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Based on Unite’s share price on the last undisturbed trading date, the acquisition – including Empiric’s 2025 dividends – values each Empiric share at c.107.5p, and the entire share capital at c.£723m.
Empiric Student Property Plc
On the basis of the proposal, the board of Empiric Student Property has agreed to enter an initial period of due diligence.
Empiric Student Property Plc UNITE Group plc
Unite’s possible offer for Empiric — 30p in cash and 0.09 new Unite shares per Empiric share — values the company at 107.0p per share or c.£719 million, represents a modest 10% premium to the last close and c.10% discount to Empiric’s reported EPRA NTA. In our view, the proposal materially undervalues Empiric’s long-term return potential, strategic position, and embedded platform value for which it attributes no Goodwill. The offer represents a meaningful discount to intrinsic value for a business with a strong track record of delivering total returns. Empiric’s focused strategy — targeting high-quality, centrally located student assets in undersupplied cities with a bias toward the postgraduate and international segments — underpins both attractive rental growth and capital preservation. The current offer fails to reflect the long-term cash flow compounding potential inherent in that model.
The shares have risen 17% YTD, placing them on c.18x 2026E earnings (forecasts unchanged). We remain at Buy, with a 105p target price.
The shares offer a dividend yield of 4.7%, while the NAV discount is 36%. We maintain our Buy rating with a reduced TP of 105p.
Another week, another rollercoaster ride. The first set of company results for 2025 have disappointed – we hope this is not a sign of things to come. To listen to the podcast, please click on the image below. #Corporate client of Peel Hunt
Empiric Student Property Plc Safestore Holdings plc
Empiric is committing the capital it raised in October, and has secured a profitable and portfolio-enhancing planning outcome in Manchester. The shares are now very undemanding in our view. We reiterate our Buy rating.
The latest raise for growth in the sector is welcome, with Empiric setting out a clear growth opportunity. We remain at Buy, with a TP of 125p. In our view the shares continue to offer attractive returns and ample upside.
This week Matt discusses rent roll growth at LondonMetric Property#, key takeaways from Primary Health Properties’# CMD, and an accretive raise from Empiric Student Property#. To listen to this week’s episode of the REcap, please click the image below. #Corporate client of Peel Hunt
ESP LMP PHP
We continue to see PBSA as an attractive sector, enhanced by the incumbents’ portfolios and operating platforms. Empiric Student Property is our top pick, offering growth and an undemanding valuation.
In the week that A-level results were released, and the scramble for university places (and accommodation!) began, Empiric Student Property# has delivered another robust set of results, with pleasing progress on all fronts. James highlights how real estate stacks up given recent movements in risk-free rates. To listen to this week’s episode of the REcap, please click the image below. #Corporate client of Peel Hunt
Empiric’s equity story remains compelling to us. It remains a top sector pick, with strong growth prospects and an undemanding valuation.
They say that cash is king – will that be the case for Tritax EuroBox shareholders? The ‘dividend achiever’ is heading for the FTSE 100, and a visit to Scotland provided another opportunity to see Empiric’s differentiated portfolio and platform in operation. To listen to this week’s episode of the REcap, please click the image below. #Corporate client of Peel Hunt
ESP LMP TTAXF
A very pleasing set of results from Empiric Student Property# this week has Matt up on his soapbox, while James discusses the ‘deal or no deal’ ultimatum set to be put to abrdn Property Income Trust shareholders at the end of this month. To listen to this week’s episode of the REcap, please click the image below. #Corporate client of Peel Hunt
Empiric Student Property Plc Harworth Group PLC
Our 2024E forecasts are tempered by higher utility and interest costs, meaning downgrades to both EPS and DPS. However, the story remains one of growth with a c.10% per annum forecast TAR. At a c.26% discount to 2024E EPRA NTA and <17x 2026E earnings, the shares remain Buy with a 120p target price.
The abolition of Multiple Dwellings Relief on 1 June 2024 is likely to impact the valuation of institutional residential assets. We wax lyrical on LondonMetric Property# post completion of its merger and the publication of our revised, and upgraded, forecasts. To listen to this week’s episode of the REcap, please click the image below. #Corporate client of Peel Hunt
ESP GRI LMP UTG
ESP published a trading update this morning. We note the following key points: (i) ESP expects EPRA EPS of 4.0p (slightly ahead of our expectation for 3.9p). (ii) Revenue occupancy for the 2023/24 academic year is expected to be around 99% (previous expectation was 98%). (iii) LfL growth in average weekly rents has accelerated again to 10.5% (previous guidance 9%). (iv) Dividend guidance for the ’23 financial year is 3.5p (+27% y/y, Lib: 3.3p).
We believe the PBSA sector remains a great place to be, and ESP is driving double-digit rental growth and full occupancy from its portfolio. At c.16x 2025E earnings and a 20% discount to gross assets, the shares remain excellent value in our view.
This week James discusses his views on Supermarket Income REIT, including the strategies employed to cover the dividend this year and the challenge of over-renting in the asset class. Matt offers some thoughts and observations from Peel Hunt’s annual Investor Conference in Liverpool and the assets he visited in the city. To listen to this week’s episode of the REcap, please click the image below
ESP HWG SRE SUPR
H1’23 EPRA NTA of 117.3p (Liberum: 115p) reflects strong growth in rental values as demand continued to accelerate for later stage student accommodation. LfL rental growth of 5.2% is slightly below our run-rate expectations of 6%, but guidance is for LfL rental growth to accelerate to 9% for the 2023/2024 academic year (previous guidance: 7%). Valuations were more robust than the broader real estate market increasing by 1% (LfL) vs. IPD All Property Index capital values which fell by 1.6% over H1. EPRA EPS increased 18.5% (Liberum r/r expectation: c.14%), driven by a 16% increase in revenue and 200bps gross margin expansion. The outlook is optimistic, with increasing levels of demand and a strong acquisition pipeline secured. ESP trades at a 23% discount to spot NTA, relative to its closest peer UTG at a 1% discount, but offers a similar rental growth profile and dividend yield. BUY.
Empiric delivers strong financials, excellent operating margins and the platform is delivering sector-leading levels of rental growth. On upgraded numbers, the shares trade on a 30% NAV discount and offer a 4.1% yield. We reiterate our Buy rating and 120p TP.
A much-needed lull in reporting offers the chance to visit Empiric’s assets in Bristol and consider the implications for recent interest rate rises. Next week sees Sirius Real Estate#, Warehouse REIT#, NewRiver REIT and LXi REIT all report, and we will also be attending Harworth’s# capital markets day at Waverley.
ESP HWG NRR SRE WHR LXILF
Continued strong sales of rooms for the forthcoming academic year leads ESP to upgrade its rental growth guidance again. Two further non-core asset sales, and a compelling equity valuation, mean it remains a top pick.
Through hard work, Empiric Student Property has positioned itself as one of the most exciting stories in our coverage universe. Aided by favourable market conditions, the opportunity to drive enhanced returns for shareholders through growth is now tangible. We reiterate our Buy rating.
Empiric Student Property’s (ESP.LN) FY’22 results reflect accelerating post-pandemic demand, driving LFL rental growth of 5.2% (Liberum +2%) for the 22/23 academic year. EPRA NTA increased 8.2% (Liberum -4%) with property values up 4.6% in the year including the benefit of developments. EPRA EPS increased 113% to 3.4p (Lib: 3.2p). The outlook is optimistic, with increasing levels of demand and a strong acquisition pipeline secured. This has increased revenue occupancy targets to 97% for the 23/24 academic year. However, disposals of non-core assets have been delayed given the turbulent market backdrop. ESP trades at a 27% discount to NTA, relative to it’s closest peer Unite at an 1% discount, but offering a similar rental growth profile and dividend yield. BUY.
Empiric had a very good 2022A, with the strong offer and focused strategy helping to take advantage of the market backdrop to deliver a double-digit return. We expect further good growth in profits and dividends, culminating in c.9% NAV returns. The shares are worth 120p.
