Unite Group plc (LON:UTG) Unite Students, the UK’s leading owner, manager and developer of student accommodation, has announced an additional three-week extension to its 50% rent discount for students, originally announced on 11 January. This takes the total discount period to 10 weeks, up to the end of the Government’s stay at home rule on 29 March.
The ten-week rental discount and four-week complimentary tenancy extension will be available to students not living in their accommodation between 18 January and 28 March 2021. Approximately 60% of checked-in students have now returned to our buildings. The decision has been taken following publication of the Government’s roadmap out of lockdown, set out on 22 February, which includes an end to the stay at home rule on 29 March. Subject to no further major changes in Government guidelines, this will be the Group’s final rent discount relating to Covid-19.
Based on take-up of the rental discount to date and occupancy in our buildings, the total 10-week rental discount and tenancy extension is expected to result in a reduction in rental income of up to £10 million (Unite share), equivalent to 2.5 pence of EPRA EPS for the 2021 financial year. This represents a lower impact than previously anticipated, despite the three-week extension to the discount, reflecting the high number of students now in occupation in our buildings.
Update on cash collection and debt covenants
We have now collected 95% of rent due to date for the 2020/21 academic year. To be eligible for the rent discounts, students are required to be up to date with their rental payments.
Given the strength of our cash collection, scheduled payments by Universities and physical occupancy in our buildings, we are confident in retaining headroom under all our ICR covenants across the Group and its funds and joint ventures.
Headroom under our ICR covenants is expected to increase materially from Q2 2021 as the material impact of tenancy cancellations in Q2 2020 are removed from the 12-month historical ICR calculation.
Richard Smith, Unite Students Chief Executive Officer, commented:
“Since the outbreak of Covid-19, we have strived to play our part and do the right thing for our students in a fair and proportionate way. We also know from our own survey of students that the majority want to return and enjoy University life. This final rent discount means we will have provided a total of 10-weeks of financial support while students were asked to stay at home by the Government. This comes on top of the waiver of rent for the third term of the 2019/20 academic year during the first national lockdown, when we were the first provider of PBSA to offer this.
“All our properties continue to remain open, as they have throughout the pandemic. Like any private landlord, we do not normally provide refunds for time students choose to spend away from a property during a tenancy. However, we acknowledge that students have faced challenges this year and that’s why we have supported them consistently through the pandemic. We remain committed to ensuring that students can continue to experience the real life-long benefits of university life.”
1. Survey of 2,000 students for Unite Students by Yonder Data Solutions from 10 to 14 February.
Unite Students is the trading name for Unite Group Plc.