Edison Investment Research Limited: GCP Student Living (DIGS): Continuing growth punctuated by COVID-19

London, UK, 5 October 2020

GCP Student Living (DIGS): Continuing growth punctuated by COVID-19

GCP Student Living's (DIGS's) FY20 financial performance was robust with increased rental income and fully adjusted earnings despite the impacts of the COVID-19 pandemic. Portfolio valuation gains drove NAV growth and including dividends paid the accounting total return was 7.6%. The pandemic will continue to negatively affect FY21, including reduced bookings for the 2020/21 academic year just commencing. However, beyond the current challenges we see no change in the positive fundamentals for DIGS's quality portfolio assets located primarily in and around London.

We have assumed a continuation of the quarterly DPS at the Q420 rate of 1.42p. On this basis the shares yield 4.3%, with DPS cover dipping in FY21 and rebuilding in FY22. The more than 20% discount to NAV compares with an average 2% premium since IPO. 
 

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