GCP Student keen to maintain dividend as some students go home
GCP Student Living updated the market in light of the Covid-19 coronavirus pandemic on Friday, saying it was monitoring the events as they related to student numbers.
The FTSE 250 real estate investment trust said around 79% of its annual income came from the direct letting of rooms to students, with a combination of nominations agreements with higher education institutions and long-term leases comprising the remaining 21%.
It said rental payments for direct let agreements with students were paid in three tranches for each academic year, with 40% received in September, 40% in January and the remaining 20% in April.
For the current academic year, the firm said t had received about 74% of all budgeted revenues due to it.
The board noted that, as of Friday, direct let bookings for the upcoming 2020-2021 academic year were ahead of bookings when compared with the same time last year.
It explained that students pay the company a deposit equal to two weeks rent at the time of booking.
“In the light of recent measures which restrict global mobility, enforce social distancing and result in closure of academic establishments, the company expects to receive materially reduced revenues than budgeted for the final term of the current academic year,” the board said in its statement.
GCP said it would “look favourably” on requests to forgo rents by residents seeking to return home for the rest of the current academic year on a case-by-case basis.
“Some students have already vacated their rooms; the company keeps under continuing review the number of students who have done so or have stated an intention to do so.”
The firm said its available banking facilities totalled £335m, of which £249m was drawn.
It said its borrowings had an average weighted maturity on its drawn debt of about six years from Friday, and its loan-to-value ratio, calculated as borrowings net of cash as a proportion of its total portfolio value, was 19%.
GCP’s fixed interest rate term facilities with PGIM Real Estate Finance were for an aggregate amount of £235m, and its facilities with Wells Fargo Bank were for an aggregate amount of up to £100m.
Those comprised a development facility for up to £55m, repayable on 21 December 2021, which was being drawn over time to fund the construction of Scape Brighton and which was £14m drawn currently, as well as a redrawable credit facility up to £45m, which was currently undrawn and which would expires on 25 July 2021.
The debt facilities include loan-to-value and interest cover covenants that were measured in accordance with each facility agreement.
“The group has maintained headroom against all such measures and is in compliance with all of its loan covenants,” the board said.
“The directors and the investment manager regularly monitor compliance with the group's financial covenants.”
In the event that the disruption caused by the Covid-19 pandemic continued through the rest of the 2020 calendar year, GCP said its rental income would be materially adversely impacted.
“The scale of this impact will depend on measures taken by global authorities, including the UK government, the approach taken by higher education institutions as regards in-person learning and how the situation develops and over what timescale.”
It said it currently benefitted from a “robust” balance sheet, including cash resources of £50m, conservative borrowing levels and an undrawn £45m redrawable credit facility.
The board said it currently intended to maintain the third interim dividend for the quarter ended 31 March at a level which was comparable to that paid for the quarter ended 31 December.
“The directors continue to monitor events as they develop and further announcements will be made as and when appropriate.”
At 1030 GMT, shares in GCP Student Living were down 2.77% at 123.29p.