Research Update: UPP Bond 1 Issuer PLC Outlook Revised To Positive On Strong Performance Expectations; 'BBB+' Ratings Affirmed

An average rent increase of close to 12% across UPP Bond 1 Issuer PLC's (UPP's) portfolio for the next academic year will further strengthen its credit metrics over the next two years, allowing annual debt service coverage ratios (ADSCRs) of consistently above 1.30x, despite consistently high inflation in the U.K. We expect occupancy across the assets to be above 99% thanks to the deployment of strategic material lifecycle works throughout the accommodation to maintain the rooms' attractiveness and competitiveness within their markets. In our view, UPP will keep improving its operating and financial position owing to the stable performance of its university counterparties, which should translate into high occupancy levels and rental income increasing in line with the retail price

...- An average rent increase of close to 12% across UPP Bond 1 Issuer PLC's (UPP's) portfolio for the next academic year will further strengthen its credit metrics over the next two years, allowing annual debt service coverage ratios (ADSCRs) of consistently above 1.30x, despite consistently high inflation in the U.K. - We expect occupancy across the assets to be above 99% thanks to the deployment of strategic material lifecycle works throughout the accommodation to maintain the rooms' attractiveness and competitiveness within their markets. - In our view, UPP will keep improving its operating and financial position owing to the stable performance of its university counterparties, which should translate into high occupancy levels and rental income increasing in line with the retail price index (RPI). - Based on the above, we revised our outlook to positive from stable and affirmed our '###+' rating on UPP's debt. - The positive outlook reflects the possibility of a one-notch upgrade if we...

Research Update