Empiric Student Property has said it expects a reduction of income for the current academic year of up to 12% or £8m, in a trading update this morning.
The loss of income from students being released from their rent obligations for the summer semester is below the company’s worst-case scenario of a £21m reduction in income.
The group, which owns and operates student accommodation across the UK, said that despite almost all universities have closed their campuses for person to person teaching for the rest of the current academic year, 55% of its student accommodation bedrooms continue to be occupied by residents.
Reservation rates for the 2020/21 academic year, which starts in September, is at 47% compared with 54% at the same point last year.
The group said demand from international students was at lower levels, but added it was starting to see an increase in bookings from the UK domestic market.
It also said it is seeing an increase in requests for self-contained studios and en-suite accommodation as a result of the current social distancing measures in place in the UK – 83% of the group’s beds meet these requirements.
The group’s covenant positions are as follows: loan to value (LTV) covenant of 65% compared to actual LTV of 35%, and interest cover ratio (ICR) covenant of 216% compared to actual ICR of 397%.
In April 2020, the group has refinanced £32.8m of existing debt with AIB Group, extending the term by four years on more favourable terms, resulting in no further refinancing requirements until November 2022.
The group currently has £12m of cash and £35m of undrawn debt facilities available.
ESP : Empiric Student Property expects £8m hit on income