Accommodation specialist reports strong interim results
Watkin Jones, the North Wales and Cheshire-based student property developer, produced “strong” interim results in line with the company’s expectations in the year to March 31.
Revenues rose 0.5% to £159.1m, while pre-tax profits fell 0.9% to £23.4m.
However, the group said it achieved strong underlying profit growth for the half year, with gross profit increased by 9% to £37.6m, while adjusted profit before tax increased by 10% to £26m.
The board is recommending an 11.3% increase in the interim dividend to 2.75 pence per share, in line with its progressive dividend policy.
Watkin Jones reported 11 developments (5,334-beds) currently forward sold for delivery over the period FY 2019 to FY 2021.
This includes the previously announced forward sale in the period of a 599-bed student accommodation development in Wembley, for delivery in FY 2021, and the exchange of contracts for the development of a 245-bed scheme in Swansea, for delivery in FY 2020.
A further three developments (594-beds) for delivery in FY 2019 and FY 2020 are currently in legals for sale.
In the period the group exchanged contracts for the purchase of a prime site in Selly Oak, Birmingham, on which it expects to develop 608 student beds, subject to planning, for delivery in FY 2022.
A total development pipeline of more than 9,000 student beds across 20 sites is targeted for delivery between FY 2019 and FY 2022.
Regarding Build to Rent schemes, the development of a 315-apartment scheme in Reading for M&G Real Estate is progressing well and work has commenced on the 300-apartment scheme in Wembley for Singaporean investors, both for delivery in FY 2021.
In the period the group secured a significant development site in Woking, on which it expects to develop 336 apartments, subject to planning, for delivery in FY 2023 and obtained the planning consents for its 166-apartment scheme in Sutton, London, and for a 90-apartment scheme in Belfast, Northern Ireland, both for delivery in FY 2021.
In total, the group now has a secured development pipeline, including Reading and Wembley, of eight sites, from which it is targeting to deliver approximately 1,800 apartments over the period FY 2020 to FY 2023.
Five of these sites have planning (1,031 apartments). The group is actively negotiating on several other opportunities.
It also continues to explore the opportunity of creating a separate BtR investment vehicle and will update shareholders further as appropriate.
In accommodation management, at the start of FY 2019, Fresh Property Group had 15,421 student beds and BtR apartments under management across 56 schemes, compared with 16,617 beds and apartments across 57 schemes the previous year, with the reduction reflecting the previously announced loss of 4,597 student beds following a portfolio sale by the Curlew Student Trust, offset by strong underlying growth.
Fresh Property Group is currently appointed to manage 21,018 units across 73 schemes by FY 2022.
There is a robust level of sales activity in the first half of the year for residential, with 53 homes and apartments sold in the division’s core North West market, compared wity 28 a year ago.
It said 22 affordable residential apartments, which form part of the group’s mixed-use development at Stratford, London, were sold in the period.
Chief executive Richard Simpson said: “We are pleased to report another strong set of results, in-line with our expectations.
“The financial performance of the group continues to be underpinned by robust student accommodation development activity and we are very encouraged by the increased contribution from the group’s other operating divisions.
“Institutional investor demand for our student accommodation developments is strong and we continue to see quality new investors entering the market, such as DWS at Wembley.
“Similarly, investor momentum is growing in the BtR market, with a significant increase in reported transaction volumes in the first quarter of 2019.
“The majority of these transactions are forward fund purchases of assets, which plays to Watkin Jones’ strategy and heritage. We are able to leverage our proven expertise in developing and managing multi-occupancy residential rental accommodation and to continue to be a partner of choice for institutional clients looking for scale.”
He added: “I continue to be very excited by the opportunities in this business, seeing the market dynamics for both student accommodation and BtR so strongly supportive of the group’s forward sale model.
“Together with our pipeline of forward sold and secured development sites, this will continue to provide excellent visibility on future earnings and cash flow. Consequently, the board remains confident in the prospects for the group.”