Watkin Jones plc
(‘Watkin Jones’ or the ‘Group’)
£182m PBSA Joint Venture between Watkin Jones & Maslow Capital
Watkin Jones, the UK’s leading developer and manager of residential for rent, is pleased to announce the sale of a new c.784 bed purpose-built student accommodation (‘PBSA’) scheme in Glasgow (the “Ard”) to a newly created joint venture (the “JV Entity”) owned 95% by Maslow Capital and 5% by the Group (the “Transaction”). The Ard will deliver high-quality accommodation in one of the UK’s prime cities for student living, in a central location highly accessible to Glasgow’s main universities.
The Transaction, which has a projected Gross Development Value of c.£182m at completion, will generate secured revenues for the Group of approximately £115m over the course of its three-year construction period. In addition, there is the potential to generate further revenue through the sale of the property once completed (the “Realisation Sale”).
Under the structure, the Group will be responsible for the delivery of the scheme through to completion, as well as its ongoing management by Fresh, the Group’s accommodation management business. Completion is targeted for the start of the 2028/29 academic year.
The Transaction will deliver an initial net cash receipt of c.£16m, as well as contributing to the Group’s revenue and profitability in FY2025. Further income will be phased over the course of the construction process. The Group will also benefit from additional revenue proportionate to any returns in excess of agreed hurdle rates delivered by a Realisation Sale. Any such sale is not expected to occur before Q4 2028.
This is Watkin Jones’ first transaction with Maslow Capital and is a further demonstration of the Group’s ability to broaden its portfolio of funding partners against a backdrop of continued volatility within the UK’s residential development and construction sectors.
This transaction, together with the continued strong operational delivery across the business through the second half, is expected to enable the Group to meet its financial expectations for FY2025.
Alex Pease, Chief Executive Officer of Watkin Jones, commented:
“This transaction represents a significant further step for the Group as we seek to diversify our business model and create innovative development funding structures. Maslow Capital is an excellent partner for Watkin Jones, and their entry into a joint venture with the Group is a great endorsement of our successful track record and extensive experience in residential development and construction.
Related party transaction
For operational purposes, the JV Entity will initially have three statutory directors, being Alex Pease, the Group’s CEO, Simon Jones, the Group’s CFO, and George Dyer, Group Investment Director. Accordingly, the JV Entity will be a related party of the Group, and the entry into the Transaction (including the associated development, financing and management agreements between the Group and the JV Entity), constitutes a related party transaction pursuant to Rule 13 of the AIM Rules for Companies.
The Independent Directors, being all directors of the Group other than Alex Pease and Simon Jones, having consulted with the Company’s nominated adviser, Peel Hunt, consider the entry into the Transaction is fair and reasonable insofar as the Company’s shareholders are concerned.