Empiric splashes fundraise cash on Manchester student digs

Empiric Student Property has snapped up more than 100 beds in Manchester, using the proceeds of its fundraise last year.

Empiric Student Property (ESP ) has expanded its holding in Manchester, using the proceeds of last year’s fundraise to snap up another 136 beds.

The student accommodation investor, which raised £56m last October in a discounted share issue, has put its cash to work, buying Tatton House in Manchester for £19.7m.

The building, which houses 136 beds in an ‘all-studio’ scheme, is less than 10 minutes walk from the Manchester University campus and opposite Empiric’s existing Victoria Point hub, which Empiric CEO Duncan Garrood said ‘allows us to unlock operational efficiencies and improve the low amenity offer currently available to residents of Tatton House’.

He predicted the asset would deliver a 7% net initial yield from September, supporting the £804m trust’s current yield of 4.4%.

Of the money raised last year, another £10m is earmarked for investment this year, including at three existing sites where ‘preparatory works’ have begun.

Garrood said he had ‘focused on strategically deploying the proceeds into growth opportunities, expanding our Manchester cluster’ as well as ‘progressing our postgraduate pipeline through the repositioning of existing buildings’.

The fund has also been granted planning permission from Manchester City Council for the ‘redevelopment and reconfiguration’ of the Victoria Point site.

Two of the buildings will be redeveloped and the other four will be extended, increasing the number of beds by 310 to 876.

Garrood said the new planning permission and the other activities ‘support our strategy of growing a portfolio of high-quality buildings in top-tier university locations where purpose-built student accommodation remains acutely undersupplied’.

Stifel investment trust analyst John Cahill said UK real estate investment trust (Reit) investors had suffered a ‘bruising’ final quarter of 2024, with the EPRA UK Reit index down 22% since the mid-September highs, due mostly to fears of higher-for-longer rates.

‘Empiric’s shares have fared marginally better, down 19%, and we think in time the company’s good earnings momentum, healthy balance sheet and exposure to the structurally undersupplied student accommodation sector will drive share price outperformance, hence our “buy”,’ he said.

‘In the short term, the wider sector and Empiric remain at the behest of the wider market interest rate movements.’

On a net asset value basis, the fund has grown 8.1% over the past 12 months, and 24.2% over three years. However, this hasn’t been reflected in the shares, which are down 13% over one year and up just 2.9% over three years, including dividends reinvested, leaving the trust trading at a hefty discount of 33.7%.

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