Empiric Student Property says its portfolio performance has been hit by a number of operational efficiencies and it is working to remedy these.
In a trading update, the REIT said operating margins were between 57% and 60% for the year, while administration expenses for 2018 were expected to be £13.6m.
Chief executive officer Paul Hadaway and chief investment officer Tim Attlee have waived their rights entirely to a bonus for the 2017 financial year, while chief finance officer Lynne Fennah has completed a financial and operational review of the group.
The trading statement said: “The performance of the group’s operating portfolio has been impacted by a number of financial and operational inefficiencies within the group and its supply chain, which have adversely affected the company’s operating margins and dividend cover.”
Empiric listed in June 2014 and has expanded considerably, particularly since 2016. It now has 84 operating assets with 7,841 bedrooms. Its management arm Hello Student operates 61 buildings and the remaining 23 buildings are operated by third-party providers.
In the new year the REIT is targeting an operating margin above 70% and a reduction of administration expenses to £10m.
Baroness Dean, chairman of Empiric Student Property, said: “The review undertaken has identified a number of operational inefficiencies which have adversely impacted performance. The board is acutely aware that performance has fallen below expectations and is fully focused on delivering operational efficiencies.”
Alongside a number of operational savings, the company said it had conducted a review of cities where it owns fewer than 200 beds and would either consider further investment or sales.
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