Empiric Student Property Share Discussion Threads

[chucko1] 22/4/2020 21:06

Stevegrass, I think if you are prepared to be patient, that 50% will come to you. Some dividends on top, including some with small dents.

[stevegrass777] 22/4/2020 20:00

I've bought here a few times over this last 3 weeks, I feel people will be compelled to carry on with education, its not like going to the pub or cinama.
Also any improvement in treatment or medication treating C-19 or vaccine breakthrough news could blow this virus to the wall, and speed up normality.
Could be up to 50% upside in 6 months.
That's why I've kept coming back for more.

[spectoacc] 22/4/2020 15:39

2nd (& 3rd) infection peaks - can you see Chinese students wanting to come here, assuming it's not also waved back through China? I can't. But c.80% forward bookings sound good.

Be interesting to know the cancellation terms.

Longer term - say a year in September - agree, should be largely back to normal, vaccine-permitting.

[chucko1] 22/4/2020 11:19

So for the year, that amounts to 22% of the overall rent. Likely around half the dividend. Assuming some further effects for 20/21, that’s possibly a quarter of the dividend. Then back to the normal running rate give or take a little.

Education is an industry the U.K. government would do whatever it took to maintain its world class status. These rooms will therefore get filled, albeit at the expense of hand sanitiser everywhere. A small price to pay. Certainly not the 32p this has fallen in the past 4 weeks, which gives a large margin of safety against a damaging second infection peak.

[panshanger1] 22/4/2020 10:43

Thanks for posting ?

[okosling] 22/4/2020 10:20

There's an announcement this morning from Unite, another student property REIT. Some of the comments in it are likely to apply similarly to Empiric:

Academic year 2019/20: based on cancellation requests received to date, they expect to forgo rent for the summer term on 62-65% of all owned & managed beds. I would have expected that to be worse, so that's positive news.

Academic year 2020/21: reservations for the next academic year currently at 80% compared with 81% at the same time last year. Positive news again.

Unite's comments on the Higher Education sector outlook:

- Government central planning scenario is for the 2020/21 academic year to start in Sept as usual, but the autumn term may start & finish a little later. A-level results to be published on 13 Aug as originally planned.

- Support measures are proposed to counter the risk of a reduced number of first-year students from overseas.

- Universities also expect to offset this potential reduction by increasing the intake of UK students from surplus applications, which totalled 101,000 for 2019/20.

- There are currently 865,000 students in houses of multiple occupancy (HMOs). Many would like to be in halls of residence but can't get places. Even a small shift of students from HMOs to purpose-built student accommodation could substantially offset potential reductions in international student numbers.

Personally, I also think a weak economic outlook could be a slight positive for student numbers, if some decide to stay on for postgraduate study because it's hard to find suitable employment.

Unite's shares are up 3½% this morning but Empiric's haven't budged. I'm happy to hold (bought a few days ago just below 65p).

[okosling] 14/4/2020 22:44

Empiric have a second website which is for the students, where you can see what they have offered on rents:
www.hellostudent.co.uk/offer/coronavirus-covid-19-everything-you-need-to-know/

In response to another question about why empty accommodation can't be offered to non-students, I believe the reason is that the council tax exemption on student accommodation would be lost if the building wasn't occupied entirely by students.

[emptyglass] 09/4/2020 18:04

Yesterday 8th Empiric Student Property PLC Annual Bonus 2019 & LTIP Option Award/PDMR, directors should have shown solidarity with shareholders suffering the dividend suspension and declined some or all of their bonus.

[spectoacc] 09/4/2020 15:41

ESP going well in this market.

[spectoacc] 03/4/2020 10:52

My view unchanged - they may well be seeing good sales for the September year, but I don't think there'll even be a September year.

[mattphillips940] 31/3/2020 08:00

hxxps://m.marketscreener.com/EMPIRIC-STUDENT-PROPERTY-16805114/news/Empiric-Student-Property-Business-portfolio-and-dividend-update-COVID-19-30279957/

Full statement if anybody wants to read it.

sets out the potential impact on the company and what they are doing to try and offset any impact on the finances in the medium term.

