TIDMDIGS
RNS Number : 6765U
GCP Student Living PLC
31 July 2020
GCP Student Living plc
("GCP Student" or the "Company", together with its subsidiaries
the "Group")
LEI: 2138004J4ID66FK38H25
NAV, portfolio update and dividend
Net Asset Value
GCP Student, the UK's first REIT focused on student residential
assets, today announces that at close of business on 30 June 2020,
the unaudited estimated EPRA net asset value per ordinary share of
the Company was 171.78 pence, representing a quarterly increase of
0.1% and an increase of 3.8% for the 12 month period ended 30 June
2020.
The EPRA net asset value includes income for the period
(cum-income) but does not include a provision for an accrued
dividend for the quarter to 30 June 2020.
The EPRA net asset value (ex-income) was 170.36 pence per
ordinary share at that date.
Portfolio and management update
Valuation
At 30 June 2020, the valuation of the Company's portfolio was
GBP1.0 billion representing a like-for-like increase over the
quarter of 0.5%.
At that date the portfolio, of which 80% by value was located in
and around London, comprised eleven assets with c.4,100 beds,
including Scape Brighton which remains under construction. The
valuation Net Initial Yield on the operational portfolio was
4.44%.
In common with the wider UK commercial property sector, the
valuations have been reported on the basis of "material valuation
uncertainty" by the Company's external valuer due to lack of
transactional evidence available and in accordance with recent
guidance issued by the Royal Institution of Chartered Surveyors
(RICS) in light of the Covid-19 pandemic. The Company has been
notified that with effect from 7 July 2020 its valuations will no
longer be subject to this qualification.
Bookings and market update
-- Bookings across the Group's portfolio of student
accommodation for the forthcoming 2020/21 academic year are
currently 55%, including in respect of the Group's Scape Brighton
555-bed development asset which has not yet opened to students. The
average level of bookings at the same time of the year over the
past five academic years was 74%. Students who have booked are
required to pay the Company a deposit equal to two weeks' rent at
the time of booking.
-- The Investment Manager, Gravis, believes students have
delayed booking accommodation for the 2020/21 academic year and
expects higher booking activity levels later in the enrolment
cycle. Bookings have shown increases for the last six consecutive
weeks.
-- The UK Government's current stated position is for the
2020/21 academic year to start in September, with A-level results
to be issued on 13 August 2020.
-- According to a survey published by Universities UK on 17 June
2020, 97% of universities plan to provide in-person teaching in the
autumn term of the 2020/21 academic year. A recent survey by London
Economics indicates that 9 in 10 students intend to attend
university for that term.
-- On 9 July 2020 UCAS provided an update on the number of
applications made by 30 June 2020 to full-time education in the UK
for the 2020/21 academic year. By that date, the overall number of
applicants showed a year-on-year increase of 2.3%, the highest
number of applicants at that point in the applications cycle in
four years. The number of applications has been driven by demand
from UK domestic and non-EU students. The number of applications by
non-EU students has increased by almost 10%, the highest level of
applications at this time in the cycle on record.
-- A record 40.5% of all UK 18-year olds have applied to attend
full-time higher education - the first time more than four out of
ten have applied by this point in the enrolment cycle.
Covid-19 impact on income for the 2019/20 academic year
-- The Company has collected 82% of all budgeted income for the
2019/20 academic year. The Company currently anticipates the lower
income to reduce earnings for the 2019/20 academic year by c.GBP9
million as compared with its budget.
The academic year runs for a period of 51-weeks from
mid-September.
Direct let income
-- As announced previously, the Company advised it would look
favourably upon requests to forgo rents by residents seeking to
return home for the remainder of the current academic year on a
case-by-case basis. Direct let rents represent 79% of the budgeted
2019/20 academic year rent roll and the offer of forgoing rent
related to the final direct let instalment of c.20% of direct let
income, due in April 2020.
-- The Company has collected 84% of budgeted direct let income
for the 2019/20 academic year. The Directors do not currently
believe this figure will materially increase over the rest of the
academic year. Accordingly, the Directors expect the Company's
direct let revenues for the first quarter of the financial year
ended 30 June 2021 will be materially reduced.
Nominations agreements and long-term leases
-- 21% of the Group's budgeted income for the 2019/20 academic
year is from nominations agreements and long-term leases. At the
date of this announcement 83% has been collected with respect to
these agreements.
-- Scape Shoreditch has a long-term occupational lease to a
WeWork subsidiary, which is part-guaranteed by its US parent
company WeWork Companies Inc. This lease comprises approximately
4.9% of the Group's 2019/20 academic year annual budgeted
income:
-- The long-term impact of the Covid-19 pandemic on the shared
workspace sector is currently unknown and difficult to quantify and
it is currently unclear how resilient providers such as WeWork will
be in the event of a sustained downturn.
