TIDMDIGS
RNS Number : 7837H
GCP Student Living PLC
27 March 2020
GCP Student Living plc
("GCP Student" or the "Company", together with its subsidiaries
the "Group")
LEI: 2138004J4ID66FK38H25
Portfolio update and Covid-19
The Directors of GCP Student, the UK's first REIT focused on
student residential assets, continue to monitor global events as
they relate to student numbers, including the potential impact of
the Covid-19 pandemic. Of paramount importance to the Directors and
the Investment Manager is the wellbeing of the residents and staff
in the Company's buildings. Consideration is also being given to
the ability of students to occupy their rooms, whether as a result
of closure of academic institutions or other unavoidable
factors.
Substantial majority of revenues for the 2019/20 academic year
have been received
GCP Student receives income from direct lets of rooms to
students, comprising approximately 79% of its annual income, and a
combination of nominations agreements with higher education
institutions and long-term leases which comprise the remaining
21%.
-- Rental payments for direct let agreements with students are
paid in three tranches for each academic year, with c.40% received
in September, c.40% in January and the remaining c.20% in April.
For the current academic year, the Company has received
approximately 74% of all budgeted revenues due to it.
-- The Board notes that, at the date of this announcement,
direct let bookings for the forthcoming 2020/21 academic year are
ahead of bookings as compared with the same time last year.
Students pay the Company a deposit equal to two weeks' rent at the
time of booking.
-- In the light of recent measures which restrict global
mobility, enforce social distancing and result in closure of
academic establishments, the Company expects to receive materially
reduced revenues than budgeted for the final term of the current
academic year.
-- The Company, in consultation with its Asset and Facilities
Managers, will look favourably upon requests to forgo rents by
residents seeking to return home for the remainder of the current
academic year on a case-by-case basis. Some students have already
vacated their rooms; the Company keeps under continuing review the
number of students who have done so or have stated an intention to
do so.
Conservative borrowing levels
-- At the date of this announcement, the Group's available
banking facilities totalled GBP335 million, of which c.GBP249
million was drawn.
-- The Group's borrowings have an average weighted maturity on
its drawn debt of approximately six years from the date of this
announcement. The Group's Loan to Value ("LTV"), calculated as
borrowings net of cash as a proportion of the Group's total
portfolio value, is 19%.
-- The Group's fixed interest rate term facilities with PGIM
Real Estate Finance are for an aggregate amount of GBP235
million.
-- The Group's facilities with Wells Fargo Bank N.A. are for an
aggregate amount of up to GBP100 million and comprise i) a
development facility for an amount of up to GBP55 million repayable
on 21 December 2021 which is being drawn over time to fund the
construction of Scape Brighton and which is GBP14 million drawn at
the present time and ii) a redrawable credit facility of an amount
of up to GBP45 million which is currently undrawn and which expires
on 25 July 2021.
-- The debt facilities include LTV and interest cover covenants
that are measured in accordance with each facility agreement. The
Group has maintained headroom against all such measures and is in
compliance with all of its loan covenants.
The Directors and the Investment Manager regularly monitor
compliance with the Group's financial covenants.
Defensively positioned with strong capital resources
In the event that the disruption caused by the Covid-19 pandemic
continues through the remainder of the 2020 calendar year, the
Company's rental income will be materially adversely impacted.
-- The scale of this impact will depend on measures taken by
global authorities, including the UK government, the approach taken
by higher education institutions as regards in-person learning and
how the situation develops and over what timescale.
-- The Company currently benefits from a robust balance sheet,
including cash resources of c.GBP50 million, conservative borrowing
levels and an undrawn GBP45 million redrawable credit facility.
-- The Directors currently intend to maintain the third interim
dividend in respect of the quarter ended 31 March 2020 at a level
which is comparable to that paid in respect of the quarter ended 31
December 2019. For the avoidance of doubt, the Directors will
continue to keep wider events and the Company's operations under
review. The Directors currently expect to declare the third interim
dividend on or around 1 May 2020.
The Directors continue to monitor events as they develop and
further announcements will be made as and when appropriate.
NOTE - Student market fundamentals and the London advantage
-- For the 2019/20 academic year the number of students applying
to higher education in the UK exceeded the number of places
available, with c. 165,000 students unable to secure a place, of
which a significant majority were domestic students. In the event
of a sustained period of measures which restrict global mobility,
there remains an excess of applicants to places available for
higher education in the UK driven by domestic students.
-- Student applications for full time higher education for the
2020/21 academic year have increased by 1.2% year-on-year,
supported by statements from the UK Government and the Universities
Minister recently suggesting that the admissions cycle for higher
education should not be disrupted by the Covid-19 pandemic. A
record number of domestic 18 year olds applied (275,000), and the
number of 18 year olds in the UK is projected to increase each year
for the next ten years.
-- Demand for full-time higher education is not evenly
distributed across the UK, with higher ranked universities and
certain locations attracting greater demand for places from
domestic and international students alike.
-- Demand for courses in London remains strong. London is home
to 23 universities, with more universities ranked in the top 40 by
The Times Higher Education World University Rankings than any other
city in the world. Approximately 30% of the 2.4 million students in
the UK study in London and the south east of England. In 2019,
London provided an estimated 110,000 purpose-built student beds for
a population of c.400,000 full time students, of whom c.275,000
were domestic students.
-- Approximately 85% of the Company's portfolio is located in and around London.
For further information please contact:
Gravis Capital Management Limited +44 020 3405 8500
Nick Barker
Dion Di Miceli
Stifel Nicolaus Europe Limited +44 020 7710 7600
Mark Bloomfield
Mark Young
Alex Miller
Buchanan / Quill +44 020 7466 5000
Helen Tarbet
Henry Wilson
About GCP Student
The Company was the first student accommodation REIT in the UK,
investing in modern, purpose-built, private student residential
accommodation and teaching facilities.
Its investments are located primarily in and around London where
the Investment Manager believes the Company is likely to benefit
from supply and demand imbalances for student residential
accommodation. GCP Student's property portfolio comprises eleven
assets with c.4,100 beds, including one asset which is under
construction. At 31 December 2019, its property portfolio was
valued at GBP987.3 million.
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END
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