The Board is pleased to report a strong trading performance in the first six months of the financial year, in line with its expectations.
Student Accommodation
In the period, good progress has been made in the student accommodation development business. As announced on 23 March 2018, Watkin Jones has now secured a development pipeline in excess of 9,800 beds, with over 8,300 beds having already received planning consent. All the developments due for delivery ahead of the 2018/19 academic year (3,415 beds) and a further five schemes (2,675 beds) currently scheduled to be delivered ahead of the 2019/20 academic year have been forward sold. The Group is actively marketing a number of further schemes scheduled to be delivered ahead of both the 2019/20 and 2020/21 academic years and is seeking to secure forward sales for these developments in the second half of the financial year.
Build to Rent
The Group has continued to push forward with a number of opportunities in the build to rent sector. In the first half of the year, planning consents have been secured for three sites located in Bournemouth, Sheffield and Sutton, increasing the pipeline of owned sites with planning to approximately 700 units. The Group has also secured a significant development site in Uxbridge and is progressing the planning consent. In total, the Group is now in control of five build to rent development sites and remains in positive negotiations on several other opportunities, from which it expects to deliver over 1,500 units in the next five years.
Fresh Property Group ('FPG')
FPG currently has 16,185 student accommodation beds and 533 build to rent units under management, across 58 schemes. As advised in the Group's FY17 full year results issued on 15 January 2018, