Watkin Jones reports 'strong' trading through final parts of year
Residential rental property developer Watkin Jones updated the market on the year ended 30 September on Tuesday, reporting that its trading remained “strong” through the final quarter of the year.
The AIM-traded firm said that as a result, it expected to report revenues and earnings for the 2019 financial year in line with its expectations, together with a good cash performance in the period.
It said all of its business segments “performed well”, and delivered on their operational objectives for the year.
The six purpose-built student accommodation (PBSA) developments, totalling 2,723 beds, scheduled for delivery in the year were successfully completed, while “good progress” was also made in the development of the forward-sold PBSA and build-to-rent (BtR) assets scheduled for delivery in the 2020 and 2021 financial years.
A “robust performance” was also achieved by the Fresh Property Group and residential businesses, the board said.
On the development front, further progress was made in growing the pipeline of sites for future development and in achieving forward sales of assets to the group's high-quality institutional client base, the board added, reflecting the strength of demand for well-located assets in the group's target cities and the “continued recognition” of Watkin Jones as a “preferred development” partner.
As it set out in the development transaction update on 3 October, the group had now forward sold all seven of its PBSA developments, totalling 2,609 beds, scheduled for delivery in the 2020 financial year, and had forward sold 1,928 beds across four schemes for delivery in the 20201 financial year, with a further 448 beds currently in legals for sale.
The group's current pipeline of forward sold and secured PBSA development sites totalled around 6,670 beds across 17 sites, for delivery over the period from the 2020 to 2024 financial years, of which 13 sites totalling 5,447 beds had planning.
Following the recently-announced sales of the group's developments in Sutton, Bournemouth and Sheffield, the forward sold and secured BtR pipeline now comprised around 1,750 apartments across eight sites for delivery over the period from the 2020 to 2023 financial years, of which 1,012 apartments across five sites had been forward sold and a further site for 184 apartments has planning.
The group noted it had a number of other PBSA and BtR opportunities in advanced stages of negotiation, which if satisfactorily concluded would add a further 2,025 student beds and 1,150 BtR apartments to the pipeline for delivery over the period from the 2021 to 2023 financial years.
Looking ahead, the board said it was encouraged by the increasing level of investor demand that was being demonstrated for BtR assets.
That provided confidence that there was a “broad range” of potential institutional investors with who the group could engage in order to replicate in BtR the low risk forward sale model that had been “so successful” for PBSA.
The pipeline of forward sold and secured development sites ensured that the group continued to maintain good visibility over future revenues and earnings, while the fundamentals supporting the PBSA and BtR markets remained strong.
Watkin Jones’ board said it remained confident in the outlook for the group, and considered that it was “well-positioned” to capitalise further on the opportunities open to it.
“We are pleased by the progress achieved by the Group in the last twelve months,” said Watkin Jones chief executive officer Richard Simpson.
“The robust PBSA activity in the period, coupled in particular with the increasing momentum in BtR, firmly positions Watkin Jones as the UK's leading developer and manager of residential for rent.”
As at 1126 GMT, shares in Watkin Jones were up 0.64% at 237p.