Empiric Student Property’s (ESP) efforts to improve operational efficiency bore fruit last year, helping cut overheads by 5 per cent and improving the gross margin. Management hopes that in-sourcing its revenue management systems and two developments will help boost earnings and improve dividend cover to 95 per cent this year, from 88.5 per cent in 2019.
However, with overseas students comprising 65 per cent of the tenant base, attention has naturally turned to the potential disruption from the Covid-19 outbreak. As of two days prior to the release of these results, bookings for the 2020/21 academic year were in line with the same point last year, management said. Occupancy for the 2019/202 academic year stood at 94 per cent, with rent either paid upfront or backed by a UK-based guarantor.
The group’s loan-to-value ratio (LTV) stood at 32.7 per cent, below a long-term target ceiling of 35 per cent and well short of the lowest LTV covenant trigger of 50 per cent on its £32.8m facility with Allied Irish Banks. The group also has an additional £134m of ungeared assets that could be drawn into debt pools if needed.
Numis placed its existing forecast net asset value of 109p a share at the end of December 2020 under review.
| EMPIRIC STUDENT PROPERTY (ESP) | ||||
| ORD PRICE: | 51p | MARKET VALUE: | £308m | |
| TOUCH: | 50.3-51p | 12-MONTH HIGH: | 104p | LOW: 50p |
| DIVIDEND YIELD: | 9.8% | DEVELOPMENT PROPERTIES: | £29.7m | |
| DISCOUNT TO NAV: | 54% | NET DEBT: | 50% | |
| INVESTMENT PROPERTIES: | £999m | |||
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015* | 103 | 14.2 | 9.7 | 4.00 |
| 2016* | 106 | 31.0 | 6.5 | 3.05 |
| 2017 | 104 | 20.8 | 3.8 | 5.55 |
| 2018 | 106 | 40.3 | 6.7 | 5.00 |
| 2019 | 110 | 54.8 | 9.1 | 5.00 |
| % change | +4 | +36 | +36 | |
| Ex-div: | 27 Feb | |||
| Payment: | 20 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. **Dividends paid quarterly, XD and payment dates refer to fourth quarterly dividend of 1.25p a share | ||||
