TIDMDIGS
RNS Number : 3049E
GCP Student Living PLC
05 November 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 September
2020, the unaudited estimated EPRA net asset value per ordinary
share of the Company was 171.71 pence, representing a quarterly
decrease of 0.07 pence (0.04%).
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 September 2020.
The EPRA net asset value (ex-income) was 171.46 pence per
ordinary share at that date.
In October 2019, EPRA announced updated best practice
recommendations which included new NAV metrics to replace EPRA net
asset value. In respect of periods from 1 July 2020 the Company has
adopted EPRA net tangible assets as its principal measure of
NAV.
At 30 September 2020 the Company's EPRA net tangible assets
(cum-income) was 171.71 pence per ordinary share, which is equal to
its EPRA net asset value at that date.
Portfolio and management update
Valuation
At 30 September 2020, the valuation of the Company's portfolio
was GBP1.01 billion representing a like-for-like increase over the
quarter of 0.7%.
At that date the portfolio, of which 82% by value was located in
and around London, comprised eleven assets with c.4,100 beds. The
valuation Net Initial Yield on the operational portfolio was
4.44%.
Bookings and market update
-- Bookings across the Group's portfolio of student
accommodation for the forthcoming 2020/21 academic year are
currently at 69%. The substantial majority (c.86%) of rooms booked
have now been occupied and/or are subject to nominations
arrangements. The Company's property managers have engaged with the
majority of those students who have booked accommodation but not
yet occupied their rooms, to better understand their needs. The
substantial majority of those students have indicated that it is
their current intention to occupy their booked rooms for the second
term of the 2020/21 academic year (commencing in January 2021).
-- The Company's academic year runs for a period of 51 weeks
from mid-September. It receives direct let income in three tranches
for each academic year; c.40% in each of September and January and
the remaining c.20% in April. Approximately 95% of the direct let
rents due on bookings for the 2020/21 academic year in respect of
the September tranche have been collected.
-- Based on the current level of contracted occupancy, reduced
rental rates on direct lets and the Investment Manager's
assumptions in relation to nominations agreements and long term
leases across the Group's portfolio, the Company would collect
approximately 62% of budgeted total income of GBP60.1 million for
the 2020/21 academic year.
-- At the date of this announcement universities in the UK
remain open to students and continue to provide a blend of
in-person and online teaching. The Company continues to see modest
numbers of enquiries and bookings being made by students for the
second term of the 2020/21 academic year (this being from January
2021). The Directors note UCAS data in respect of the 2021/22
academic year indicating increased levels of applications from
domestic and international students to attend universities in the
UK for 2021/22 academic year. Such demand for higher education in
the UK should result in improved occupancy across the Group's
portfolio in the absence of significant ongoing Covid-19 related
disruption.
Nominations agreements and long-term leases
-- Scape Shoreditch has a long-term occupational lease to a
WeWork subsidiary ("WeWork"), which is part-guaranteed by its US
parent company WeWork Companies Inc. Rental payments are received
from WeWork quarterly in advance.
As at the date of this announcement WeWork is in arrears of
GBP1.5 million in respect of half of the quarterly payments due to
the Group in respect of the March and June 2020 quarters and for
the full September 2020 quarterly payment. All arrears to date and
payments due through to the end of June 2021 are covered by the
part-guarantee.
The Directors and the Investment Manager remain in discussion
with WeWork about the outstanding arrears on the lease as well as
WeWork's ongoing commitment to the asset. As part of these
discussions WeWork has informed the Company that it wishes to exit
the lease immediately. The current passing rent is approximately
GBP2.5 million per annum. The Company is seeking legal advice to
ensure the maximum possible amount can be recovered from this
tenant.
S cape Shoreditch is a modern property located in a prime London
location and a two-minute walk from Old Street underground station.
The Company believes that the space is desirable and has started
discussions with alternative parties in order to secure a new lease
when it receives vacant possession.
-- In the annual report and accounts published by the Company on
17 September 2020, it was noted that the Company's nominations
agreement with a subsidiary of INTO University Partnerships
("INTO") was in arrears in respect of the latest termly instalment
due to the Company. The amount outstanding at 30 September 2020 was
c.GBP1.9 million. The Investment Manager remains in discussion with
INTO in connection with the outstanding payment.
-- 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
Scape Brighton is operational and began welcoming students from
September. The Covid-19 pandemic has resulted in reduced levels of
activity across the property construction sector. It is therefore
pleasing to note that the Company's forward funded development at
Scape Brighton was not materially impacted by such delays, with the
property having opened to students in two stages across September
and early November 2020.
The construction costs at Scape Brighton have been part funded
through a GBP55 million loan facility, of which c.GBP38 million was
drawn at 30 September 2020, with the remainder of approximately
GBP14 million to be funded through the Company's available cash
resources.
Cash and available debt facilities
-- At 30 September 2020 the Company had cash resources of
c.GBP50 million and a redrawable credit facility of which GBP17.5
million was available to be drawn at that date.
-- The Group's borrowings have an average weighted maturity on
its drawn debt of approximately five 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 23% at 30 September 2020.
Termination of forward purchase agreement
On 2 May 2019, the Company announced that it had entered into a
conditional forward purchase agreement (the "FPA") to acquire an
asset in the same locality as its Scape Guildford asset. The
Directors decided not to exercise its right to acquire this asset
under the terms of the FPA, which has now terminated.
Dividend
The Company's rental income for the financial year ended 30 June
2021 is being materially adversely impacted as a result of the
disruption caused by the Covid-19 pandemic.
Noting this impact on the Company's revenues, the ongoing
uncertainties relating to the Covid-19 pandemic and a desire to
manage the business in a prudent and conservative manner, the
Directors have decided to announce a first interim dividend of 0.25
pence per ordinary share in respect of the quarter ended 30
September 2020.
The quantum of the dividend will be reviewed on a quarterly
basis with a view to increasing the quarterly payment when there is
greater visibility on the Company's revenue prospects.
The dividend will be paid on 14 December 2020 to ordinary
shareholders on the register at 13 November 2020. The dividend will
be paid as 0.25 pence per ordinary share as a REIT property income
distribution ("PID") in respect of the Group's tax-exempt property
rental business. No element of the dividend will be paid as an
ordinary UK dividend ("non-PID").
Additional information on the Company's portfolio can be found
in the factsheet for the period ended 30 September 2020, which will
be published shortly and will be available at:
www.gcpstudent.com/literature
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014. Upon the publication of
this announcement, this inside information is now considered to be
in the public domain.
For further information please contact:
Gravis Capital Management Limited +44 020 3405 8500
Nick Barker
Dion Di Miceli
Jefferies International Limited +44 020 7029 8000
Neil Winward
Stuart Klein
Tom Yeadon
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 September 2020, its property portfolio was
valued at GBP1.01 billion.
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