Empiric Student Property has reported a 2% rise in EPRA NAV per share during the 12 months to 31 December compared with the previous year, alongside an increase in property valuation.
EPRA NAV per share stood at 106.2p per share. The value of its portfolio grew to £970.6m, which represented a 4.8% increase on a like-for-like basis.
As at 31 December, the group had 95 assets with 9,397 beds. The group, which is financed with a loan-to-value ratio of 30.6%, said it will continue to explore the potential disposal of non-core assets from the portfolio.
That said, Brexit uncertainty could potentially slow this strategy down. Tim Attlee, chief executive of Empiric, told EG that overseas investment has stalled while an outcome remains unclear.
Attlee said: “We identified a group of non-core assets that we would have liked to dispose of at the tail end of last year. We embarked on a sales process and attracted a number of competitive bids.
“We agreed heads of terms with a buyer but the investment committee that controls the fund, which is based in Europe, isn’t even meeting to consider UK acquisitions – not just ours, but across the board – until there is certainty on the outcome of Brexit.
“The level of activity across the property industry is very low this quarter. The amount of capital transactions has dramatically reduced – nobody knows what to do.
“As soon as there is some certainty and the transaction can proceed, then we will proceed with it. We are also looking more generally at opportunities to divest and invest. It is a dynamic process.”
Cutting costs
Towards the end of 2018, Empiric agreed a new £86.1m, 10-year debt facility with a fixed interest rate of 3.196%. This means it now has £390m of financing facilities, with an average term of 7.6 years and average interest cost of 3.26%.
During the year the group also made efficiency improvements, including bringing facilities management for 27 of its assets in-house, with the remainder coming in-house from April 2019.
The business said this enabled it to achieve a gross margin of 62% for the year, up from 57% in 2017 and on track to reach its 70% target.
Lynne Fennah, chief financial officer of Empiric, said: “We have had a brutal year in a sense because [external functions such as HR and IT] were previously outsourced, which we have been bringing in-house.
“Facilities management will be in-house by the end of March, and HR by the end of April. So the business looks very different to a year ago.
“We will complete that in-sourcing and our priority is to continue to drive revenue up and costs down – there is still more to do, but we are well on track.”
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