2018 a year of progress for Empiric Student Property – Empiric Student Property (ESP) has announced full year results to 31 December 31 2018. These re-affirm the fundamentally strong shape UK higher education is in on the demand side. Current occupancy stands at 97%, up 5% from year-end 2017.
Key highlights from the fund’s financial performance include:
- Revenue increased 25% to £64.2m (2017: £51.2 million)
- Gross margin increased to 62% (2017: 57%), reflecting good progress in increasing occupancy levels and reducing property costs
- Administration expenses reduced by 33% to £9.1m (2017: £13.5m)
- Profit for the year increased by 94% to £40.3m.
- Basic earnings per share were 6.68 pence with adjusted earnings per share up 72% to 3.20 pence (2017: 1.86 pence)
- Dividends declared in relation to 2018 totalled 5.0 pence per share, and in line with our target, dividend cover increased to 64% (2017 :34%)
- Property portfolio valued at £970.6m at 31 December 2018 (31 December 2017: £890.1m) an increase of 9% (4.8% on a like for like basis)
- EPRA net asset value per share up 2% to 106.2 pence (2017: 104.5 pence)
- Net debt of £324m at 31 December 2018 (31 December 2017: £298m ), resulting in a loan-to-value ratio of 31% (31 December 2017: 28%), below our long-term target of 35% and maximum of 40%
Student housing relatively resilient
ESP’s student housing portfolio is spread across the UK and, as the company notes in its press briefing, their target market is polarising as applications for the top-ranked universities continue to increase, especially from abroad. Universities ranking outside the top twenty in particular are becoming relatively less popular, so future investments by the company will reflect this.
Discussing the REITs outlook for 2019, Tim Attlee, CEO of ESP, notes: “We expect 2019 to be a year of further significant progress. We have taken swift action to maximise revenue for the remainder of this academic year and bookings for the 2019/20 academic year are progressing well. The benefits of the operational improvements we have made will continue to come through in 2019 and we are taking action to drive additional efficiencies.
In 2019, we are targeting a gross margin of 67% and a dividend of 5p per share1, which we expect to be around 85% covered on an adjusted basis.
While there are economic and political uncertainties, particularly regarding Brexit, we are yet to see any material adverse consequences. We have a quality portfolio of assets, which coupled with the improvements in our operations, gives us confidence in the outlook for the business.”
About Empiric
ESP is a leading provider and operator of modern, direct-let, nominated or leased student accommodation across the UK. Investing in both operating and development assets,The trust is a multi-niche student property company focused on, (i) providing first year accommodation managed , (ii) offering a variety of second and third year purpose-built accommodation options for individual students and those wanting a group living environment, and (iii) continuing to expand the Group’s existing premium, studio-led accommodation portfolio which is tailored to international and postgraduate students.
ESP: 2018 a year of progress for Empiric Student Property