Gcp Student Living
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GCP STUDENT LIVING PLC GCP STUDENT LIVING PLC Annual report and consolidated financial statements for the year ended 30 June 2018 Annual reportyear ended 30 June 2018 and consolidated financial statements for the CONTENTS ABOUT US Introduction 1 At a glance GCP Student Living plc was the Highlights for the year first real estate investment trust 2 Investment objectives and KPIs 3 Portfolio at a glance in the UK to focus on student 4 Chairman’s statement residential assets. 6 Five years of GCP Student Strategic report The Company seeks to provide shareholders with 10 Strategic overview attractive total returns in the longer term through 12 Investment Manager’s report the potential for modest capital appreciation and 18 Review of the financial year regular, sustainable, long-term dividends with RPI 21 Company performance inflation-linked income characteristics. 22 Property portfolio 30 Corporate, social and environmental responsibility It invests in properties located primarily in and 34 Risk management around London where the Investment Manager believes the Company is likely to benefit from Governance supply and demand imbalances for student 42 Leadership 52 Effectiveness residential accommodation and a growing number 54 Accountability of international students. 57 Remuneration 61 Relations with shareholders The Company has a premium listing on 62 Directors’ report the Official List of the UKLA and trades on the Premium Segment of the Main Market Financial statements 66 Statement of Directors’ responsibilities of the London Stock Exchange. The Company 67 Independent Auditor’s report had a market capitalisation of £566 million at 72 Consolidated statement of 30 June 2018. comprehensive income 73 Consolidated statement of financial position 74 Consolidated statement of changes in equity 75 Consolidated statement of cash flows 76 Notes to the consolidated financial statements 97 Company statement of financial position 98 Company statement of changes in equity 99 Company statement of cash flows 100 Notes to the Company financial statements Additional information 102 Glossary 104 Shareholder information IBC Corporate information Best Report and www.gcpstudent.com Accounts (Specialist) Introduction GCP STUDENT LIVING PLC Annual report and consolidated financial statements for the year ended 30 June 2018 AT A GLANCE VALUE OF PROPERTY PORTFOLIO £m EPRA NAV2,4 PER ORDINARY SHARE p DIVIDENDS PER ORDINARY SHARE p 784.4 149.12 5.66 5.75 5.95 634.6 136.93 139.08 424.8 2016 2017 2018 2016 2017 2018 2016 2017 2018 NET OPERATING MARGIN4 % SHARE PRICE PER ORDINARY SHARE p STUDENT RENTAL GROWTH4 % 1 79 78 78 145.00 147.00 4.5 3.9 4.1 130.75 2016 2017 2018 2016 2017 2018 2016 2017 2018 HIGHLIGHTS FOR THE YEAR3 ― Annualised shareholder return since IPO4 ― First forward-funded development at Scape ― High-quality portfolio of ten assets with c.3,600 of 12.5%, in excess of the Company’s target Wembley, London, completed on schedule beds located primarily in and around London, return of 8-10%. for the 2017/18 academic year, generating with a valuation of £784.4 million at 30 June a material valuation uplift of c.£12 million 2018. ― Dividends of 5.95 pence per share paid at completion and providing a further c.580 or declared in respect of the year. ― The Company’s properties continue to benefit modern beds. from the supply/demand imbalances for ― Delivery of a strong set of results, generating ― Second forward-funded development high-quality, modern student facilities, with total rental income for the year of £35.8 million. asset, Circus Street, Brighton, commenced the portfolio fully occupied and student rental ― Successful equity raise of £70 million through construction, which is expected to provide growth4 of 4.1% for the 2017/18 academic year. a substantially oversubscribed placing of 450 beds on completion ahead of the 2019/20 ― Completion of the refurbishment of ordinary shares. academic year. Scape Bloomsbury in time for the 2018/19 ― Acquisition of Podium, which offers 178 beds academic year, providing 432 beds. in the same locality as the Company’s ‘The Pad’ ― Post year end, completion of a redrawable asset, together providing c.400 beds adjacent credit facility of £45 million with Wells Fargo to RHUL. & Company and entry into a forward-funding ― EPRA NAV4 (cum-income) per ordinary share agreement to fund Scape Brighton. of 149.12 pence and EPRA NAV (ex-income) per ordinary share of 147.61 pence at 30 June 2018. 1. Share price at 29 June 2018. 2. EPRA NAV is equivalent to the NAV calculated under IFRS for the year. 3. The Company’s financial statements are prepared in accordance with IFRS. The financial highlights above include performance measures based on EPRA best practice recommendations which are designed to enhance transparency and comparability across the European real estate sector. See glossary for definitions. 