Student property company admits it underperformed

accommodation: Major student provider Empiric sees profits drop, leading to a ‘top to bottom’ review of its operations

The owners of student accommodation Ayton House in St Andrews said its portfolio “operationally underperformed” last year.

Empiric Student Property owns 85 blocks of accommodation in 29 university cities in the UK, which total more than 9,000 beds.

The listed London-based firm purchased the 233-bedroom Ayton House for £26 million in late 2015.

The group announced yesterday that it recorded revenue of £51.2m for the year ending December 31, an increase from £31.4m the previous year.

Pre-tax profits dropped from £31m to £20.8m.

In November Empiric said it was undertaking a “top to bottom review” of the business.

This led to eight out of 12 people in the finance team being replaced and a stronger budget and forecasting process being implemented.

Every contract with external service providers was reviewed with the aim to bring facilities management in-house over the next year.

Occupancy levels last year were 92% and the firm has set a target to improve this to 97% this year.

Reflecting on the results, Tim Attlee, acting chief executive officer of Empiric, said: “We have a very strong property portfolio which operationally underperformed in 2017.

“We have identified the causes of that underperformance and are implementing the changes necessary to allow the business to deliver the improvements we all want to see.

“We expect these actions will deliver growth in operating margin and dividend cover during 2018 and beyond.

“As a result, we continue to target a total return of 10% per annum over the medium term.”

The company purchased four standing assets, one forward funded project and one development site at a total cost of £64.5m last year.

Its portfolio was valued at the end of December at £890m, a rise of £169m from the previous year.

The firm’s non executive chairman, the Rt Hon the Baroness Dean of Thornton-le-Fylde, died last week. Stuart Beevor, a non-executive director of the company, has agreed to assume the role.

Shares in Empiric rose by 1.9p to close at 86.9p.

Empiric Student Property purchased Ayton House in St Andrews for £26 million in 2015.