Empiric Student Property Share Discussion Threads

[spectoacc] 20/8/2019 07:40

Looks reasonably good to me - 94% cover at half year (albeit "on track" for 85% FY cover), EPRA NAV 108.5p. Fairly striking NAV discount compared to sector premia.

[chucko1] 12/7/2019 12:43

NAV flat is what makes me keep a few of these. This company should be bought out if they cannot get full dividend cover and feed it with higher operating income. Others have shown they can do it and the portfolio appears to be decent. Clearly the assets are in reasonable demand.

[maddox] 11/7/2019 21:27

Hi daviepj,

Re Unite takeover of Liberty Living

The price being paid by UTG is at NAV so no premium and no discount - so I assume that there is a bit of debt acquired - probably secured against the individual properties.

Nevertheless, Unite are going to do well out of it as the economies of scale will deliver efficiency benefits.

Regards Maddox (long Unite)

[daviepj] 11/7/2019 20:07

Saw this on CityWire - hxxps://citywire.co.uk/investment-trust-insider/news/unite-seals-no1-status-with-1-4bn-student-digs-deal/a1246886?re=66106&ea=398014&;utm_source=BulkEmail_Investment+Trust+Insider+Daily&utm_medium=BulkEmail_Investment+Trust+Insider+Daily&utm_campaign=BulkEmail_Investment+Trust+Insider+Daily. Thing that caught my eye was Unite are paying £1.4 billion for a portfolio that 'was independently valued at £2.2 billion in May'.

[maddox] 11/7/2019 10:58

A few select quotes from the Guardian today.....

'Applications from Chinese students to study at UK universities have gone up 30% since last year'

'The Ucas figures also revealed an increase in the number of British 18-year-olds applying for places, up 1% on last year to 275,520 despite a 1.9% fall in the overall 18-year-old population of the UK. EU applicants have also risen 1%, to 50,650 despite the Brexit uncertainty, and Ucas reported a record number of applicants from outside the EU at 81,340, an increase of 8%.'



I wonder whether EY will be up-dating their report to reflect the continuing growth in this sector?

Regards Maddox

[spectoacc] 11/7/2019 06:51

Not sure I'd have got into ESP if not for the stupidity.. :)

Currently prefer AEWL to AEWU.

[chucko1] 10/7/2019 20:12

2wild, exactly what I was considering doing today. Same two stocks! I’ve effectively been doing that for a few months now. I did have quite a bunch of ESP and lightened up as it approached par a while back. Bought into AEWU in the low 90s, but they have partly gone now. Into RGL. Now looking to pick up AEWU again at around this price.

Yes, I think this is kind of it for ESP. Better rewards for the risk elsewhere. The only issue is that of the NAV discount - about 15%. For that reason, I still keep some. The journey has been good, but would have been better had it not been for the stupidity of two years back. I think the last set of trading results were worrisome in that their stated intention of covering their EPRA dividend by FY 2019 was not evident.

[2wild] 10/7/2019 19:15

Sold out of ESP at 92.5p today, as don't see share price going anywhere. Dividend is ok but uncovered and will probably remain so for a few more years. Reinvested in some more AEWU with an 8.3% coverd dividend, low LTV at 25% and very low cost of debt at circa 2.5%.

[spectoacc] 09/7/2019 07:49

LSE got an RNS problem atm.

"The board is pleased to confirm that the Company remains on track for FY2019 with operating margin expected to be above 67%, administration costs around £10 million and dividend cover in the region of 85%."

[killing_time] 09/7/2019 07:47

ESP update not showing up here.

[maddox] 03/7/2019 10:17

Hi jonwig,

Happy that you raised the issues, always important to look carefully at the risks. We investors need a 'speak-up' rule so we encourage a constructive discussion in a respectful way of both positive and negative points. Nothing worse than someone saying after a share falls 'yep thought that (whatever) was a problem'.

Regards, Maddox

[spectoacc] 03/7/2019 06:54

"The directors of the scheme, Mr Spence and Mr Kewley, partly blame competing supply for the schemes’ difficulties. Even if it were fully let, though, it would only bring in £10m of income, according to notes of the creditors’ meeting with Quantuma. Most of the sites offered returns of 10 per cent — meaning even maximum rents, as it currently stands, do not appear to be enough to pay the investors the amount in the contracts after accounting for costs."



Will be more scams like this around I'm sure. And this is before the tide has even gone out!

Much better to have invested in ESP instead.

[jonwig] 03/7/2019 06:49

Maddox - I'm not taking sides on what was, for me, merely a piece to report on.

I wonder if the EY study had more relevance in the political atmosphere of 2016 than maybe it does now? UK student finance is highly politicised, and the question of the value of the value of some HE degrees as opposed to vocational education is never far away.