Trading update: full occupancy, 5+% growth for 2023/24E Empiric Student Property’s trading update underlined the progress it has made, with record revenue occupancy of 98% and 5.2% LFL rental growth for the 2022/23E academic year. With strong demand and a target of “at least” 5% growth in 2023/24E, top-line growth goes some way to mitigating rising costs. On our revised forecasts, the shares sit on 17x 2024E earnings and a 28% discount to our 2023E NTA per share forecast. With 30+% upside to our new 110p TP, our conviction Buy remains. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com
Delivering on the potential The delivery of a c.11% accounting return in 1H22 arguably marks the start of a new era for Empiric Student Property#. The operational transformation of the Hello Student platform should combine with a resurgence in customer demand to deliver strong earnings growth over the coming years. The continual improvement in the portfolio, its increasing exposure and scale in winning locations should further enhance returns. Post c.8% earnings upgrades the shares sit on just 19x 2024E earnings, with the prospect of a near-5% dividend. In our view, this warrants a Buy and we increase our TP from 115p to 120p. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com, Sebastian.Isola@peelhunt.com 12-page note #Corporate client of Peel Hunt
Real Insights – Friday 12 August 2022 This week we discuss the student accommodation market with Duncan Garrood, CEO of Empiric Student Property#. We hear about the prospects for the forthcoming academic year, as well as the medium-term outlook for both domestic and overseas students. We also debate the growing postgraduate market, how operators can deliver value for money, and the opportunity for Empiric Student Property that most excites Duncan. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com, Sebastian.Isola@peelhunt.com #Corporate client of Peel Hunt Click on the image below to listen to the Real Estate team's weekly podcast
A* interims: upgrades across the board Empiric has delivered a strong set of interim results, with all KPIs moving in the right direction and culminating in a c.11% accounting return. Demand tailwinds, a strengthened product offer, and the Hello Student operating platform create an exciting pathway for future growth. Upgrades to our forecasts mean increased confidence in the ability of the business to deliver robust income-led returns, and the shares are an attractive proposition sitting at a c.17% discount to our upgraded 2022E NTA per share forecast and less than 20x 2024E earnings. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com, Sebastian.Isola@peelhunt.com
The REcap – Friday 24 June 2022 This week we discuss Safestore’s interim results, James and Sebastian share some thoughts on recent share price volatility and propose Empiric Student Property and LondonMetric Property# as two stocks that are worth revisiting. Matt, joining remotely thanks to the train strikes, looks forward to next week and a senior living seminar he is attending. The increasing institutional appetite for this real estate asset class provides a good read-across to others that are set to benefit from strong demographic tailwinds and political goodwill, including primary healthcare and Primary Health Properties# in particular. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com, Sebastian.Isola@peelhunt.com #Corporate client of Peel Hunt Click on the link below to listen to the Real Estate team's weekly podcast
ESP SAFE LMP PHP
The REcap – Friday 27 May 2022 Our podcast this week focusses on Empiric Student Property’s bookings being ahead of pre-Covid levels, as well as the continued strength of the logistics market, where LondonMetric Property# and Warehouse REIT# had two of the strongest sets of results that we have seen for some time. Crossrail also opened this week, with Sebastian using it as an excuse for being late for work! Have a good weekend. James.Carswell@peelhunt.com, Matthew.Saperia@peelhunt.com, Sebastian.Isola@peelhunt.com #Corporate client of Peel Hunt Click on the link below to listen to the Real Estate team's weekly podcast
ESP LMP WHR
Platform drives bookings ahead of pre-Covid cycle Empiric reports revenue occupancy at 68% for the forthcoming academic year, six percentage points ahead of the same point in the 2019/20 booking cycle. This a strong endorsement of the progress made over the past few years, and is very supportive of the equity story. CF&SO Lynne Fennah, who deserves significant credit for the REIT’s transformation, will leave next year. The shares offer the prospect of a 5%+ dividend yield and remain very attractive, in our view, sitting at a 23% discount to 2022E EPRA NTA per share of 113p. Buy, TP 105p. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com, Sebastian.Isola@peelhunt.com
PBSA: Platform businesses securing alpha With the prospect of full occupancy and rental growth for the forthcoming academic year, both Empiric Student Property (Buy, TP 105p) and Unite (Add, TP 1,180p) look set to deliver strong earnings growth over the coming years, with their prospects enhanced by their operating platforms and brand value. PBSA assets remain well-bid, with an increasing breadth of investor looking to access the sector, which should prove supportive of the REITs. Unite remains the sector leader, but the progress made by Empiric’s management team and its valuation makes it the stand-out opportunity in this “must own” sector. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com, Sebastian.Isola@peelhunt.com 8-page note To listen to Matt discuss this note, click on the play button below.
Empiric’s FY21 results confirmed a return to growth, with +5% TAR in the period (vs -4% in the prior year), as property valuations have begun to recover. We increase FY22 EPS c.4%, leaving NTA broadly unchanged. Further recovery in revenue occupancy should leave the earnings trajectory positive from here. Achieving >70% gross margin leaves further upside vs our forecasts. At a 21% discount to FY21 EPRA NTA for accelerating total returns, Empiric shares continue to screen as attractive on both an absolute and relative basis. TP 113p based on EVA.
