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Good year for Empiric Student Property

Empiric Student Property has posted a 8.2% uplift in EPRA net tangible assets (NTA) in annual results to the end of 2022.

The student accommodation specialist said EPRA NTA was 115.4p at the end of the year, up from 106.7p. This was in part due to a 7.3% like-for-like increase in the value of its property portfolio to £1,078.9m.

This was impressive given the fall in values witnessed by other property companies (due to the impact of rising interest rates) and reflects the strong and uncorrelated characteristics of the student accommodation sector.

Revenue was up 30% to £73.0m, while EPRA earnings per share was up 113% to 3.4p (2021: 1.6p). It has increased its divided by 10% to 2.75p per share.

Operational performance

The group achieved record occupancy of 99% for the academic year 2022/23. It also saw rental growth of 5.2% for the academic year.

Meanwhile, operating margins have been improved through its “clustering” strategy (whereby it looks to owns several assets in a cluster around targeted universities).

It expects to see like-for-like rental growth for the 2023/24 academic year of 6%. It has so far secured bookings at 65% of the portfolio and is targeting occupancy over 97% when term starts in September.

Actively managing the property portfolio

During the year, the company sold £53.1m of non-core properties across seven sales, in line with book value. The proceeds of which have been redeployed into its investment programme.

It also acquired Market Quarter Studios in Bristol for £19.0m, adding 92 beds to its Bristol “cluster”.

The company developed or refurbished 263 beds for the 2022/23 academic year and expects that over 250 beds will be refurbished for the 2023/24 year.

Balance sheet

The group has a loan to value (LTV) of 31.1%, with a weighted cost of debt of 4.0% (89% of debt has interest rate protection) and cash or uncommitted facilities of £95.8m.

Chief executive comments

Duncan Garrood, said: “2022 has been another year of razor-sharp focus on our strategic priorities, with significant progress made across all key metrics. The steps we have taken over the last five years to transform the operations of the business, improve our brand and focus on clusters of high quality accommodation are delivering tangible results, evidenced by the record revenue occupancy, significant growth in earnings and improved operating margin that the business achieved in the year.”  

“The business is now well positioned for growth and we continue to recycle the proceeds of non-core sales into our pipeline of developments and refurbishments. We operate in a resilient sector, and we continue to see high levels of demand for our product for the 2023/24 academic year which underpins our confidence in the outlook for the business and our commitment to our customer-first philosophy.”

ESP : Good year for Empiric Student Property

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