Join our community of smart investors

Dig into GCP Student Living

Student beds in London are like hen's teeth
Dig into GCP Student Living

In a break with our conventional tip format, we're suggesting GCP Student Living (DIGS) as a buy – but not quite yet. The reason for the delayed gratification approach is that at the time of writing the student accommodation real-estate investment trust (Reit) is looking at ways to finance a noteworthy property transaction. Funding may well take the form of a non-pre-emptive placing, which was the case with an oversubscribed £70m, 142p a share fundraising a year ago that enhanced the net asset value (NAV), but coincided with the shares falling by about 5 per cent to the placing price. If history repeats, there could be a more attractive entry point following a placing. But even if the financing of the new deal does not knock the shares, the virtues of GCP's portfolio, the shares' attractive yield and the discount to forecast NAV still make us rate the shares a buy.

IC TIP: Buy at 145.2p
Tip style
Growth
Risk rating
Low
Timescale
Medium Term
Bull points

Modest gearing

Significant undersupply of student beds

High exposure to a supply-constrained London market

Portfolio fully occupied

Bear points

Dividend currently not covered by earnings

Student numbers could fall

To continue reading...
Join our Community of Smart Investors
  • Independent full-length company analysis
  • Actionable investment ideas and recommendations
  • Expert investment tools and data
  • Stock screens from Algy Hall
Have an account? Sign in