Empiric Student Property Share Discussion Threads

[stemis] 23/11/2017 08:23

Re one off costs -

From the announcement

Savings in H2 2017 are expected to be achieved mainly from one-off costs incurred in H1 2017 that have now fallen away, including the cost of a settlement agreement with the previous CFO and the cost of temporary finance staff to support the migration to a new accounting platform.

The Group is targeting administration expenses for the year ending 31 December 2018 of GBP10.0 million which would result in a total expense ratio of approximately 1.15%.

That's considerably lower than I expected

[25october1969] 23/11/2017 08:14

Whilst it is good news that top men have waived their bonus entitlement, the question has to be asked - why did they have an entitlement in the first place whereby a bonus is due even if the performance of the company is poor. Perhaps the targets for bonus entitlement need to be revisited and become more challenging?

[spectoacc] 23/11/2017 08:14

Obviously not in the price. They certainly need to prove they can now deliver, and that proof could take 2 years (& has @jonwig says, even the reduced divi isn't set in stone).

Remain a holder & added a few, as everything has its price.

[belgraviaboy] 23/11/2017 07:46

Another consideration is how ESP have changed the story.

Originally we were led to believe the the higher costs were due to ESP being in the development / expansion phase.

Now it is clear that it is operational inefficiency.

They have said they can tackle the costs - will the story change again?

[belgraviaboy] 23/11/2017 07:38

The has been clear for anyone to see if they read the accounts, I have mentioned it here in posts 427, 449 & 452.

It should not be taking this long to address these issues. ESP have known this was a problem for months. Why have they not addressed it sooner?

It is one this to say you are going to make cuts, it is another thing to deliver them.

They need to prove they can make these cuts. Too much of a risk to invest before they provide evidence of progress.

[hannath] 23/11/2017 07:32

Clearly some were in the know what was going on and got out, or reduced holdings. Let’s hope the current price reflects the news and its seen as clarity and that the business going forward still looks sound and worth investing in.

[jonwig] 23/11/2017 07:28

Actually the dividend cut was essential to maintain credibility: in fact it should have been to about 4.5p to ensure full cover under REIT rules. They could then expect to increase it in a year's time. As it is, they run the risk of finding it's still uncovered at the end of 2018 owing to more unforseen circumstances.

I must admit I haven't done more than scan the announcement as I won't be buying at this price. I'm also a bit concerned that some properties aren't fully let.

[spectoacc] 23/11/2017 07:21

Yes, and at least things seem to have been addressed going forward. But - they shouldn't have bloody needed addressing in the first place, and the divi cut, albeit small, won't go down at all well.

Saying that - becomes abundantly clear why it had moved to a persistent discount.

[riskvsreward] 23/11/2017 07:19

At least the top men waived their bonus entitlement, which is totally appropriate for the worst performance in the sector.

[spectoacc] 23/11/2017 07:13

Haven't read it all, but reads not great to me - divi cut next year and the year after.

[chucko1] 22/11/2017 21:44

All I care about tomorrow is some indication that the reason for not “substantially” covering the dividend from EPRA earnings should not continue. As I see it, there were about 10 items totalling about £4mm that were behind the costs overrun. It is quite reasonable to think that a new CFO comes in and takes an immediately conservative view. Unless there was more and they could not face taking an even bigger hit. But if that were the case, the CEO’s purchase of a bunch of stock just afterwards would take some explaining.

An update on NAV might be informative. The way these sorts of things are valued very much relates to the NOI (net operating income) of the underlying assets. A stable NOI indicates that the property values are appropriate and the converse is true. Stability in this metric suggests meaningful recovery in the share price

[hannath] 22/11/2017 21:13

But fingers are crossed for the share price to get back above £1 tomorrow at the very least. They should be able to maintain the dividend until the next lot of beds come into play at the start of next term (Sept 2018).... I for one am sticking with them after picking up more stock in recent weeks.

[bullsvbears] 22/11/2017 16:59

The market does not appear to be expecting fireworks.

