Empiric ‘optimistic’ as falling revenues start to reverse
Revenue at Empiric Student Property fell by 24% to £26m over the past six months, but pretax profit climbed.
The student accommodation REIT posted H1 profit before tax of £7m, a significant improvement on H1 2020’s £14.4m loss.
Empiric saw occupancy levels fall from 84% in the previous half year to 65%, while rental growth fell to 1.3% from last year’s 1.8%. Its margins also slimmed from 68.6% in H1 2020 to 57.9%.
Revenue at Empiric Student Property fell by 24% to £26m over the past six months, but pretax profit climbed.
The student accommodation REIT posted H1 profit before tax of £7m, a significant improvement on H1 2020’s £14.4m loss.
Empiric saw occupancy levels fall from 84% in the previous half year to 65%, while rental growth fell to 1.3% from last year’s 1.8%. Its margins also slimmed from 68.6% in H1 2020 to 57.9%.
However, operating profit rose to £13.2m, including a fair value gain of £1.8m, against last year’s £26.2m loss. Its initial yield of 5.59% is also marginally better than the 5.61% clocked at the beginning of the year.
Empiric’s total portfolio value fell in H1 to £995.5m, down from just over £1bn in 2020, as Empiric sold four properties for £18.1m, generating a profit of £1.7m above book value.
The REIT said it would continue to sell around £100m of non-core assets, with plans to reinvest £44m into refurbishing its core estate. Empiric owns 91 properties, totalling 9,170 beds, down from December’s 9,396 beds. Only 87 of those, with 8,543 beds, were revenue-generating at the period end. However, Empiric noted that 65% of its beds, including those in its pipeline, were located in Russell Group university towns. CBRE classes 90% of the portfolio as either prime or super prime.
The valuation reflected a £20m Covid deduction, based on the lower levels of international students expected and previous void periods.
CEO Duncan Garrood said: “Whilst we have been impacted by the pandemic, we remain encouraged by the resilience of the business, which is underpinned by the operational transformation we have undergone over the past three years, and our underlying business outlook remains positive.”
He added that Empiric was “optimistic” that a commitment to face to face teaching and a rise in student applications “will result in occupancy levels for the upcoming 2021/22 academic year continuing to grow in the coming weeks”.
Empiric plans to resume dividend payments in Q4 with a payment of 2.5p per share.
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Photo by Empiric Student Property
