TIDMDIGS
RNS Number : 5794L
GCP Student Living PLC
01 May 2020
GCP Student Living plc
("GCP Student" or the "Company", together with its subsidiaries
the "Group")
LEI: 2138004J4ID66FK38H25
NAV, portfolio update and dividend
Net Asset Value
GCP Student, the UK's first REIT focused on student residential
assets, today announces that at close of business on 31 March 2020,
the unaudited estimated EPRA net asset value per ordinary share of
the Company was 171.55 pence. The EPRA net asset value includes
income for the period (cum-income) and does not include a provision
for an accrued dividend for the quarter to 31 March 2020.
The EPRA net asset value (ex-income) was 169.97 pence per
ordinary share at that date, representing a quarterly decrease of
1.8% which has mainly been driven by the anticipated impact of the
Covid-19 pandemic on the Group's income for the remainder of the
2019/20 academic year.
Portfolio and management update
Valuation
At 31 March 2020, the valuation of the Company's portfolio was
GBP986.5 million representing a like-for-like decrease over the
quarter of 0.9%.
At that date the portfolio, of which 81% was located in and
around London, comprised eleven assets with c.4,100 beds, including
Scape Brighton which remains under construction, and the Net
Initial Yield on the operational portfolio was 4.44%.
The valuations have been reported on the basis of "material
valuation uncertainty" by the Company's independent valuer, in
accordance with recent guidance issued by the Royal Institution of
Chartered Surveyors (RICS) in light of the Covid-19 pandemic.
Covid-19 impact on academic year 2019/20 income
As announced on 27 March 2020, 74% of all the budgeted 2019/20
academic year income of GBP50.5m had been collected as at that
date. The Company has now collected 80%.
As a result of the flexibility offered to direct let tenants and
the wider economic impacts of Covid-19, the Directors anticipate a
reduction of c.GBP9.0m (18%) to all the budgeted 2019/20 academic
year income. The Company currently anticipates property operating
cost savings of c.GBP1.0m from lower occupancy reducing the impact
on earnings to c.GBP8.0m.
Direct let income
-- As announced on 27 March 2020, the Company advised it would
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. Direct let rents represent 79% of the 2019/20
academic year rent roll and the offer of forgoing rent related to
the final direct let instalment of c.20% due in April 2020.
-- At the time of the previous announcement 80% of direct let
income budgeted for the 2019/20 academic year had been collected.
This figure has increased to 84%. Currently c.40% of rooms remain
occupied or have residents that have decided to pay a reduced rent
for the remainder of the academic year in order to keep their room
for the storage of their belongings.
-- The Directors do not currently believe this figure will
materially increase over the rest of the academic year.
-- The anticipated reduction in forecast property operating
costs of c.GBP1.0m is attributable to reduced utility costs and
payroll costs. Vacant rooms are being prepared for the forthcoming
academic year on a rolling basis. This usually takes place in a one
week period and with the additional time available to do so the
Company will not incur the cost of external contractors to prepare
rooms ahead of the 2020/21 academic year.
-- The Directors, as advised by the Investment Manager, Gravis,
do not expect the Group to generate any material income in respect
of summer lettings at its Scape Bloomsbury asset. The budgeted
gross income for the coming summer was c.GBP1.1m.
-- The Company, in consultation with its Asset and Facilities
Managers, has adapted its marketing strategy to reflect current
circumstances with a particular focus on digital marketing and
existing residents.
-- Bookings for the forthcoming 2020/21 academic year are
marginally behind the same time last year
Nominations agreements and long-term leases
-- 21% of the Group's budgeted income is from nominations
agreements and long-term leases. At the date of this announcement
71% has been collected with respect to these agreements for the
2019/20 academic year.
-- Scape Shoreditch has a long-term occupational lease to a
WeWork subsidiary, which is part-guaranteed by its US parent
company WeWork Companies Inc. This lease comprises approximately
4.9% of the Group's annual budgeted income.
The long-term impact of the Covid-19 pandemic on the shared
workspace sector is currently unknown and difficult to quantify and
it is currently unclear how resilient providers such as WeWork will
be in the event of a sustained downturn.
