GCP Student Living posts decent first half as it monitors coronavirus outbreak

GCP Student Living reported a total shareholder return of 24.3% for the first half on Friday, making for an annualised total shareholder return since its initial public offering of 15.6%.

The FTSE 250 company said that compared well to its long-term target return of between 8% and 10%.

It paid dividends of 3.15p per share for the six month period ended 31 December.

The firm said its EPRA net asset value per share, cum-income, rose to 174.71p for the period, up from 157.93p a year earlier, while its EPRA net asset value ex-income was 173.13p per share as at 31 December.

Total rental income for the period was £24.6m, with the firm reporting student rental growth of 4.4%, improving from 3.5% at the same time last year.

GCP Student Living completed an equity raise of £77m during the half-year, through a “substantially oversubscribed” placing of new ordinary shares, and also noted its inclusion in the FTSE 250 from 18 September.

It described its portfolio as being of “high quality”, with 11 assets consisting of around 4,100 beds primarily in and around London, with a valuation of £987.3m as at 31 December, up from £841.5m in the first half of last year.

GCP said its had a fully-occupied portfolio, and reported a net initial yield for the operational portfolio of 4.42%.

“The company's focus on assets in and around London has delivered another interim period of strong net asset value performance,” said chairman Robert Peto.

“This performance can be attributed to strong year-on-year student rental growth in excess of both inflation and the national average for student accommodation across a fully occupied portfolio of assets.

“The company's annualised total shareholder return since its initial public offering in 2013 of 15.6% has substantially exceeded the 8% to 10% target at launch and is more than double the return of the FTSE All-Share Index over that period.”

Peto said the company provided shareholders with access to a portfolio of private student accommodation assets in locations which continued to benefit from strong supply and demand imbalances, resulting in full occupancy, rental growth and yield compression.

“The attraction of the UK, and London in particular, for domestic and global students alike remains evident.

“The UK has some of the highest-ranking universities in the world, with three of the top ten institutions in 2020.

“Furthermore, education remains a core sector for the UK economy, contributing £95 billion and supporting nearly one million jobs.”

Peto said GCP’s board and its investment manager were monitoring events as they related to student numbers, including relations between the US, the UK and China as well as the potential impact of the Covid-19 coronavirus outbreak - both in terms of the ability of students to attend universities and occupy student rooms, and in terms of the wellbeing of the residents in its buildings.

“The board notes that, at the date of publication, bookings for the forthcoming academic year are in line with 2019-2020 and residents for the current academic year continue to occupy their rooms.

“Student applications for full time higher education for the 2020-2021 academic year have increased by 1.2% year-on-year.”

At 1052 GMT, shares in GCP Student Living were down 5.15% at 184p.