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Empiric Suspends Financial Guidance

Posted by Richard Ward in

Image courtesy of Flickr, Creative Commons

Empiric Student Property has decided to suspend all financial guidance, as well as future dividends in response to Covid-19, as it looks to conserve its liquidity position.

As at the end of last year, the group had debt facilities of £390 million and a Loan to Value ratio of 33%. Based on drawn facilities, the group has significant headroom against its banking covenants and its Interest Cover Ratio remains well positioned. The group also has £10 million of cash and £57 million of undrawn debt facilities.

Whilst Empiric is in a strong contractual position, the group will look favourably on a case by case basis requests from residents who wish to be released from their rent and lease obligations from April 25th onwards. The group is anticipating a worse case scenario and reduction in revenue of up to c.£21 million for the 2019-20 academic year.

With continued market uncertainty, the group will further increase its focus on operational cost management and will take action where needed to balance the short and long-term interests of the business. The group has also taken the decision to defer developments where it is cost effective to do so along with non-essential capital expenditure.

These measures, in addition to suspending its dividend, will provide the company with a reduction in cash outflows of net c.£26 million, ensuring it retains cash headroom through the remainder of 2020.

For the 2012-21 academic year, the group has reported marginally better bookings compared to the same period of last year, albeit new bookings are being made at reduced levels.

Therefore, there remains a risk of lower occupancy and rental rates for 2020-21 compared to current forecasts.

The company will continue to monitor the situation and impact from Coronavirus and will keep shareholders updated on any material developments.