GCP warns on £9m hit to earnings

GCP Student is expecting a circa £9m reduction in its earnings for the 2019/20 academic year. In a market update, the UK student accommodation REIT said it had collected 82% of its budgeted income and 84% of its budgeted direct let income for 2019/20 and its directors do not believe this will materially increase over the rest of the academic year. The directors also expect its direct-let revenue for the first quarter of its current financial year to be “materially reduced”. Bookings across GCP Student’s portfolio stand at at 55% for the forthcoming 2020/21 academic year. The average level for the same time of year over the past five years has been 74%. Its investment manager, Gravis, believes students are delaying booking accommodation, GCP Student said. However, the firm added that bookings have shown increases for the past six weeks. GCP has also collected 83% of payments relating to nomination agreements and long-term leases, including a long-term lease with WeWork at Scape Shoreditch. The firm said WeWork had only paid around half of its March and June quarterly rent and it remained in discussions with the serviced office provider over the outstanding monies due. In addition, foundation course provider INTO University Partnerships, which GCP has a long-term nominations agreement with for 210 beds at its Scape East asset, is in arrears in respect of its latest rent payment and discussions are ongoing. GCP student also reported a 0.5% like-for-like uplift over the quarter ended 30 June 2020 taking its portfolio value to £1bn. It net initial yield on the operational portfolio was 4.44% EPRA net asset value per ordinary share was 171.78p, representing a quarterly increase of 0.1%.   To send feedback, e-mail louise.dransfield@egi.co.uk or tweet @DransfieldL or @estatesgazette