Unite Group PLC (UTG) said it was “too early to commit” to reinstating its dividend as it warned that university rental income for the current year will on the worse side of previous expectations, though it has agreed another development acquisition after its summer fundraising.
The FTSE 250-listed group said it was still retaining its guidance for EPRA earnings per share of 22-25p for the year, thanks to rent collection progress in the first term and expected cost savings.
Having said before that 88% of bed spaces across the whole portfolio for the 2020/21 academic year had been led, 80% of students have now checked in, up from 70% in early October.
With two out of every 10 of its existing student accommodation beds remaining empty, this will mean rental income for the year will be reduced by up to 20%, towards the bottom end of previous guidance of 10%-20%.
Once a student has checked-in to their accommodation, universities start to pay rent directly to Unite. Of the remaining 8% of occupancy, the company said it expects check-in from these students in January.
While EPS is not expected to be affected the board said it was not ready to make a decision on dividends, “given current uncertainty”, adding that they will review this decision early in the new year.
Amid the uncertainty, the company has exchanged contracts to acquire a new 800-bed development site in Paddington from Travis Perkins PLC (LON:TPK), subject to planning, which is targeted for delivery for the 2023/24 academic year.
Unite estimated total development costs will be £150mln, to be funded from the proceeds of £300mln cash call in June.
Published at Fri, 20 Nov 2020 08:29:00 +0000-Unite Group says ‘too early’ to reinstate dividend as some students still staying away