GCP Student Living raising capital for new London build – GCP Student Living (DIGS) is to raise capital through an ordinary share placing, which will be directed towards financing the purchase of Scape Canalside, a new-build asset located immediately adjacent to Queen Mary University of London and in the same locality as the company’s existing c.590-bed Scape East asset.
We note that the placing closes on May 30 and is priced at a 2.47% premium to the company’s prevailing EPRA net asset value (ex-income) of 160.03 per share.
About Scape Canalside
The company entered into a conditional forward purchase agreement in regard to Scape Canalside in October 2017 – it is expected to open to students for the 2019/20 academic year, providing 412 beds. If Scape Canalside is acquired, the company’s portfolio will include 1,000 beds in the same locality as Queen Mary University of London.
DIGS’ board sees the placing having some of the following benefits:
- The acquisition of an additional asset in central London further diversifies the investment portfolio, provides increased operational scale in the capital, and reduces portfolio concentration risk;
- the acquisition is expected to result in an increase in the company’s earnings and provide further opportunity for improvements in the company’s service levels, margins and occupancy rates which should lead to an enhanced dividend cover ratio;
- Equity capital to fund the acquisition of Scape Canalside will reduce the requirement for the company to obtain additional debt financing for these purposes;
- An increase in the market capitalisation of the company should make it more attractive to a wider investor base.
The company’s portfolio, which was valued at £862m as at 31 March 2019, benefits from structural supply and demand imbalances in its target markets, the high quality, modern nature of the assets and the ongoing trend for both domestic and international students to choose to study in the UK. Since its IPO in 2013, DIGS has delivered an annualised shareholder return of 12.8% to 10 May 2019, whilst its market capitalisation has grown from £70m to more than £650m.
DIGS: GCP Student Living raising capital for new London build