Empiric Student Property (ESP) H1 2024 earnings summary

Executive summary

• Transformation plan and Hello Student platform drove strong results, with KPIs and customer satisfaction at record levels (NPS +37, 87% satisfaction).

• Like-for-like rental growth reached 10.5% for AY 23/24 and is forecast above 6% for AY 24/25, with occupancy at 99% for AY 23/24 and expected to exceed 97% for AY 24/25.

• Portfolio is now 95% in prime/super-prime locations, 87% aligned to top-tier universities, with valuation up 1.3% to £1.1bn and EPRA NTA per share up 1.7% to 122.8p.

• Disposal program completed with £115m in sales above book value, redeploying capital into strong locations and refurbishments.

• Two new acquisitions in H1, with further pipeline and major refurbishments supporting growth strategy.

Financial highlights

• H1 2024 revenue increased 3% to £42.4m, with like-for-like rental growth of 10.5% and gross margin up 0.5 pts to 72.2%.

• Administrative costs rose 9% to £7.1m due to growth initiatives and inflation.

• Finance costs increased 10% to £9.9m, including a £0.9m non-recurring refinancing charge.

• Adjusted EPS for H1 was 2.4p (+2.8% YoY); reported EPRA EPS 2.3p; IFRS profit £24.8m.

• H1 dividend up 7.7% to 1.75p/share; minimum full-year dividend target of 3.5p, 8% higher than prior year.

Outlook and guidance

• Like-for-like rental growth for AY 24/25 expected to exceed 6%, with occupancy rates above 97%.

• Gross margin expected to moderate to 70% for FY due to energy cost increases as fixed contract ends.

• Dividend guidance maintained at minimum 3.5p per share for 2024.

• No material refinancing required until 2028; 95% of debt fixed or capped.

• Rental increases for 2025-26 expected to be a couple of points above inflation, with uplift from refurbishments.