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Unite Students to Forgo Rents

Posted by Richard Ward in

Image courtesy of Flickr, Creative Commons

Unite Students has released its latest update on the Coronavirus, providing reassurance to investors that it is well positioned to withstand the impact of the outbreak.

The group has highlighted that it maintains a strong balance sheet and liquidity position with significant headroom against debt covenants. The company also has £291 million in cash and undrawn debt facilities if needed.

Despite a strong contractual position, the company has taken the decision to forgo rent from mid-April onwards for students who chose to return home for the remainder of the 2019-20 academic year. Unite will also continue to work closely with its University partners through its existing nomination agreements.

For its international students unable to return home at the end of their tenancies, Unite Students will provide accommodation over the summer free of charge.

Whilst forgoing rent will reduce the company's cash flow by £90-125 million in 2020, it will be more than offset by the cancellation of the final dividend for 2019, as well as deferring development and non-essential operational capex.

The company will continue to review its cost base and has the ability to make further savings if required. These measures will ensure the business retains cash headroom through the remainder of 2020.

For the 2020-21 academic year, Unite has recorded a reservation rate of 78%, which is in line with the same time last year. Although the business has seen a reduced number of new offers to customers in the past week, the level of cancellations and expired bookings has remained in line with previous years.

The company has also emphasised that it is ready to shift its marketing strategy to target domestic students if there is a reduction in demand from international students due to continued travel restrictions. However, there remains a risk of lower occupancy and rental rates for 2020-21 than previously anticipated.

Due to market uncertainty, the company is to suspend guidance for like-for-like rental growth and EPRA EPSA for 2020.