-- Rental payments are received from WeWork quarterly in
advance. As at the date of this announcement the Group has received
approximately half of the quarterly payments due to it in respect
of the March and June quarters. The Company, through the Investment
Manager, remains in discussion with WeWork in relation to the
outstanding payment and continues to monitor the performance of the
Group's lease with WeWork.
-- Scape Shoreditch is a modern property located in a prime
London location, a two-minute walk from Old Street underground
station.
-- The Company has a long-term nominations agreement with a
subsidiary of INTO University Partnerships ("INTO"), a provider of
foundation courses, for 210 beds at its Scape East asset. Rents for
the agreement are received in advance of each of the three terms of
the academic year. INTO are currently in arrears in respect of
their latest termly rental instalment, The Investment Manager is in
discussions with INTO with regard to this. The nominations
agreement with INTO comprises approximately 5.9% of the Group's
2019/20 academic year annual budgeted income.
-- Rental income in respect of the Group's lease at Circus
Street, Brighton, continues to be received in line with
expectations. The 450-bed student accommodation building is
contracted on a 20-year lease with annual uplifts of RPI plus 50
basis points (capped at 5% and floored at 2%) to a subsidiary of
Kaplan Inc, a global education provider.
Developments
As noted in the Company's announcement on 1 May 2020, the
construction of Scape Brighton has been proceeding with reduced
levels of activity. Whilst it remains the expectation that Scape
Brighton will be operational for the 2020/21 academic year, there
is a risk that completion of construction is delayed beyond the
start of the academic year.
Should construction not be completed ahead of the scheduled
move-in date for students who have booked accommodation at Scape
Brighton, the Group shall be responsible for accommodating such
students, at its cost, until such time that construction has
completed.
The remainder of the construction costs at Scape Brighton are
being funded through a GBP55m development loan facility, which was
c.GBP32m drawn as at 30 June 2020. Completion of the building
should not impact the Company's cash reserves.
The Company benefits from licensing fees which provide a 5.5%
per annum coupon until the site reaches practical completion.
Cash and available debt facilities
-- The Company currently benefits from a robust balance sheet.
At 30 June 2020 the Company had cash resources of c.GBP60 million
and a GBP45 million redrawable credit facility of which GBP30
million was undrawn as at that date.
-- The Group's borrowings have an average weighted maturity on
its drawn debt of approximately six years from the date of this
announcement. The Group's Loan to Value ("LTV"), calculated as
borrowings net of cash as a proportion of the Group's total
portfolio value, was 22% at 30 June 2020.
Dividend
The Board is pleased to announce a fourth interim dividend of
1.42 pence per ordinary share, in respect of the quarter ended 30
June 2020. Accordingly, in respect of the financial year ended 30
June 2020 the Company has paid or declared dividends totalling 6.15
pence per ordinary shares, thereby maintaining its annual dividend
in line with the previous financial year.
The dividend will be paid on 14 September 2020 to ordinary
shareholders on the register at 14 August 2020. The dividend will
be paid as 1.26 pence per ordinary share as a REIT property income
distribution ("PID") in respect of the Group's tax-exempt property
rental business and 0.16 pence per ordinary share as an ordinary UK
dividend ("non-PID").
The Company's rental income for the financial year ended 30 June
2021 will be adversely impacted by the reduction to revenues
received in connection with the 2019/20 academic year. Further, i n
the event that the disruption caused by the Covid-19 pandemic
continues into the 2020/21 academic year, the Company's rental
income will be adversely impacted. The scale of this impact will
depend on measures taken by global authorities, including the UK
government, the ongoing approach taken by higher education
institutions as regards in-person learning and how the situation
develops and over what timescale.
The Directors continue to keep wider events and the Company's
operations under review in respect of any future dividends which
may be declared by it.
Additional information on the Company's portfolio can be found
in the factsheet for the period ended 30 June 2020, which will be
published shortly and will be available at:
www.gcpstudent.com/literature
For further information please contact:
Gravis Capital Management Limited +44 020 3405 8500
Nick Barker
Dion Di Miceli
Stifel Nicolaus Europe Limited +44 020 7710 7600
Mark Bloomfield
Mark Young
Alex Miller
Buchanan / Quill +44 020 7466 5000
Helen Tarbet
Henry Wilson
About GCP Student
The Company was the first student accommodation REIT in the UK,
investing in modern, purpose-built, private student residential
accommodation and teaching facilities.
Its investments are located primarily in and around London where
the Investment Manager believes the Company is likely to benefit
from supply and demand imbalances for student residential
accommodation. GCP Student's property portfolio comprises eleven
assets with c.4,100 beds, including one asset which is under
construction. At 30 June 2020, its property portfolio was valued at
GBP1.0 billion.
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END
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