Watkin Jones plc (AIM:WJG), the UK's leading developer and manager of residential for rent, with a focus on the student accommodation and Build to Rent sectors, is pleased to provide a trading update for the year ended 30 September 2019 (the 'Period' or 'FY19').
The Group's trading remained strong through the final quarter of the year. Consequently, the Board expects to report revenues and earnings for FY19 in line with its expectations, together with a good cash performance in the Period.
All of the Group's business segments performed well and delivered on their operational objectives for the year. The six Purpose Built Student Accommodation (PBSA) developments (2,723 beds) scheduled for delivery in the year were successfully completed, whilst good progress was also made in the development of the forward sold PBSA and Build to Rent (BtR) assets scheduled for delivery in FY20 and FY21. A robust performance was also achieved by the Fresh Property Group and Residential businesses.
Development pipeline
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, 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 set out in the Development Transaction Update on 3 October 2019, the Group has now forward sold all seven of its PBSA developments (2,609 beds) scheduled for delivery in FY20 and has forward sold 1,928 beds across four schemes for delivery in FY21, with a further 448 beds currently in legals for sale. The Group's current pipeline of forward sold and secured PBSA development sites totals circa 6,670 beds across 17 sites, for delivery over the period FY20 to FY24, of which 13 sites (5,447 beds) have planning.
Following the recently announced sales of the Group's developments in Sutton, Bournemouth and Sheffield, the forward sold and secured BtR pipeline now comprises approximately 1,750 apartments across eight sites for delivery over the period FY20 to FY23, of which 1,012 apartments across five sites have been forward sold and a further site for 184 apartments has planning.
The Group has a number of other PBSA and BtR opportunities in advanced stages of negotiation, which if satisfactorily concluded would add a further circa 2,025 student beds and 1,150 BtR apartments to the pipeline for delivery over the period FY21 to FY23.
|
Delivery pipeline |
PBSA |
BtR |
||||||
|
|
Beds |
Apartments |
||||||
|
|
FY20 |
FY21 |
FY22 |
FY23/ FY24* |
FY20 |
FY21 |
FY22 |
FY23/ FY24* |
|
|
|
|
|
|
|
|
|
|
|
Forward sold |
2,609 |
1,928 |
– |
– |
159 |
782 |
71 |
– |
|
In legals for sale |
– |
448 |
– |
– |
– |
– |
– |
– |
|
Secured with planning |
– |
462 |
– |
– |
– |
– |
184 |
– |
|
Secured subject to planning |
– |
– |
1,032 |
191 |
– |
– |
213 |
336 |
|
Advanced negotiation to acquire |
– |
415 |
1,610 |
– |
– |
– |
350 |
800 |
|
|
|
|
|
|
|
|
|
|
|
Total |
2,609 |
3,253 |
2,642 |
191 |
159 |
782 |
818 |
1,136 |
* FY23/24 relates to a two-year period
Outlook
The Board is encouraged by the increasing level of investor demand that is being demonstrated for BtR assets. This provides confidence that there is a broad range of potential institutional investors with whom the Group can engage in order to replicate in BtR the low risk forward sale model that has been so successful for PBSA.
The pipeline of forward sold and secured development sites ensures that the Group continues to maintain good visibility over future revenues and earnings, whilst the fundamentals supporting the PBSA and BtR markets remain strong. The Board remains confident in the outlook for the Group and consider that it is well positioned to capitalise further on the opportunities open to it.
Capital Markets Day
At the Capital Markets Day to be held later today at Duncan House in Stratford, Chief Executive Officer, Richard Simpson will be joined by a number of the senior management team in providing an update on the Group's growth strategy.
The presentations will provide information on the opportunity which the Group has to increase the delivery rate across its two core markets to 3,500 PBSA beds and 1,000 BtR apartments per annum over the next five years, underpinned by long term, growing demand from tenants and institutional investors, as well as providing further insight into Watkin Jones' expertise and working capital light business model. No further price-sensitive information will be given in these presentations.
The presentations are being recorded and the slides, together with the recording, will be made available via the Group's investor relations website later today:
http://www.watkinjonesplc.com/results-centre/reports-presentations-and-publications/2019
Richard Simpson, Chief Executive Officer of Watkin Jones, said: “We are pleased by the progress achieved by the Group in the last twelve months. 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.”
Notice of Final Results
The Group will be announcing its Final Results on Tuesday, 14 January 2020. An analyst briefing will be held at 09.30hrs at the offices of Buchanan, 107 Cheapside, London EC2V 6DN.