Empiric Student Property release interim results

Empiric Student Property releases its interim results for the six-months ended 30 June 2023, demonstrating growth in earnings and dividend.

ESP South Bridge. Empiric Student Property has released its interim results for the six-months ended 30 June 2023 | PBSA News
ESP South Bridge.

Purpose-built student accommodation (PBSA) operator Empiric Student Property has released its interim results for the six-months ended 30 June 2023, demonstrating growth in earnings and dividend supported by record occupancy and like-for-like rental growth. Earnings growth has been shown to underpin a 30% increase in the first half dividend, with revenue increasing 16.0% to £41.3m.

EPRA EPS increased 18.5% to 2.3p and portfolio valuation stands at £1,064.0m, reflecting a 1.0% net like-for-like increase. The company had a net initial yield of 5.3% whilst EPRA NTA per share increased 1.6% to 117.3p.

Empiric Student Property reports its first half dividends paid and payable of 1.625p, 30% ahead of the first half of 2022 and in line with its target, with a total accounting return of 3.1%.

There is still a strong demand for the academic year 2023/24, including the best re-booker campaign. Revenue occupancy for the academic year 2023/24 was at 98% – and continues to track ahead of the prior year, with like-for-like growth in average weekly rents now expected to be around 9% .

Continued focus on operational efficiency with clustering strategy and refurbishments have provided profitable growth, as 254 newly refurbished beds are set to be delivered across target cluster markets for the 2023/24 academic year.

Finance and administrative costs continue in line with guidance as the Gross Margin improved to 72% on 30 June 2023 – expected to moderate in line with guidance of 70% across the full year.

Post-Grad roll-out continues with the planned opening of Empiric Student Property’s second Post-Grad offering in Nottingham for the academic year.

“The business has experienced a very strong start to the year. Following our best-ever re-booker campaign, the booking cycle for academic year 2023/24 has tracked significantly ahead of the prior year. Our accommodation is now effectively full for the forthcoming academic year with occupancy at 98%, a level achieved earlier than ever before.

“We are confident that like-for-like rental growth of around 9% will now be achieved, significantly ahead of previous guidance. The Company is in great shape with improving operating margins, increased earnings per share, a robust balance sheet, and significantly enhanced portfolio quality following ongoing refurbishments and execution of our non-core disposal programme.

“At an operational level, customer satisfaction measured through our improving Net Promoter Scores and the Platinum Operator certification awarded to our Hello Student brand, combined with the acute undersupply of high-quality student accommodation, is driving increased re-bookings and greater demand for our rooms. 2023 is firmly on track to be another record year for the Company.”

Duncan Garrood, Chief Executive Officer, Empiric Student Property plc

Empiric Student Property’s disposal programme is on track to complete in 2023. The non-core disposal programme generated £34.6m from the sale of four properties.

Contracts have exchanged for the sale of two further properties post 30 June 2023, collectively generating a further £8.8m.

Disposals achieved in line with book values demonstes a robust valuation approach and non-core properties now represent only 4% of the total portfolio.

On the robust balance sheet, property loan to value is at 30.3%, comfortably ahead of the long-term target of 35%.

Weighted average cost of debt is now at 4.3% (31 December 2022: 4.0%), 88% with interest rate protection.

The operator has cash and undrawn committed facilities of £75.6m with terms agreed for the refinancing of 2024 & 2025 variable debt maturities.

Operating platform Hello Student is set to deliver a market leading service following the continued improvement in the Global Student Living Index Net Promoter Score from 27 to 32, which compares favourably against the PBSA average of 14 and nine for university halls.

Recently, Hello Student were awarded Platinum Operator certification by Global Student Living.

Business and market outlooks remains positive for H2 2023, with the revenue occupancy target already achieved for the 2023/24 academic year; earlier than last year.

Empiric Student Property are targeting a minimum dividend for the year to 31 December 2023 of 3.25 pence per share and are actively exploring the growth of Post-Grad opportunities, with a view to accelerating the roll out of this product in key strategic locations.