LONDON (Alliance News) - Empiric Student Property PLC on Monday said letting for its operating property portfolio is progressing ahead of this time last year, and said the UK's decision to leave the European Union will have a limited impact on its operations.
The student accommodation provider said 70% of its portfolio has been let for the academic year commencing in September, which is higher than at this time last year. It is also achieving an annual rental uplift for the 2016/17 academic year of approximately 2.8%, with a gross annualised rent roll of approximately GBP49 million.
Empiric added that, following the result of the EU referendum, it is "not in a position to determine exactly what the consequences will be for the higher education sector in the UK", but said it believes the impact on its operations will be limited.
Empiric noted that EU students represent just 6% of all full-time students in the UK due primarily to an historical cap on the number of EU students, as well as the higher overall cost of studying in the UK compared to continental Europe.
Also, while EU students may be subject to more stringent visa requirements and higher fees, there is strong demand from other international students, Empiric said, while the potential long-term devaluation of sterling would make the UK more affordable for international students.
There also is a significant increase in expectations for a UK interest rate cut, Empiric noted, which would be to its benefit.
Empiric added that it intends to terminate its investment support agreement with Revcap Advisors Ltd, under which Revcap was appointed to provide certain investment support services. Empiric is required to give 12 months' written notice to terminate the agreement and will serve notice on June 30.
The company said it has now grown to a size where it no longer needs to draw as heavily on Revcap's support services.
Empiric's property portfolio currently comprises 7,265 beds, which are either already operating or under development, across 75 assets in 29 university cities and towns in the UK. By the start of the 2016/17 academic year, Empiric anticipates that 65 of the assets, comprising 5,853 beds, will be operational.
The company added that it has recently entered into agreements with developers in relation to two forward-funded projects. One is for 150 beds at Bonhay Road in Exeter in the 2017/18 academic year, and the other is for 63 beds at Trippet Lane in Sheffield also in the 2017/18 academic year.
In addition, Empiric acquired a ground floor retail unit adjacent to its Buccleuch Street property in Edinburgh which will be converted to provide additional shared amenities as well as an additional two studios. Conversion is expected by the end of 2016, giving the property a total of 88 beds.
"Empiric has experienced another exciting six months and we are particularly pleased that a significant number of assets which were under development have reached practical completion or are on schedule to reach practical completion in the next few months, in time for the 2016/17 academic year, with the resultant uplift in rental income and valuation," Chief Executive Paul Hadaway said in a statement.
"With the Brexit result, we can expect some market volatility over the foreseeable future, but we are confident that our business model will prove to be robust," he added.
Shares in Empiric were trading down 6.0% at 102.25 pence on Monday.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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Empiric (ESP)