GCP Student Living grows with focus on London

Student residential asset-focussed real estate investment trust GCP Student Living announced its results for the six months to 31 December on Friday, with rental income rising to £13m from £9m in the first half of the prior financial year.

The London-listed firm said its net operating margin for the period was 79%, improving from 76%, and rental growth was 3.9%, falling from 4.5% a year earlier.

Total return for the period stood at 15.1%, nearly double the 7.8% reported in the first half of last year, and dividends for the period totalled 2.86p per share, up from 2.82p.

The EPRA net asset value per share was 138.17p, rising from 136.93p.

Through the period, GCP Student Living’s share price per ordinary share was 147.5p, up from 130.75p, and the value of its property portfolio improved to £465.7m from £424.8m, making for a loan-to-value ratio of 25%.

“On behalf of the board, I am pleased to report a period of stable performance for the company,” said chairman Robert Peto.

“The focus on assets offering long-term rental growth prospects has delivered full occupancy across the portfolio and rental growth of 3.9% compared with the 2015/16 academic year, substantially ahead of the national average of 1.9%.

“The company continues to deliver an attractive dividend return to shareholders, with 2.86 pence per share paid during the period, and has generated annualised total returns since IPO in 2013 of 16.3%.”

Peto said the board believed the company’s migration from the Specialist Fund Segment to the Premium Segment of the Main Market of the LSE would broaden its investor base in the long term and better position the firm to meet the liquidity requirements of a wider audience of investors.

“Further, the oversubscribed issue of new ordinary shares in February 2017, raising gross proceeds of £80.6m, was a pleasing endorsement of support for the company by existing and new investors alike.

“These proceeds will be used to acquire Woburn Place, which is located in a prime central London position in WC1 and in close proximity to several globally recognised universities.”

Whilst the long-term implications of Brexit and political events in the US remained unknown, Peto explained, he said the board remained confident that the company’s portfolio would continue to deliver stable performance due to its defensive income qualities as well as offering the prospect for continued rental growth.

“The group’s focus on London, which has the largest student population of any city in the UK and is a global centre of academic excellence, continues to position the company to benefit from strong structural supply and demand imbalances in the student residential accommodation market.

“Looking forward, the focus will continue to be on sustainable rental growth, to which end, the board is encouraged by the investment manager’s ability to secure attractive assets in and around London.”