4. APM – see glossary for definitions and calculation methodology. 1 GCP STUDENT LIVING PLC Annual report and consolidated financial statements for the year ended 30 June 2018 INVESTMENT OBJECTIVES AND KPIs The Company invests in UK student accommodation to meet the following key objectives: TOTAL PORTFOLIO DIVERSIFICATION RETURN QUALITY To provide shareholders with To focus on high-quality, To invest and manage assets with attractive total returns in the modern, private student the objective of spreading risk. longer term. residential accommodation and teaching facilities primarily in and around London. KEY PERFORMANCE INDICATORS The Company has generated an The Company’s investment The Company’s property portfolio annualised shareholder total return portfolio has been fully occupied comprises eight modern standing since IPO1 of 12.5%. since IPO, with average annualised student accommodation buildings, rental growth1 of 3.9%. one development asset and one refurbishment. 5.95p FULL 3,561 Dividends paid or Occupancy1 for Number of beds declared for the year 2017/18 academic year at 30 June 2018 12.5% 4.1% 10 Annualised shareholder Student rental growth1 Number of assets total return since IPO1 for the year at 30 June 2018 Further information on Company performance can be found on page 21. 1. APM – see glossary for definitions and calculation methodology. 2 Introduction GCP STUDENT LIVING PLC Annual report and consolidated financial statements for the year ended 30 June 2018 PORTFOLIO AT A GLANCE At 30 June 2018, the Company’s portfolio comprised ten assets with c.3,600 beds, providing high-quality, modern student accommodation. IN AND AROUND LONDON LONDON 94% 2 4 3 1 Location of assets by total capital value 7 6 5 10 5.04% Blended net initial yield 8 9 11 1 2 3 4 5 6 7 8 SCAPE SCAPE SCAPE SCAPE SCAPE THE PODIUM SCAPE EAST WEMBLEY SHOREDITCH BLOOMSBURY GREENWICH PAD SURREY M V £139.0 m MV £90.4m MV £193.0 m MV £166.0 m MV £55.4m MV £35.3m M V £ 3 0.1 m MV £25.2m NI Y 4.90 % NIY 5.25% NIY 4.45% NIY N/A NIY 4.80% NIY 5.75 % NIY 5.75 % NIY 5.50% 588 578 541 432 280 220 178 141 REST OF UK OPERATIONAL ASSETS UNDER CONSTRUCTION 9 10 11 CIRCUS WATER LANE SCAPE UNDER REFURBISHMENT STREET APARTMENTS BRIGHTON POST YEAR END BRIGHTON BRISTOL MV MARKET VALUATION MV £30.5m M V £19.5 m MV N/A NIY N/A NIY 5.75 % NIY N/A NIY NET INITIAL YIELD 450 153 550 NUMBER OF BEDS 3 GCP STUDENT LIVING PLC Annual report and consolidated financial statements for the year ended 30 June 2018 CHAIRMAN’S STATEMENT Full occupancy, above RPI rental growth and valuation uplifts have all contributed to another year of strong results for the Company. Introduction In September 2017, Scape Wembley opened its On behalf of the Board, I am pleased to report doors to students. The property was the Company’s another year of strong operational results for the first forward-funded development asset, acquired Company. The focus on assets in and around in September 2016, and benefited from a material London has delivered robust NAV and income valuation uplift during the year. This success performance for the year. The Company delivered evidences the potential for forward-funded a positive shareholder total return1 of 5.7% over the developments to enhance the total return profile year and 12.5% annualised since IPO. of the portfolio. The Company’s performance during the year At the year end, the portfolio included two has been driven by a combination of key factors. assets which were under construction or Operationally, the Company has benefited from refurbishment. Construction of the Company’s a fifth consecutive year of full occupancy and second forward-funded development at Circus year-on-year rental growth which has delivered Street, Brighton, remains on track for completion dividend growth for shareholders. Further, the in September 2019. Similarly, the Board is pleased Company’s portfolio has benefited from valuation to note that the substantial refurbishment of gains on all of its assets partly as a result of yield Scape Bloomsbury, located in the heart of compression arising from competitive market London WC1, will be completed following the activity for private student accommodation assets. year end, with the property opening to students in mid-September 2018. This year marks the fifth anniversary since the Company’s £70 million IPO as a REIT in May 2013. The portfolio continues to deliver strong operational performance, having achieved full occupancy for Robert Peto During that period, its EPRA NAV1 per ordinary the 2017/18 academic year and generating rental Chairman share has grown from 97.00 pence to 149.12 pence income of £35.8 million. The Company achieved and its annual dividend has increased from year-on-year student rental growth1 of 4.1% across 5.5 pence per ordinary share to 5.95 pence per its operational assets, substantially ahead of the ordinary share.