UK student accommodation group Unite said on Wednesday that it has agreed to a 30% reduction to salaries and pension contributions for executive directors as part of a number of cash saving measures amid the ongoing health crisis.
The company, which owns 30,209 beds in 79 properties across 22 university towns and cities in the UK, said in an update on the impact of coronavirus on its business that senior management will likewise take a 10-20% salary cut while non-exec directors will be paid 30% less for a four-month period from 1 April.
Bonus payments for executive directors will also be suspended for 2020, it added.
The company expects to see a sharp drop in revenues after announcing last month that it would not charge students who do not stay in their accommodation for the remainder of the 2019-20 academic year.
In addition, for international students who are unable to return home at the end of their tenancies, Unite said it would provide accommodation over the summer months at no extra cost. The unprecedented move for the sector means Unite has effectively assumed costs of up to £125 mln.
‘Based on cancellation requests received to date, we expect to forgo rent on around 43,000-46,000 beds representing around 62-65% of all owned and managed beds,’ Unite said.
Overall, the company expects a reduction in income from the 2019/20 academic year of 16-20% on a Group share basis, it added. Reservations across the Group for the 2020/21 academic year are currently at 80%, compared with 81% at the same time last year.
Given the priority of conserving cash while income uncertainties remain, Unite has deferred the delivery of two projects - Middlesex Street in London and Old BRI in Bristol - into 2022. Delivery of 2020 completions will also be delayed by temporary site closures and amended working practices.
Richard Smith, Unite Students Chief Executive Officer, commented: ‘We are committed to doing the right thing for our customers, colleagues and other stakeholders, despite the unprecedented times we face. This underpinned our decision to forgo rent for students wishing to return home for the remainder of the current academic year and the reduction in Board remuneration announced today.’