Empiric Student Property Share Discussion Threads

[wirralowl] 08/10/2015 08:00

Full divvy details:

Dividends

The Company has today declared a first interim dividend for the financial year ending 30 June 2016 of 1.5 pence per Share in respect of the quarter ended 30 September 2015 payable on or around 4 November 2015 to Shareholders on the register on 16 October 2015.

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 (2) . The Company's stated intention is to pay these dividends on a quarterly basis.

Shares subscribed in the Issue will rank pari passu with the existing ordinary shares (but will not rank for the first interim dividend for the quarter ended 30 September 2015 declared today).

[wirralowl] 08/10/2015 07:53

Institutional Placing @ 106.5.

Also quarterly dividend of 1.5p declared (placing shares won't be eligible).

[eastbourne1982] 07/10/2015 12:20

Been buying these at just over £1.09, really like the look of this going forward.

[fourgirls] 06/10/2015 18:37

With all the volatility around the markets at present,this share gives me no concerns at all.Im very hopeful that within a couple of years the share price should be sitting around the £2 mark.The company are ahead of schedule and full occupancy is very pleasing indeed.

[wirralowl] 06/10/2015 09:16

A pleasing trading update, confirming full occupancy for this academic year, 6p dividend growing at least in line with RPI and expecting increased NAV at next valuation point. Can't ask for much more:

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 GBP23.3 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 GBP19.1 million of the GBP20 million additional RBS facility agreed in February 2015. Following draw-down, total drawn debt (including the Group's share of joint venture debt) is GBP107.9 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.

[skinny] 21/9/2015 14:28

Jefferies International Buy 110.13 - 125.00 Initiates/Starts

[wirralowl] 15/9/2015 12:22

No worries, I lost it years ago! :-) Well worth a listen if you get the chance though, seems they've progressed pretty rapidly since Feb even.

[skinny] 15/9/2015 11:49

Ah yes - I think I'm losing it lately!

[wirralowl] 15/9/2015 11:18

Thanks Skinny, but those were the interims, this is the full year presentation, held yesterday.

[jl9] 15/9/2015 11:07

I wasn't holding my breath over these results but its good to see everything is on track. I see this as a great parking place for cash.

[skinny] 15/9/2015 10:59

The link is in post 96 :-)

[wirralowl] 15/9/2015 10:48

Thanks MG, I've added the presentation to the thread header for future reference.

[mg1982] 15/9/2015 05:17

The results presentation is worth listening to:

[1861andy] 14/9/2015 20:26

Great results very solid and they have since added further holdings! This is the one share in my portfolio really feel can just leave it long term without any stress with it.

Look forward to future results here.

[fourgirls] 14/9/2015 13:11

No worries here with this one,very happy long term holder.

[jakedog2] 14/9/2015 13:08

Bought third tranche this morning. All positive & reassuring from this mornings RNS. Happy holder

[wirralowl] 14/9/2015 09:39

Very reassuring results. Target of initial 6% dividend reaffirmed with the intention to increase so offering inflation protection (average rent review increase for academic year 15/16: 3.25%). A growing NAV (increase of 5.2% over the year) should assist capital appreciation. Portfolio fully let and operating in a market where demand is high and supply is short, so outlook positive too. Definitely a sweet spot to be in at the moment.

[mg1982] 14/9/2015 07:33

solid progress being made here. Its good to see the ambitions of keeping the dividend at 6% (currently 5.5% roughly at todays share price). We can expect the share price to appreciate as time goes on. One to tuck away for long term without stressing about it. Another UTG in the making I believe.

GLA LT holders

[wirralowl] 08/9/2015 13:59

Hi neverneverland,

I don't have much time to post right now, but the company are targetting 6% on the IPO price of £1, so 6pps at current price is a yield of around 5.5%. You mention the price being £1, but it is now around 110p, ie. a 10% increase in a little over a year.

From their RNS of the 28th May:

As set out in the announcement dated 25 February 2015, the Company expects to pay dividends of at least 2 pence per Share for the first six months of 2015 and will target an annual dividend of at least 6 pence per Share for the financial year commencing 1 July 2015. Thereafter, dividends are expected to grow by not less than inflation (1).



Re: your suggestion that govt loans are funding the student rents - approx 70% of their student uptake are from overseas, so not necessarily the case...

The following presentation might be worth a listen if you want greater detail on the company: hxxp://webcasting.brrmedia.co.uk/broadcast/54e7336a9db74c6805a37d9e

There's also a Cantor research note from July this year available on the net (sorry don't have the link) which is well worth finding and reading.

BR
WO

NB. You'll need to input 'http' manually, as advfn change this to stop links to other sites!

[neverneverland] 08/9/2015 12:23

0rient,

I am currently looking at these two shares, ESP and DIGS.

You mentioned 6% yield, where is that currently stated. Are they providing 6% dividend to shareholders, ESP that is. 6% a share plus capital growth would be nice. I have been looking at SIPPs, do you use any specific provider. This would be a nice way to invest in commercial , well student accommodation as it moves forward.