[clausentum] 22/11/2017 13:38

Trading update and dividend declaration booked for tomorrow.
Will there be a comment on the future intention for dividends???

[stemis] 20/11/2017 10:25

Critical mass for covering the dividend

[spectoacc] 20/11/2017 08:27

Critical mass for the bonus pool?

[stemis] 20/11/2017 08:18

I doubt they'll be reining in their expansion plans. Their objective is to reach critical mass.

[spectoacc] 20/11/2017 08:11

Sounds like more expansion but agree it's not clear:

"Lynne Fennah, Chief Financial Officer of Empiric Student Property plc, commented:

"This new Facility provides the Company with further flexibility in financing future acquisitions, within our target loan-to-value parameters. This is a new debt funding relationship and we look forward to working with Lloyds Bank in the future.""

[jonwig] 20/11/2017 08:07

This loan facility: either they aren't reining in their expansion plans, or it's to replace an expiring facility.

[jl9] 13/11/2017 14:24

Twinkle Toes wants to keep faith with those Mail readers who she sees as behind her rise. Its her "keep the fockers out" edge over everyone.

[jonwig] 08/11/2017 07:14

It feels as though this has been simmering away for years.
FT -

Amber Rudd, the home secretary, is leading a new cabinet push to remove students from the government’s immigration targets, in a move that will delight universities but put her on course for a clash with the prime minister.

Theresa May is said by one minister to be in a minority of one in the cabinet in believing that students must be counted in the target, and she has been implacable in her resistance to any change in policy. But Ms Rudd believes that unless the prime minister changes her position in the coming weeks, the government will suffer a humiliating defeat early next year when the Commons considers a bill to set up a post-Brexit immigration regime.

One ally of the home secretary said it was certain that there would be an attempt to amend the Immigration bill: “We’re going to have to do something about this ourselves, or we will be forced into doing it.”

51% of ESP's students comr from outside the UK.

[riskvsreward] 07/11/2017 19:07

Unless the management is completely incompetent,this should be a safe business in current environment. They should get 6% initial yield at least for any investment they make and with finance cost around 3.5%, with the rental income only going up on review.

This has been borne out by other businesses in the same sector like utg and digs which are quite successful, not mentioning the run-away success like wjg (admittedly on a slightly different business model of development and selling + renting).

So the danger lies in their incompetence in over-paying for investment, time and cost-overrun in development and out of control of other costs running the business which in theory should be very lean just renting the properties to students.

The management is also quite greedy in their remuneration and incentive packages compared to other companies in the sector considering they managed the worst performance in the sector

[jonwig] 07/11/2017 13:29

A000... - there's a decent business in there waiting to get out. Rein in development, manage costs, pay the covered REIT-compliant dividend.

I think they're more or less compelled to pay the expected final (jobs lost otherwise) but could get away with an acceptable future plan from then on.

I won't venture to buy before the 23rd, and certainly would want to buy at a decent discount anyway.

[a0002577] 07/11/2017 13:03

Well - what's it going to be? Judging by the sales today (sales 1.3 million, buys 120K) - the market thinks it's going to be bad.

However, Management must be under considerable pressure from institutions who in turn must be smarting at paying 109 pence per share in July - when the board should have known about the upcoming poor results. So my guess is that they - management - will have been working hard to produce an upbeat statement. Conversely, of course, they might decide to lump all the bad news together so that the only way after that is upwards.

So - is this share a buy or a "don't touch it with a barge-pole at the moment share"?

Being a contrarian I am actively considering buying back in - but will wait to see how it falls in the next few days.

[jonwig] 07/11/2017 07:06

All will be revealed:

Following the commencement of the current 2017/18 academic year, the Board of Empiric Student Property plc (ticker: ESP), the owner and operator of premium student accommodation across the UK, announces that the Group intends to issue a trading update, together with a dividend declaration in respect of the quarter ended 30 September 2017, on Thursday, 23 November 2017.

FWIW, I guess the dividend will be as expected, but there will be a statement about future payouts.