Empiric Student Property Share Discussion Threads

[tyranosaurus] 15/9/2017 11:23

12 month low.

[stemis] 15/9/2017 10:50

SteMis - total return? And ESP's strategy looks rather like borrowing against future returns.

DIGS made £23.474m on NAV £466.994m = 5.0%
ESP made £14.477m (6 mth) on NAV £530.428m =5.4%

I think ESP are in a more development stage of assets than DIGS (although I don't know DIGS well so might be wrong). ESP refer to costs being artificially high. My niece has just moved into one of their properties in Leeds so her feed back will be interesting.

Although ESP dividend is uncovered it's not by much - £1.6m run rate at half year compared to NAV of £530.4m. Should close and move into covered territory as assets are developed and producing. Storm in a teacup...

[horndean eagle] 15/9/2017 10:26

That trading statement in June where they claim noi at 70% again looks really dodgy. It is off that they managed to get the fundraising away. Scumbags. Hadn't realised how huge operating costs are for student properties.

[spectoacc] 15/9/2017 09:06

Surprised they got that large fundraising away recently, looking at recent t/s. Numis about right I reckon, though ESP do start to look interesting at a discount.

....Although NAV is thanks to revaluations, so it'll be interesting to see what happens if/when those go into reverse. Hard not to compare it to the huge REITS - LAND, BLND etc - & the massive discounts they're on.

[horndean eagle] 15/9/2017 09:04

Numis given them a real kick. Says total lack of confidence in management. Doesn't like the fact dividend will be uncovered. Need a real rocket put up them. Flag up in June trading statement NOI conversion was back at 70%. Now at 60%. Not sure quite how they managed that.

[hannath] 15/9/2017 08:58

It sounds like.... only until other beds come on line though

[spectoacc] 15/9/2017 08:55

"..Shares worth having for the dividend alone" say IC - even though some of that dividend is coming out of capital? Not convinced.

[jonwig] 15/9/2017 08:47

SteMis - total return? And ESP's strategy looks rather like borrowing against future returns.

EDIT: but this share price might be tempting!

[hannath] 15/9/2017 08:34

In Investors Chronicle today ...

Empiric readies for jump in student numbers 

Empiric Student Property (ESP) spent much of the six months to June consolidating a number of acquisitions and developments, but the target of adding up to 3,000 student beds each year remains firmly on the agenda. Higher debt pushed up net finance costs but this was more than outweighed by a rise in net rental income.

Demand for purpose-built student accommodation remains as strong as ever, and is set to grow even faster by 2020 as a result of a significant population bulge comprising children reaching university age. To meet this demand, Empiric has raised £110m through a share placing and a further £10m through an unsecured loan, and has already spent £51.2m on four acquisitions. Nearly 7,000 beds were operational at period-end. A further five acquisitions are in the pipeline, with an expected cost of £64m, and this is expected to lift gross annualised rental income from £53.8m as at June 2017 to as a much as £75m by June 2018.
The implications of Brexit remain unclear; just under 7 per cent of students in the UK come from the EU, but three-quarters of these are postgraduates who spend less than 12 months in the UK and should not be affected by immigration limits.
Analysts at broker Numis are forecasting adjusted net asset value at the new December year-end of 111p, from 105p a year earlier.
EMPIRIC STUDENT PROPERTY (ESP)
 
 
*Dividends paid quarterly. Second-quarter dividend of 1.525p paid on 1 Aug
Empiric retains a 6.1p per share dividend target for the year but admits that this will not be substantially covered by after-tax earnings. We expect growth to accelerate over the longer term, but the shares are worth having for the dividend alone. Buy. 
Last IC View: Buy, 109.5p, 10 Apr 2017

[stemis] 15/9/2017 08:23

But dividend is much lower in DIGS. If ESP paid the same (lower) level of dividend as DIGS it's cover would be higher than DIGS's.

[jonwig] 15/9/2017 07:19

By way of comparison, DIGS shows how it's done:



Dividend pays out £22.1m from available £23.5m. Eight fully-occupied properties, showing concentration.

[jonwig] 13/9/2017 14:31

The share price is moving to par with NAV, making it impossible to issue new shares and forcing them to stick to their knitting. (As a REIT, they can't issue C shares or other financial engineering stuff!)

[joe say] 13/9/2017 12:32

Fully agree

[horndean eagle] 13/9/2017 11:58

Shockingly poor underlying earnings. Their admin costs seem to be way out of control. Would have thought leasing student property a fairly straightforward task. Had a look at their bonus set up. Only a third of it tied to underlying earnings. 1/3 on deploying capital. That is moronic. The other third they collected as well. Should do the decent thing and forgo bonuses until they sort themselves. Doubt anyone will stump up any more cash until they do.

[jl9] 13/9/2017 11:51

I also sold out of this and went into Grainger - better optionality on their properties and less vulnerable to Old Grim Twinkletoes (May).

[gswredland] 12/9/2017 20:10

Glad I abandoned these in favour of WJG!

[jonwig] 12/9/2017 18:57

They will issue new shares so long as the existing share price trades at a premium to NAV. If it doesn't, basically they can't. Their management systems can probably be scaled up to cope with additional properties and volumes.

It's obvious they are chasing price per bed upwards and the market seems to be in a bit of a bubble, with new purpose-built premises providing the supply. My question to them would be, "Have you looked at the possibility of alternative use - eg. apartments - if the student market loses profitability?"

I'm trying to see their side of the argument!

[riskvsreward] 12/9/2017 18:23

WHy would they keep issue new shares if the exisitng investment is not making good profit? The management of this company seems to be much too greedy with their pay and incentive in the light of very poor performance in comparison of other companies in the same sector.

[tyranosaurus] 12/9/2017 13:27

The rent increase is being used up by higher property costs, admin charges and finance costs.
The bottom line is stagnating.

[a0002577] 12/9/2017 10:17

Rather less than brilliant interim results published this morning.



Thus the significant price drop. Glad I sold last week.

[riskvsreward] 14/8/2017 10:27

Thanks Jonwig. just a gut feeling that it is not attractive enough for the price paid. Also it will not get any income until two years later if the cost is upfront and who knows what the market is like in two years with uncertainties of brexit and economy etc.

[jonwig] 14/8/2017 10:16

riskvs - yes, £160,000. I think their earliest purchases were well below £100,000. OK, Edinburgh is a premium location, and the Scottish model for student finances is different from the RUK one, but even so.

I'm not sure of the yield intricacies here: students pay rent up-front for 51 weeks, I beleive but the room is sub-let for conferences, etc. in the long summer break.

[riskvsreward] 14/8/2017 10:06

This latest deal looks pretty expensive working out almost 200K a bed assuming no cost overrun. How much they can get for rent for each bed,assuming 8K a year it works out only 4% yield gross which is not looking attractive.

[aylingd] 09/8/2017 12:10

This is quite interesting, the last two aquisitions are former hospitals.

The one in Liverpool is listed so I presume it had to be converted rather than re-built. The one in Bristol is an historic building but not particularly pretty (imo). There was an attempt to demolish it last year & build sheltered accomodation, I believe. This proposal was refused planning. I assume Empiric are planning to convert rather than re-build, this will probably have a better chance of success but we will have to wait & see how it develops.

Are Empiric taking on an element of property speculation here ?

D.

[jombaston] 03/8/2017 16:48

Doesn't sound particularly exciting until you get to the development potential, which is quite a kicker!

However exciting that is, development won't help cover the divi in the near term.

Maybe they should get planning, make a nice turn and sell all or part on to developers such as WJG - now there's a company that knows how to add value!