% (GBP8 million), which is below the worst-case reduction
in revenue of up to c.GBP21 million as previously announced by the
Company.
-- Despite the fact that almost all universities have closed
their campuses for person to person teaching for the balance of the
current academic year and are using online learning instead, 55% of
the Group's student accommodation bedrooms continue to be occupied
by residents.
2020/21 academic year
-- The Group is continuing to receive bookings for the
forthcoming academic year 2020/21, with 47% of rooms now reserved,
compared with 54% at the same point last year.
-- Demand from international students is continuing albeit at
lower levels, but the Group is starting to see an increase in
bookings from the UK domestic market. The Group's digital marketing
platform, Hello Student, is now in-house and well-established and
continues to effectively target both international and domestic
students who are interested in premium student accommodation in key
university towns and cities across the UK.
-- The Group is beginning to see an increase in requests for
self-contained studios and en-suite accommodation as a result of
the current social distancing measures in place in the UK.
Empiric's strategy of owning and managing premium student
accommodation across the UK means that the Group is well placed to
meet this demand, with 83% of the Group's beds meeting these
requirements. Similarly, the Group's smaller buildings have a
relatively low reliance on lifts, lending themselves readily to
adaptation to meet current social distancing measures.
-- The Group continues to focus on further embedding the
operational transformation of the business, which is largely
complete. In particular, the delivery of a new in-house revenue
management platform remains on track for launch on 1 November 2020.
The key benefits of the new platform will be a significant annual
cost reduction of c.GBP1.5 million from Q4 2021 and no longer
having reliance on a third-party legacy platform. The Group
currently has full revenue management capability on its existing
platform.
-- The Group's 52 bed development at New Walk in Leicester is
expected to complete later this month, in time for the forthcoming
academic year 2020/21. Given Empiric's priority of conserving cash
during this period of uncertainty, the Group has deferred the
delivery of three developments until market conditions stabilise
(Emily Davies, Southampton (232 beds); Canterbury (134 beds,
refurbishment); and St Mary's, Bristol (153 beds)).
Debt position and cash and cost saving measures
-- The Group remains well capitalised with a healthy balance
sheet and significant headroom against its financial covenants.
-- In line with previous announcements, based on drawn
facilities at 31 December 2019 and calculated on an average basis,
the Group's covenant positions are as follows: loan to value
("LTV") covenant of 65% compared to actual LTV of 35%*, and
interest cover ratio ("ICR") covenant of 216% compared to actual
ICR of 397%. In addition to this, the Group has GBP134 million of
uncharged assets.
-- On 24 April 2020, the Group announced that it had
successfully refinanced GBP32.8 million of existing debt with AIB
Group (UK) plc, extending the term by four years on more favourable
terms, resulting in no further refinancing requirements for the
Group until November 2022.
-- The Group is in discussions with its banks around potential future funding requirements.
-- As announced on 31 March 2020, the Group is continuing to
focus on reducing operational costs, non-essential capital
expenditure remains cancelled, its development pipeline (save for
New Walk in Leicester which is expected to complete this month) and
the corresponding development debt of GBP22 million continues to be
deferred and all future dividend payments remain suspended until
market conditions stabilise. These measures have strengthened the
Group's cash position and the Board retains its previous guidance
of a reduction in net cash outflows of c.GBP26 million for the 2020
calendar year.
-- The Group currently has GBP12 million of cash and GBP35
million of undrawn debt facilities available.
Outlook
-- Empiric's strategy of owning and operating premium student
accommodation in high-demand towns and cities combined with a
strong and robust balance sheet puts the Group in a strong position
to withstand the challenges presented by the COVID-19 pandemic. The
long-term drivers for the sector and the structural demand from
both domestic and international students for the Group's UK
accommodation remains strong, but in the near-term Empiric is
focused on continuing to manage through the impacts of COVID-19
effectively.
-- The UK Government's current plan is for the 2020/21 academic
year to start broadly in line with the usual cycle, however, there
remains uncertainty over start and finish dates for the first term
and the impact on teaching due to the continuing disruptions caused
by the COVID-19 pandemic, which may affect the demand for
accommodation from both domestic and international students.
* Calculated in line with that required by banking covenants,
which excludes cash holdings. If cash holdings are included, which
is in line with the usual reporting calculation, the LTV is 34% at
the date of this release.
FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:
Empiric Student Property plc (via Maitland/AMO below)
Tim Attlee (Chief Executive Officer)
Lynne Fennah (Chief Financial & Operating
Officer)
Jefferies International Limited Tel: 020 7029 8000
Stuart Klein
Tom Yeadon
RBC Europe Limited (trading as RBC Tel: 020 7653 4000
Capital Markets)
Charlie Foster
Marcus Jackson
M aitland/AMO (Communications Adviser) Tel: 020 7379 5151
James Benjamin Email: empiric-maitland@maitland.co.uk
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, direct-let, nominated or leased student accommodation
across the UK. Investing in both operating and development assets,
Empiric is a multi-niche student property company focused on, (i)
providing good quality first year accommodation managed through its
Hello Student(R) operating platform in partnership with
universities, (ii) offering a variety of second and third year
purpose-built accommodation options for individual students and
those wanting a group living environment, and (iii) continuing to
expand the Group's existing premium, studio-led accommodation
portfolio which is attractive to international and postgraduate
students.
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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTFLFSAEDIEIII
(END) Dow Jones Newswires
May 06, 2020 02:00 ET (06:00 GMT)
Empiric Student Property (LSE:ESP)
Historical Stock Chart
From Jun 2024 to Jul 2024
Empiric Student Property (LSE:ESP)
Historical Stock Chart
From Jul 2023 to Jul 2024