JAM | Aug 22, 2022

Rentals rebound offers business lifeline to 138 Student Living

/ Our Today

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138 Student Living expects a revenue boost come the start of the 2022-23 academic year in September.

Durrant Pate/Contributor

138 Student Living, the accommodation rental company at the University of the West Indies (UWI), continues to see a rebound in the demand for short-term rentals, in particular, group accommodations since the lifting of the COVID-19 restrictions late last year.

During the June quarter, the publicly traded company hosted more than fifteen groups. There has also been a steady increase in 138 Student Living’s long-term occupancy. Occupancy for the reporting quarter averaged 50 per cent.

Under the Concession Agreement with UWI, 138 Student Living is guaranteed a 90 per cent occupancy with the university, signalling its intent to increase face-to-face course offerings. With this in mind, the expectation is that applications for student long-term accommodations for the new academic year beginning September 1, 2022, will increase.

COVID-related fiscal control measures to remain in place

Measures of prudent fiscal controls that were implemented in 2020 with the onset of the coronavirus (COVID-19) pandemic will remain in place. These measures have enabled the company to remain viable during this challenging period.

For the June quarter, 138 SL recorded profit before taxation of J$78.2 million and an after-tax profit of J$85.2 million. For the nine-month period ending June 2022, the company recorded profit before taxation of J$220.7 million and an after-tax profit of J$238.6 million.

Ian Parsard, company chairman, says “the results benefitted from both the variation claims relating to Irvine Hall and The UWI 90 per cent occupancy guarantee. For the quarter under review revenue increased by 15 per cent when compared to the corresponding period last year.”

The increase was driven by an increase in occupancy under our short-term rentals program and a general increase in room rates for long-term residents. Operating cost recorded was 52 per cent above the prior year due to a one-off reversal of expected credit losses (ECL) provision in the amount of J$125 million in the quarter ended June 2021.

Higher finance costs drag profitability

Adjusting for this one-off event, operating expenses would have been reduced by 36 per cent quarter-over-quarter. For the current quarter, the company recorded a decline in net profit when compared to the June 2021 quarter due to increases in finance costs from an average of five per cent to eight per cent on outstanding loan notes.

‘Students receivable balances’ were reduced significantly, as 136 SL continues to enforce strict collection measures. Net cash from operations grew due to increase in short-term rentals and the collections measures that were implemented.

Cash and cash equivalents at the end of the period remained steady.  During the period under review, 138 SL operated 1,464 world-class rooms at its four locations on the UWI Mona Campus consisting of 1,692 beds. 


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