Analysts back property trust as it slashes fees

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Analysts back property trust as it slashes fees
Credits: Chris Ratcliffe/Bloomberg

Analysts have maintained their ‘buy’ rating on the £570m GCP Student Living real estate investment trust after the fund manager reduced its fees.

A Stifel note, published today (August 27), showed Gravis Capital Management, the trust’s manager, had slashed its fees from a blanket 1 per cent to a staggered charging structure depending on how big the trust grows. 

Assets up to £950m will levy a 0.75 per cent charge, while a 0.64 per cent fee will be applied to the trust’s assets above £950m and up to £1.5bn.

If the trust’s net asset value grows above £1.5bn, a management fee of 0.56 per cent will be charged on any assets above that marker.

Stifel said the move would “ultimately benefit shareholders as the company grows over time”.

Other changes to the structure include that Gravis will no longer be responsible for the payment of any property management fees and has instead entered into annual agreements with third parties, a move likely to save the trust around £600,000 in costs per year.

If the arrangements had been entered into on July 1 last year, the trust would have saved 7 per cent in fees, the analyst note said.

GCP Student Living — a FTSE 250 company and was the first student accommodation REIT in the UK — aims to provide shareholders with attractive total returns through investments in modern, purpose built, private student accommodation.

It has returned 66 per cent in share price terms since its launch in 2013 and offered 17 per cent over a five-year period.

The trust is currently trading at a 19 per cent discount, plummeting from a premium when the coronavirus crisis saw interest rates dive and students flee university cities.

It struggled significantly when the coronavirus crisis first hit, losing 30 per cent over the past six months compared to its peers in the AIC property sector’s negative 5 per cent return, but has rallied since.

Over the past three months, it is the best performer in the sector and has returned 18 per cent compared with the sector’s 9 per cent.

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