Student digs specialist underlines ‘robust foundations’ as Covid rent collection pressures pile on

Kexgill looks to ‘rapid vaccination programme’ for September returns as European expansion plans remain

Article extracted from Business Live – click here to view on their website

Hull student accommodation specialist Kexgill is bracing itself for the full impact of Covid-19 after a strong performance heading into the pandemic.

The company behind the city’s university quarter and developments in other academic hot-spots in the UK and Germany, is looking at a 15 per cent hit, as it models for continuing voids post-spring.

The year to June 2020 saw turnover up 3.7 per cent from £13.2 million to £13.7 million, with a £1 million rise in operating profit.

And it hopes the “rapid vaccination programme” will see a stronger campus return in September.

Richard Stott, managing director, told how the impact was “unpleasant and bumpy” when he completed a £29 million refinancing deal for Hull properties in December

Now in the annual report filed late last month, just published, he told how forward letting for the first term of the academic year started in September had been hit, with the slow down attributed to the second lockdown, while lockdown three is putting pressure on rent collection.

“The situation is fluid and whilst the directors are keeping the matter under constant review, measures taken during 2020 have given the group a robust foundation for 2021/2022,” he said.

“Our forward letting is only 15 per cent down on previous years, to be expected under the circumstances. This is projected to recover during the next months.

Kexgill property in Hull.

“Our quick approach of early payment discounts and rent reductions has been well received by tenants and student unions.”

A hardship fund was established, with more than 250 tenants supported, a move described as a “successful balance in our ethical approach to handling the pandemic”. It has also widened its mental health and wellbeing student assistance programme to staff.

Accommodation has remained open throughout with “no impact on management, maintenance or cleaning other than Covid-19 secure practices,” for the 81-strong Salmon Grove team.

“There is some comfort created by the rapid vaccination programme adopted in the UK for paving the way for September 2021 fuller campus occupancy,” he enthused.

The turbulence brought by coronavirus hasn’t dented expansion plans for Kexgill, winner of the RICS Social Impact Award and Property Week Investor of the Year.

The German portfolio, with a first venture 15 years ago, has seen no impact on occupancy or rental arrears, with interests North Rhine, Westphalia, Leipzig and Berlin. Denmark appears next on the list with the formation of a company there.

“Our pan-European ambitions remain, and we are in active consultation to expand further in mainland Europe,” Mr Stott said. “The aim is to build strong investments outside the UK.

Key moves in the year saw the Stockton house portfolio sell to social housing provider Mears Group for £5.3 million as Durham University pulled out of the Tees town.

The purchase of 55 Talbot Street in Nottingham was also flagged, with planning consent received for letting office and student cluster apartment.

Hull’s University Quarter refurbishment was also completed, with the exception of a single studio development, while the £29 million refinancing of Hull sites saw loan repayments reduced by a “considerable margin”.

Kexgill was established by a former Hull student in 1978, having seen a niche after suffering with sub-standard accommodation while in Birmingham and then East Yorkshire.