Research Update: UPP Bond 1 Issuer PLC Upgraded To 'A-' On Consistently Improving Performance; Outlook Stable

We expect UPP Bond 1 Issuer PLC's (UPP's) operating and financial performance will continue recovering as macroeconomic pressures in the U.K. subside and demand for higher education at UPP's university counterparties remains healthy. Credit metrics will be supported by RPI-adjusted rents that largely include utility and operating cost pass-throughs, which allow annual debt service coverage ratios (ADSCR) to recover and trend toward 1.30x after being squeezed due to inflationary pressures and the lag effect on rents when inflation increases after rents have been determined. We expect occupancy rates will remain at about 98%-100% owing to the stable performance of UPP's university counterparties and a strategic material lifecycle to maintain the rooms' attractiveness and competitiveness within their markets. We therefore raised

...- We expect UPP Bond 1 Issuer PLC's (UPP's) operating and financial performance will continue recovering as macroeconomic pressures in the U.K. subside and demand for higher education at UPP's university counterparties remains healthy. - Credit metrics will be supported by RPI-adjusted rents that largely include utility and operating cost pass-throughs, which allow annual debt service coverage ratios (ADSCR) to recover and trend toward 1.30x after being squeezed due to inflationary pressures and the lag effect on rents when inflation increases after rents have been determined. - We expect occupancy rates will remain at about 98%-100% owing to the stable performance of UPP's university counterparties and a strategic material lifecycle to maintain the rooms' attractiveness and competitiveness within their markets. - We therefore raised our long-term issuer credit rating on UPP to 'A-' from '###+' and revised the outlook to stable from positive. - The stable outlook reflects UPP's recovered...

Research Update