Eighteen months ago, Empiric Student Property (ESP) began its transformation from landlord to a fully-fledged owner/operator of student properties. Now, the first phase of its transition is almost complete. Management has been assiduously bringing more and more functions in-house, from facilities management to human resources, to give it greater control and, ultimately, maximise the return on its assets. Chief executive Tim Attlee said this, along with the launch of the Hello Student platform for marketing and managing its properties, allowed the group “to pull every available lever that affects revenue or cost”.
These changes have already led to vast improvements. The group beat its £10m target on administrative costs in 2018, clocking up £9.1m, down from £13.5m in the previous year. Gross margins expanded from 57 per cent to 62 per cent and occupancy rates climbed four percentage points to 96 per cent, just below the 97 per cent level management considers “full occupancy”. These improvements led to a 72 per cent improvement in adjusted EPS. In the coming year, the group is looking to rationalise the business and drive further cost reductions.
The annual dividend is expected to remain at 5p in the coming year while the group builds up to full coverage, before returning to growth in 2020. Analyst Numis is forecasting adjusted net asset value (NAV) of 109p per share in 2019, up from 106p at the end of 2018.
| EMPIRIC STUDENT PROPERTY (ESP) | ||||
| ORD PRICE: | 95p | MARKET VALUE: | £ 572m | |
| TOUCH: | 94.9-95.1p | 12-MONTH HIGH: | 100p | LOW: 81p |
| DIVIDEND YIELD: | 5.3% | DEVELOPMENT PROP: | £41.7m | |
| DISCOUNT TO NAV: | 10% | |||
| INVESTMENT PROP: | £929m | NET DEBT: | 61% | |
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015* | 103 | 14.2 | 9.67 | 4.00 |
| 2016* | 106 | 31.0 | 6.51 | 3.05 |
| 2017 | 104 | 20.8 | 3.84 | 5.55 |
| 2018 | 106 | 40.3 | 6.68 | 5.00 |
| % change | +2 | +94 | +74 | - |
| Ex-div: | 28 Feb** | |||
| Payment: | 22 Mar | |||
| *In 2016 the group's year-end changed from Jun to Dec, and the 2015 figures cover the period from 11 Feb 2014 to 30 Jun 2015 **Empiric's ex-dividend date has already passed | ||||