Finals: moving in the right direction Empiric’s 2021 results are in line. Encouragingly the guidance for 2022/23 endorses our own optimism of a return to more normal operating conditions, and we believe the hard work undertaken by the REIT over the past few years to put in place a robust operating platform will start to be reflected in the performance of the refined portfolio. The shares sit at a near-20% discount to NAV, and offer the prospect of a 5%+ yield as occupancy returns to pre-Covid levels. The shares are a Buy. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com, Sebastian.Isola@peelhunt.com
Empiric’s FY21 results confirm a return to growth, delivering a +5% total accounting return in the period (vs -4% prior year) as property valuations have begun to recover. EPRA NTA up 2% y/y to 107p is broadly in line with our 109p forecast. EPS is 28% lower y/y but masks a tale of two halves with H2 +80% vs H1. A recovery in revenue occupancy should leave the earnings trajectory positive from here and a recommitment to >70% gross margin and 7-9% total return as occupancy normalises. LTV at 33% (vs 35% FY20) is broadly in line with the long term target. At an 18% discount to FY21 EPRA NTA for accelerating total returns, Empiric shares continue to screen as attractive on both an absolute and relative basis. TP 113p based on EVA.
Empiric Student Property - Note: Hello studentsApax Global Alpha - Fund valuations imply flat Q4 performanceVPC Specialty Lending Investments - Resilient income and accretive SPAC investments lead to 28% FY 2021 NAV returnGCP Co-Living REIT - Proposed £300m IPOResidential Secure Income - £15m capital raise
ESP VSL RESI
CEO Video - Timo Lehne of sThree, SAS UK SMID Monthly - The risk premium in UK markets is large, Empiric Student Property, Virgin Wines UK, SMID Market Highlights
Empiric Student Property Plc Virgin Wines UK PLC
CEO Video - Timo Lehne of sThree, SAS All Cap Monthly - The risk premium in UK markets is large, Empiric Student Property, Virgin Wines UK, Market Highlights
ESP VINO ROG CPG SKFB 0NWX 0QQ6
Yesterday’s Q4 trading update was encouraging. While we hazard a guess disposals may have transacted below cost, these were non-core and we now find additional reason to be positive ahead of FY21 figures on 3 March. We have constructed an index based on CBRE Student Property yields that is aligned to Empiric’s portfolio. It suggests we can expect some yield compression in 2H21. Our index gives us the confidence to lift our FY21 EPRA NTA forecast c.2% to 109p, now implying +4.7% total accounting returns for FY21 (+2.4% prior). At a 16% discount to spot EPRA NTA for accelerating total returns, Empiric shares continue to screen as attractive on both an absolute and relative basis. TP 113p (from 110p) based on EVA.
Outperforming expectations Empiric’s trading update provides yet another encouraging overview of the performance of the business. Revenue occupancy is now ahead of our estimates for the current academic year, and bookings for the 2022/23 season are expected to be strong, while a further five non-core assets were sold. A 2022E dividend yield of 3.0%, growing to a forecast 5.2% in 2023E is attractive, in our opinion, as is the 20% discount to our 2021E NAV estimate. On this basis, we believe the shares are a sound way to play the UK’s economic re-opening and we are happy to reiterate our Buy recommendation and 115p target price for c.31% upside. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com, Sebastian.Isola@peelhunt.com
Initiation - Empiric Student, Initiation - Endeavour Mining, Alternative Funds Chartbook, National Express/Stagecoach, OCI, Atlanic Lithium, In the Style, M&C Saatchi, SMID Market Highlights
ESP EDV MCG SGC OCI ALL ITS SAA SRP CKN CURY BOWL DX/ PDL SOLG HMSO
Initiation - Empiric Student, Initiation - Endeavour Mining, Alternative Funds Chartbook, National Express/Stagecoach, OCI, Atlanic Lithium, In the Style, M&C Saatchi, Market Highlights
ESP EDV MCG SGC OCI ALL ITS SAA IAG SRP CKN CURY BOWL DX/ PDL SOLG HMSO
Empiric Student Property is an undervalued CV-19 recovery story, supported by both structurally growing demand and a structural undersupply of student accommodation. This should support a recovery in occupancy, positive rental growth, and perhaps yield compression over time. We forecast an acceleration in TAR over the next three years, yet still see further upside if management can return the business to pre-Covid gross margins above 70%. At a 22% discount to spot NTA for accelerating total returns, Empiric shares screen as attractive on both an absolute and relative basis. Our 110p TP based on EVA offers 32% upside. BUY.
