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Watkin Jones Plc - Development Transaction Update

 

 

Watkin Jones plc

('Watkin Jones' or the 'Group')

Development Transaction update

Watkin Jones plc (AIM:WJG), a leading UK developer of multi-occupancy residential property assets, with a focus on the student accommodation and Build to Rent sectors, is pleased to provide the following update on transactions in its two core sectors.

 

Summary: 

  • Forward fund of 762 unit mixed PBSA and Build to Rent development in Sheffield
  • Sale of 400 student beds across two schemes in Chester
  • Agreements for the development of 638 beds across two schemes in Glasgow and Edinburgh
  • Forward fund of two Build to Rent schemes, comprising 325 units, in Sutton and Bournemouth
  • Forward sale of a 35 apartment residential development in Chester
  • Further development of the PBSA pipeline with new sites secured in Edinburgh and Bath and planning obtained for the Group's site in Bristol

 

Student Accommodation (PBSA)

Forward sales / development agreements

Watkin Jones has completed the forward fund of a mixed PBSA and Build to Rent site, with 691 student beds and 71 Build to Rent units at Steelworks House on Rockingham Street, Sheffield, located in close proximity to the University of Sheffield with AIG Global Real Estate.  The consideration payable to Watkin Jones is circa £61 million, net of client funding costs.  The development is scheduled for a phased delivery between August 2021 and the end of March 2022 and represents the fifth deal between the two organisations. 

The Group has also sold two PBSA developments in Chester to Arlington Investors for a combined total value of circa £30 million.  The first development on Hunter Street, which was completed for the start of the 2019/20 academic year, comprises 77 studios, whilst the second development on Liverpool Road has been exchanged on a forward commitment basis and comprises 323 beds for delivery ahead of the 2020/21 academic year.  The consideration for the second development will be paid on hand over of the development.  Both schemes will be managed by Fresh Property Group, the Group's specialist accommodation management company.

In addition, Watkin Jones has secured development agreements for two PBSA sites in Scotland with CA Ventures, a Chicago-based real estate investment company and a new client for the Group.  The first site comprises 422 beds in Cathedral Street, Glasgow, whilst the second site comprises 216 beds in Dundee Street, Edinburgh. Both developments are scheduled for completion ahead of the 2021/2022 academic year.  The combined consideration payable for the development works for both schemes is circa £50 million, net of client costs.

 

Development pipeline

Watkin Jones has recently secured a prime site in Iona Street, Edinburgh, located close to the city centre.  The Group will now seek planning permission for a scheme which comprises circa 270 student beds and a further 88 residential units.  The scheme is targeted for delivery ahead of the 2022/23 academic year. 

The Group has also secured a circa 185 bed site on Lower Bristol Road, Bath which is targeted for delivery ahead of the 2024/25 academic year.

Further to the announcement issued on 1 October 2018, detailing the Group's development portfolio sale to the joint venture between KKR and Round Hill Capital (the 'JV'), Watkin Jones is pleased to confirm that the Group has now secured full planning consent for the scheme in Bristol, which the JV had entered into an option agreement to acquire subject to receipt of the planning consent.  The site on Wilder Street is in close proximity to the City centre and Bristol University and comprises 348 beds, which are scheduled for completion ahead of the 2021/2022 academic year. 

 

Build to Rent (BtR)

The Group has forward funded two BtR developments to M&G Real Estate for a consideration of circa £90 million, net of client funding costs.  The first site is situated in Sutton, London and comprises 166 apartments for delivery in June 2021.  The second site, which is located in Bournemouth, is due for delivery in March 2020 and comprises 159 apartments as well as 37,000 sq.ft. of commercial office space.  They represent the fourth and fifth transactions which the Group has entered into with M&G Real Estate. 

Watkin Jones is also pleased to announce that it has forward sold a residential development of 35 apartments on Trafford Street in Chester to an institutional fund managed by Hearthstone Investment Management, for circa £5.2 million.  Developed by Watkin Jones' Residential division, the scheme is scheduled for delivery in March 2020.

 

Richard Simpson, Chief Executive Officer of Watkin Jones, said: 

"I would like to congratulate the teams involved in concluding these various transactions as planned, underlining the resilience and strength of the Group's business model, as well as that of the sectors in which we operate.  We highly value our institutional clients and partners and it is pleasing to see a number of our key relationships strengthened further at this time."

 

Capital Markets Day & Pre-Close Trading Statement

Watkin Jones will hold a Capital Markets Day for investors and analysts on Tuesday, 5 November 2019 at Duncan House in Stratford, one of the Group's recently completed London based purpose-built student accommodation developments.  On the morning of the Capital Markets Day, the Group will issue its FY Pre-Close Trading Statement for the year ended 30 September 2019.