Student record

Watkin Jones confident in second half, sells student portfolio

Residential developer and home builder watkin jones on Tuesday reported an 8.2% rise in first-half revenue to £193 million amid “strengthening demand” from institutional investors.

The AIM-listed company said its underlying operating profit, however, fell 49.8% to £14.6 million for the six months to March 31, as expected.

He said the decline was due to a higher proportion of low-margin land sales and the timing impact of the planned sale of the portfolio of three purpose-built student housing schemes (PBSAs).

Underlying full-year earnings performance was expected to be in line with expectations.

Watkin Jones’ pipeline stood at a record £2bn, of which £0.6bn had already been sold forward, giving the board ‘clear visibility’ into revenue growth and profits in the years to come.

The company said that in response to the new building safety law and following a review of all buildings over 11 meters in height that it had developed over the past three decades, it had recognized an exceptional charge of £28 million for the potential costs of the remediation works. , which it expected to be incurred over a period of up to seven years.

Adjusted net cash was £26.8m at the end of the period, which the directors said showed ‘good liquidity’ after high levels of growth investment, which would drive sales eventually in the second half and beyond.

The board declared an interim dividend of 2.9p, up 11.5% year-on-year, reflecting the company’s strengthening development pipeline and strong expected second-quarter earnings semester.

Operationally, Watkin Jones said it had 15 developments underway, adding that it was “proactively” managing inflationary increases in asset values ​​and construction costs, ensuring its margins were maintained.

A total of 22,155 beds were managed under the company’s “Fresh” student residence brand, up 10% year-on-year, with bookings “well advanced” for the next academic year.

Its “affordable” homes business was gaining ground, with pipeline construction from site acquisitions.

Watkin Jones also announced on Tuesday the sale of a portfolio of PBSA to EQT, consisting of three prime student developments as well as two operating properties.

The sale would make a profit contribution of £20 million to the full year results, with all properties to be managed by Fresh.

“We continue to build on the positive momentum from the second half of last year and have demonstrated operational resilience through the strength of our business model,” Chief Executive Richard Simpson said.

“Today’s sale of a significant portfolio of PBSA plans to EQT, a new institutional investor in the industry, with continued management provided by our Fresh business, underscores the appeal of our end-to-end offering for institutional capital targeting the UK residential for rent. .

“Our proactive management of construction costs and sales values ​​has ensured that our overall development margins are maintained, and we are confident for the second half.”

At 12:31 a.m. BST, shares of Watkin Jones were up 2.06% at 235.75 pence.

Reporting by Josh White on Sharecast.com.