A reassuring update and a clear Buy opportunity Revenue occupancy for the current academic year at 81% is in line with expectations and our own assumptions – a reassuring data point and in contrast with the recent share price weakness. The opportunity to buy the shares at a 20%+ discount to NAV and with an impending 2.5p dividend is attractive, and we continue to believe there is a 5%+ dividend yield on the horizon as demand normalises. An opportunity not to be missed: Buy. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com, Sebastian.Isola@peelhunt.com
One to study Empiric’s interim results reflected a robust performance against the challenging backdrop of a pandemic-affected academic year. The consensus is that 2021/22 will be better, with the REIT guiding to occupancy of up to 85% – if international students travel. We are optimistic, but our Buy case is about when occupancy recovers, not if. An improved operating platform and a profitable disposal and reinvestment programme should support the portfolio and importantly returns, with high single-digit returns and a c.5% yield on the horizon. We reiterate our Buy and increase our target price from 110p to 115p. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com, Sebastian.Isola@peelhunt.com 6-page note
Interims: Bookings accelerate Bookings for the 2021/22 academic year have reached 70%, and if the current rate continues Empiric expects occupancy to be 75-85%. EPRA NTA increased 1%, broadly on track to meet our forecast, with values flat and yields stable. As we expected, no interim dividend was declared, but the dividend is to be reinstated in 4Q with a payment of 2.5p, demonstrating management’s increasing confidence in the recovery. We remain confident in the long-term outlook for PBSA and believe the shares present excellent value on a 9% NAV discount and with a future dividend yield approaching 5%. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com, Sebastian.Isola@peelhunt.com
Another one bites the dust? GCP Student (Hold, TP 160p) is the latest quoted property company to be on the receiving end of bid interest, this time from its largest shareholder and the Blackstone-owned iQ. We have talked about GCP’s “rented platform” and related party issues in the past, and shareholders must now make sure they are not left short-changed given the numerous interests involved. Alongside asset-rich Morrisons accepting a PE-led takeover offer, this again shines a light on the valuation of real estate in the public markets. We would buy Empiric Student Property (Buy, TP 95p) on the back of this news. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com, Sebastian.Isola@peelhunt.com
Empiric Student Property Plc GCP Student Living Plc
ESP’s niche positioning within the PBSA market has led to underperformance vs peers through Covid which we expect to continue through AY21/22, as occupancy levels remain heavily contingent on int’l travel restrictions and ESP’s higher rental price point means that, without potentially material disc
FY20 results: A more challenging path to recovery
FY20: Brighter skies ahead? The past 12 months have been challenging for Empiric, but the strength of its offer and its operating platform have enabled the business to weather the storm. As we look forward we remain optimistic about the future. A combination of the platform, a recognised brand and offer, and a refined portfolio provide the foundations for a business that we believe can deliver attractive earnings streams in FY22E. Buy, TP up to 90p. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com, Sebastian.Isola@peelhunt.com
Trading update: FY21 forecasts impacted by lockdown Although not offering the blanket discounts of other operators, Empiric is supporting customers through the latest lockdown. Revenue occupancy has reduced to 65% to date, and the outturn for the year will no doubt depend on how quickly physical occupancy can bounce from the current c.50%. Importantly, the group remains fully covenant compliant and access to liquidity looks ample. We reduce our FY EPS and DPS forecasts to reflect the impact of the current lockdown, but on c.16x FY22 earnings and a c.30% discount to NAV, the shares remain an attractive way to play the PBSA sector. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com, Sebastian.Isola@peelhunt.com
LXi – Interims to 30 September 2018 | Civitas Social Housing – Interims to 30 September 2018 | Empiric Student Property – New CEO
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Empiric Student Property – Interims to 30 June 2018 | BH Macro – Interims to 30 June 2018 | DP Aircraft 1 – Interims to 30 June 2018
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There are suggestions that the sector has peaked, but we feel this relates more to Central London than the rest of the country: the EU referendum has certainly provided an excuse to ‘wait and see’, compounding the effect of any uncertainty. Activity levels have suffered and the growth momentum slowed, and this is now showing up clearly in market data. However, the impact is not universal and is concentrated on the more exposed investment areas of Central London, leaving bright spots across the sector for investors to exploit.
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Empiric (ESP) has spent its first year as a listed company assembling a portfolio of premium, purpose-built student accommodation in university cities across the UK. This has been funded with the money raised at IPO and two further equity raises above NAV totalling £235.7m and £115m of debt. The target dividend of 4p for the first year has been met and the board aims to pay 6p in FY16. Further opportunities for growth abound in a growing and already undersupplied market and ESP has 81.2m shares left available in its share issue programme, which would raise c £90m at the current share price.
Q2 2014 fell slightly short of Q1 in terms of money raised, but saw a shift in the type of assets investors were willing to back. New themes emerging included peer-to-peer lending and a return to more vanilla, equity portfolios. Property continued to attract new money but investor appetite for student accommodation appears sated, with Empiric Student Property (ESP.L) only raising half of target and Liberty Living shelving launch IPO plans. Debt was less popular in Q2 with only two names on the list and FairOaks Income Fund raising c60% of target.
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