Rental payments are received from WeWork quarterly in advance.
As at the date of this announcement the Group has received
approximately half of the payment due to it in respect of the
quarter to 23 June 2020. The Company, through the Investment
Manager, is currently in discussion with WeWork in relation to the
outstanding payment and continues to monitor the performance of the
Group's lease with WeWork.
Scape Shoreditch is a modern property located in a prime London
location, a two-minute walk from Old Street underground
station.
-- The Company has a long-term nominations agreement with a
subsidiary of INTO University Partnerships ("INTO"), a provider of
foundation courses, for 210 beds at its Scape East asset. Rents for
the agreement are received in advance of each of the three terms of
the academic year. INTO are currently in arrears in respect of
their latest rental instalment and the Company, through the
Investment Manager, is in discussions with Into with regard to
this.
-- Rental income in respect of the Group's lease at Circus
Street, Brighton, continues to be received in line with
expectations. The 450-bed student accommodation building is
contracted on a 21-year lease with annual uplifts of RPI plus 50
basis points (capped at 5% and floored at 2%) to a subsidiary of
Kaplan Inc, a global education provider.
-- The nominations agreement for 100 beds at our Scape Greenwich
asset has been treated in line with our direct let tenants, i.e.
released from the final instalment of the 2019/20 academic year on
a case by case basis.
Forward funding agreements
-- On 23 May 2019, the Company announced that it had commenced
the forward funding of Scape Brighton, a large-scale 555-bed
development located on the primary campus of the University of
Brighton.
As a result of a combination of social distancing measures and
supply chain disruption arising from the Covid-19 pandemic, the
construction of Scape Brighton is proceeding with reduced levels of
activity. Whilst it remains the expectation that Scape Brighton
will be operational for the 2020/21 academic year, there is a risk
that completion of construction is delayed beyond the start of the
academic year.
Should construction not be completed ahead of the scheduled
move-in date for students who have booked accommodation at Scape
Brighton, the Group shall be responsible for accommodating such
students, at its cost, until such time that construction has
completed.
The remainder of the construction costs at Scape Brighton are
being funded through a GBP55m development loan facility, which is
c.GBP27m drawn as at the date of this announcement and hence
completion of the building should not impact the Company's cash
reserves.
The Company benefits from licensing fees which provide a 5.5%
per annum coupon until the site reaches practical completion.
-- The Company is also forward funding c.30,000 square feet of
grade A offices as part of the wider site at Circus Street,
Brighton. This remains under construction and the Company continues
to receive licencing fees which provide a 5.5% coupon on deployed
cash through the construction phase.
Pipeline
-- On 7 April 2020, the Company announced that the conditional
forward purchase agreement in respect of Scape Mile End Canalside
("Scape Canalside") had terminated. The Directors continue to
assess whether the acquisition of Scape Canalside may be funded
whilst maintaining the Group's liquidity and conservative borrowing
levels, particularly in this period of uncertainty.
Cash and available debt facilities
-- The Company currently benefits from a robust balance sheet,
including cash resources of c.GBP58.4 million, conservative
borrowing levels and an undrawn GBP45 million redrawable credit
facility at the date of this announcement.
-- 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 20%.
Dividend
The Board is pleased to announce a third interim dividend of
1.58 pence per ordinary share, in respect of the quarter ended 31
March 2020.
The dividend will be paid on 8 June 2020 to ordinary
shareholders on the register at 11 May 2020. The dividend will be
paid as 1.30 pence per ordinary share as a REIT property income
distribution ("PID") in respect of the Group's tax-exempt property
rental business and 0.28 pence per ordinary share as an ordinary UK
dividend ("non-PID").
In the event that the disruption caused by the Covid-19 pandemic
continues into the 2020/21 academic year, the Company's rental
income will be 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 Directors continue to keep wider events and the
Company's operations under review in respect of any future
dividends which may be declared by it.
Additional information on the Company's portfolio can be found
in the factsheet for the period ended 31 March 2020, which will be
published shortly and will be available at:
www.gcpstudent.com/literature
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 March 2020, its property portfolio was valued
at GBP986.5 million.
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END
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