It's likely that there will be an increase in OS students, whilst the situation in 2016 was one of repression. (Thanks to the then Home Sec, whose name escapes me.)

My interest in the sector is purely through a holding in DIGS, whose business model is more affected by the current Mayor's policies than any nation-wide factors. I accept the point you made about UTG over on that thread.

I can't comment on any relevance to ESP, as I've not followed the company.

[maddox] 02/7/2019 22:23

Hi Jonwig,

Thought I'd pursue the general discussion here.

“The number of UK students available to fill private sector beds has declined,” said Fergal O’Reilly, an EY partner."

This statement is blatantly incorrect.   

EY wrote a report Dec 2016 'Purpose Built Student Accommodation - testing times ahead' stating that the sky was going to fall in on the PSBA sector. Essentially, it argued that student numbers are in decline due to demographics. It's a classic consultants ploy to drum up work to create fud (fear, uncertainty and doubt). I used to be a strategy consultant so I recognise the tactics. Can't find an online link for it or find this report on EY's web site? 

Suffice to say the report's predictions are not proving to be correct. Whilst of course the demographic decline is real enough it has been more than off-set by:

1. Proportionately more of those 17/18 year olds opting to go to university;
2. More foreign students coming to he UK; and
3. More second and third year students opting to stay in-hall.

EY chose to ignore the potential for points 1 and 3 in what is a chronically under-supplied market.

Regards, Maddox

[spectoacc] 29/6/2019 17:44

Interesting - on the flip side, Unite announced they were in talks to buy Liberty Living on Thursday, £1.4bn. So plenty of life in the sector IMO, if scams avoided.

[daviepj] 29/6/2019 16:38

There is this - hxxps://www.newsgroove.co.uk/collapse-of-uk-student-property-scheme-hits-investors/ - that has the story and is not behind FT pay wall. They were running at 50% occupancy in Feb - ESP claim occupancy above 90% I think.

[daviepj] 31/5/2019 20:48

Saw this WRT DIGS hxxps://citywire.co.uk/investment-trust-insider/news/gcp-student-living-fund-raising-flops-at-5m/a1234565?re=64971&ea=398014&utm_source=BulkEmail_Investment+Trust+Insider+Daily&utm_medium=BulkEmail_Investment+Trust+Insider+Daily&utm_campaign=BulkEmail_Investment+Trust+Insider+Daily. Seems investors in other student property ITs are not wanting to invest further

[spectoacc] 02/5/2019 13:27

They've bunged a t/s in with the AGM statement just now, but seems to be largely the same as previously - a little bit of operational progress, as you'd expect, and confirmation on the 85% dividend cover.

[chucko1] 25/3/2019 13:51

HE, I think the only saviour here is its NAV. Another manager is likely to be able to do a better job of squeezing income from the assets, and the MV of the company makes it quite digestible. So it’s back at about a 14% discount which makes it look pretty tasty in that respect.

At least they see a 85% dividend cover, which is far better than when the share price was in the mid 80s, but the improvement momentum appears to have ground to a halt and there was nothing in the ts to make me believe that it was likely to hit 100% any time soon.

[horndean eagle] 25/3/2019 13:27

The problem is the CEO is one of the schmucks that is responsible for the mess we are in. Not sure how he got away with not losing his job either. The portfolio wasn't assembled properly and has left bloated cost bases on a local level where they do not have many beds. They were supposed to have made progress on resolving the composition. Not sure I buy this brexit nonsense. Lots of property deals going through in the market. Really needs to be taken over like PHP took over the other healthcare reit. Sooner the better

[makinbuks] 25/3/2019 12:24

What would the market reaction be if they cut the dividend to 4p? The payout is then fully covered and they could concentrate on reducing debt and thereby financing costs. This and their other P & L initiatives over Revenue and Cost would then allow a progressive dividend payment in future years. With interest rates not likely to rise for some time a yield of 4.5% would still look attractive. More in line with PHP for example

[makinbuks] 25/3/2019 12:21

Rob, In response to your post 814 above, clearly this is a reaction to the lack of coverage from current earnings thereby necessitating distribution of reserves which just means they are giving shareholders back their original money. The worrying point is that it might be money under the mattress in the balance sheet but its not distributable cash

[jimmyb33] 22/3/2019 14:35

Listened to the results meeting on the company web site.
The cfo did not sound so confident as in previous broadcasts. Lot of talk of not having control of the operations whilst still outsourced. Target 350/400 beds in a town so they have a few towns where they will have to sell up or add properties to bring the bed count up. Sale of three properties held over until brexit settled.
120 students did not show up having booked rooms which trimmed occupancy %.

Share price falling reflects the hard work that lies ahead.