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Buy Empiric Student Property REIT (ESP) - Recovery?

ReallyVeryFoolish
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Buy Empiric Student Property REIT (ESP) - Recovery?

#323825

Postby ReallyVeryFoolish » July 5th, 2020, 9:39 am

Well, students are not going to stay away from university forever. Bombed out REIT with zero current income but back in business again the next academic year? Quarterly dividends will start rolling again within the next six months?

RVF

mc2fool
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Re: Buy Empiric Student Property REIT (ESP) - Recovery?

#323857

Postby mc2fool » July 5th, 2020, 11:32 am

You might also look at GCP Student Living (DIGS), which has been the notably better performer all along. The most obvious difference between the two is that DIGS' properties are pretty much all in London whereas ESP's are pretty much all not.

https://www.graviscapital.com/funds/gcp-student/about
https://www.theaic.co.uk/companydata/0P0000ZQAB
Covid-19 impact statement: https://www.investegate.co.uk/gcp-stude ... 00055794L/

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Re: Buy Empiric Student Property REIT (ESP) - Recovery?

#323909

Postby jonesa1 » July 5th, 2020, 5:02 pm

mc2fool wrote:You might also look at GCP Student Living (DIGS), which has been the notably better performer all along. The most obvious difference between the two is that DIGS' properties are pretty much all in London whereas ESP's are pretty much all not.


Many London based students rent from the general rented sector, some of my daughters' peer group (including one of my daughters) are not renewing leases because they have moved back with parents, are successfully working remotely and are waiting to see how things pan out before committing to a new lease. Others are finding that the prices of new leases are significantly lower than a year ago (presumably in response to demand reducing). In the short to medium term that must have an impact on student housing. In the medium to longer term there are 2 additional risks:

1) the numbers of over-seas students may not recover (many are from China, where political relationships with the UK are not great, even without the perception that the UK isn't safe because of the high numbers of Covid-19 cases). This would also have a devastating impact on the finances of many universities, potentially resulting in some having to contract (in contrast to recent expansion).

2) the reality that academically, many students don't lose out by doing a degree remotely (because with a few exceptions, quality contact time was very limited pre-Covid) may result in significantly more students deciding that the attractions of 3 years on the lash (which they could equally well do at home) aren't worth the additional expense of living away from home.

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Re: Buy Empiric Student Property REIT (ESP) - Recovery?

#323912

Postby jonesa1 » July 5th, 2020, 5:31 pm

and a short term risk that I forgot to add:

significant numbers of candidates may decide to defer university because they don't see the attraction of becoming a student and not being able to socialise. You'd assume that at some point in the future, COVID restrictions will be behind us and there may then be a bump in the numbers to compensate, but if that risk occurs, then demand by students for housing will reduce for at least 12 months. That's on top of a temporary reduction in demand from young graduates who've moved back home, a potentially long term reduction in numbers of over-seas students and any demand reduction resulting from job losses.

Maybe those risks are already priced in?

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Re: Buy Empiric Student Property REIT (ESP) - Recovery?

#323970

Postby ReallyVeryFoolish » July 6th, 2020, 2:31 am

jonesa1 wrote:and a short term risk that I forgot to add:

significant numbers of candidates may decide to defer university because they don't see the attraction of becoming a student and not being able to socialise. You'd assume that at some point in the future, COVID restrictions will be behind us and there may then be a bump in the numbers to compensate, but if that risk occurs, then demand by students for housing will reduce for at least 12 months. That's on top of a temporary reduction in demand from young graduates who've moved back home, a potentially long term reduction in numbers of over-seas students and any demand reduction resulting from job losses.

Maybe those risks are already priced in?

(My bold) Given present share prices, yes, I think so. But who knows for certain? On a two to three year view I think we're likely to be pretty much back to where we were in 2018 and 19. Perhaps at the margins a change and perhaps at the higher cost end (London) too where there's more incentive to reduce costs of study.

PS -Weak GBP is a big positive for overseas students too.

RVF


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