26th Feb 2015 14:22
LONDON (Alliance News) - GCP Student Living PLC Thursday reported further profit and earnings growth in the first half of the year, boosted by rental growth and a larger property portfolio, and said it was considering a change in its investment policy to allow investment in development and forward-funded projects.
The student accommodation real estate investment company posted a net profit after finance cost of GBP11.9 million for the six months to end-December 2014, and earnings per share of 10.86 pence. Its EPRA net asset value per share increased by 8.13 pence over the six months to end-December, to 110.77 pence, which it said was driven by high occupancy, year-on-year rental growth and portfolio valuation uplifts.
EPRA is the European Public Real Estate Association, the industry body for European REITs.
The company delivered a total return of 10% for the six month period, having declared a dividend of 1.40 pence per share for each of the two financial quarters.
GCP said its property portfolio is operating at full occupancy, generating GPB5.6 million in rental income, up from GBP4.6 million at the end of the first half of last year, reflecting rental growth and a larger property portfolio following recent acquisitions.
"The values of the company's property assets have performed ahead of expectations with a 6% uplift
in the period, driven by a combination of yield compression and increasing rental rates," the company said in a statement.
It said the external valuation of the company's property portfolio was GBP160.7 million as at end-December, up from GBP151.6 million at end-June 2014.
"The structural supply and demand imbalance for student residential accommodation, notably in London which is the company's primary market, remains acute," the company said.
GCP said that while the outlook for the market in which it operates is highly encouraging, it's aware of the risks in a market where valuations are being driven up on existing student residential developments.
"Against this background, the board believes that the company's existing investment policy may in future constrain its ability to source and secure investment in suitable opportunities offering an attractive total return profile for shareholders in the longer term and may limit the company's ability to grow its asset base," the company said.
The company said that it is therefore considering whether it would be appropriate to consider "modifying" its current investment policy to permit investment in development and forward-funded projects where such projects are income-generative. It said that would then secure operational new-build properties in which the company is currently unable to invest under its existing investment policy.
"This would enable the company to benefit from the availability of additional attractive projects in and around London," it added.
GCP Student Living shares were trading 0.2% lower Thursday afternoon at 114.78 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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