In my opinion a very reassuring and sensible approach that will protect the companies underlying assets over the course of the outbreak.

[spectoacc] 31/3/2020 07:38

RNS reads reasonably well this morning, even with:

"Despite a strong contractual position under the Group's lease agreements, but given the unprecedented and unpredictable impact of COVID-19, the Group will look favourably upon requests on a case by case basis from its 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 onwards. We also remain committed to supporting residents who want to continue to stay at the Group's properties.

The Group has carefully considered the impact on all our key stakeholders and believes that this is the right thing to do in these extraordinary circumstances. The impact of this decision is expected to be a worst-case reduction in revenue of up to c.GBP21 million for the academic year 2019/20. "


But my big concern would be their optimistic take on next September. I don't personally think we'll be more than halfway through Covid-19 by then. Won't have been enough transmission for herd immunity, won't be a vaccine yet, won't be particularly welcoming of foreign students, who are most of ESP's business.

[rambutan2] 30/3/2020 21:00

I would have thought Empiric will come under pressure to offer a get out clause/refund for the summer semester, as Unite have offered. My son and everyone he knows in his Unite accom in Sheffield are taking up the offer as with the Uni closed down, along with any social activities, there is absolutely no reason to stay. Also, the summer semester rent is a bit of a rip off as whilst Uni effectively finishes in May, rent is paid until well into July.

[spectoacc] 30/3/2020 07:02

Agreed; also:

"Shares would now have to increase by 70% to reach NAV again"

They were on a decent discount to the moveable feast that is NAV, even in the good times, due to failure to cover divi. So you need both a new NAV, and a new discount to it.

Not saying ESP aren't a buy, but if you believe Covid-19 will resovle sooner than say 12-18 months, there's prob better buys IMO.

[belgraviaboy] 29/3/2020 17:46

I think it is realistic to now refer to NAV as (very) historic.

I for one do not have a clue what anything is 'worth' any more - but it is unlikely to be the same....

[rik shaw] 29/3/2020 17:30

No idea what Empiric approach will be but they won't be able to ignore the fact that Unite in a statement this week stated, 'Unite will not charge any student who wishes to leave their accommodation for the final semester of 2019/20, with effect from mid-April. We will continue to work closely with our University partners through our nominations agreements to meet any additional short-term requirements.'

[mattphillips940] 29/3/2020 15:41

I imagine this is for the tax benefits it gives to investors as PID is subject to income tax and Non-PID is taxed at a much lower rate.

[arichardwilson] 29/3/2020 15:05

Can you explain the 70% discount to nav please?

[stemis] 29/3/2020 15:03

Empiric is currently trading at a 70% discount to NAV.

Last EPRA NAV was 110.2p and share price is 64p so I make that a 42% discount

[spectoacc] 29/3/2020 14:33

Looks a professional piece of research.

Re: "So any refunds given will be in the full control of the company."

There's a letter in the Sunday Times today asking student landlords to forego rental payments, and for the govnt to step in if they don't. So I wouldn't assume that income is coming in.

And if students withhold it, the govnt have already barred landlords from evicting/chasing the rent, at least for the next 3 months.

The bigger issue, of course, is the following academic year. Covid-19 may die down, we may be back to something resembling normality within months. Or we may very well not.

[2wild] 29/3/2020 14:06

Yes excellent research and post. Just a minor correction, the REIT distribution rule is 90% not 95.
Do you know why only a fraction of the Divs have been PID? Over the last 4 quarters average has been about 53%. Most other REITs pay 100% PID.

[panshanger1] 29/3/2020 12:59

Great post Thanks for the feedback ?

[mattphillips940] 29/3/2020 12:56

I would buy empiric and hold until the price recovers in 6 to 12 months. At that time you can either sell it for a profit or do as I will do and add it to your long term portfolio and enjoy the dividend income.