I saw an article recently suggesting BlackRock where now looking at alternative asset classes, one was garden centers, for the return, of possibly 8.6%. They got some. I am wondering whether these smaller bods will be snapped up one day by the bigger boys.

What about DIGS, they are a smaller outfit and again are they looking at providing some dividend returns.

Some thing do concern me, yes the rents go up, but eventually the loans won't. The government loans are in effect funding the demand for these services and I do wonder when the peak will be hit. It all depends how much the development costs.

Do their numbers show how leveraged they are.

Any help would be appreciated for those who know more than me.

The price seems to have been £1 for some time here, is that because they have raised more cash recently so more diluted.

[mg1982] 08/9/2015 03:47

Trust Insider: student property - rooms for improvement?

As I write, thousands of students are working their way through clearing, hoping to secure their place at university. A couple of investment companies will be following the process with interest. Empiric Student Property (ESP) and GCP Student Living both focus on providing student accommodation.

I mentioned GCP in an article I wrote back in May 2014 and then it was the only fund of its type and had assets of £70 million, which it was in the process of expanding to £110 million. Today, GCP is a £250 million company (by net assets), having just raised £120 million in a C-share. ESP, which only launched at the end of June 2014, has surpassed it however, with net assets of more than £310 million (having raised £85 million at launch).

Gross assets are boosted through the use of borrowing facilities. Assets being developed may be financed separately with non-recourse debt secured against the development.

Both funds trade at a premium to asset value and do not seem to have any trouble raising fresh capital when it is needed. The attraction, as usual, is the yield that their investments throws off. In GCP’s case 4.2% and in ESP’s 5.5%, indeed, ESP’s higher yield might be one reason why it is the larger company.

The attractions of the asset class are decent yields, a degree of inflation protection, the potential for some capital appreciation and the relative stability of the revenue stream.

While the UK property market seems to be booming almost across the board, this latter aspect of the student accommodation sector might not be uppermost in the minds of investors but students still go to university during recessions.

The funds are buying new or relatively new purpose-built blocks. Block sizes vary but for ESP somewhere between 50 and 200 beds is typical, whereas GCP have been going for much bigger properties, such as its Scape East block, which provides 588 studio rooms for students of Queen Mary University London.

Students have to rent for 51 weeks a year (leaving a week clear for changeover) and pay their rent in advance – termly for UK students and annually for overseas students. This helps keep voids and arrears low. Occupancy rates are pretty good too – usually 100%.

GCP has a bias to locations close to London, whereas ESP’s properties are scattered across the UK, and I wonder whether the higher land prices in London are one reason for the lower yields that GCP achieves.

Empiric is targeting city centre locations in 27 towns and cities. It reckons the total student population in these locations exceeds 1.1 million and 335,000 of these are overseas students.

The number of overseas students has boomed in recent years, part of a deliberate policy by universities and colleges to boost their revenues. One thing that could upset this could be the strength of sterling. The devaluation policies being adopted by many emerging countries make studying in the UK much more expensive. Time will tell if this has an impact.

The long-term trends seem to be in their favour though. A growing middle class in emerging markets and the UK’s reputation as a good place to study augur well – GCP say the number of students applying to study in the UK from outside the EU rose by 9% last year. There is plenty of home-grown demand too. GCP reckon the UK student population has more than doubled over the past couple of decades.

The attractions of the sector when added to a history of rising rents has attracted substantial capital to the sector. GCP and ESP may be the only two listed funds but there are plenty of others.

A number of open-ended funds predate GCP and ESP. Brandeaux, which hoped to list its Liberty Living portfolio last year but failed to make it, would have been larger than ESP and GCP put together. As an open-ended fund it ran into trouble a few years ago when investors wanted their money back.

The fund was gated, making it doubly unpopular. It sold its £1.1 billion student accommodation portfolio in March this year and has now returned cash to shareholders. Brandeaux was not the only open-ended fund that ran into trouble, funds likeMansion Student Accommodation, Braemarand Opal had similar problems. It puzzles me why anyone thought it would be a good idea to put something so obviously illiquid in an open-ended structure.

The Brandeaux portfolio was sold to the Canada Pension Plan Investment Board. It is by no means the only pension fund that has seen the attraction of the sector. Other investors include Mikhail Friedman’s LetterOne, which bought over £600 million of student accommodation assets earlier this year as did a US outfit called Greystar.

Then there are also companies like Alumno and Unite Students, both of which provide rooms for thousands of students.

One thing that struck me looking at these companies is that rents have been rising fast – ESP mentions a figure of more than 50% rent increases between 2006 and 2013. Students are not noted for being particularly affluent and I cannot help wondering how far the elastic will stretch before it snaps, particularly given the pace of development within the sector.

Both GCP and ESP think there is a long way to go however. GCP quotes a shortfall of 190,000 beds in London alone in 2013, yet London only accounts for 15% of the UK’s students, says ESP. The general shortage of flats to rent is also supportive of the industry.

James Carthew is a director at Marten & Co

[jl9] 27/8/2015 13:03

Sorry. I posted there and thought better of it.

[skinny] 26/8/2015 20:27

Apologies in that case - I must admit that I didn't read any further after seeing £90k - I'll remove the link.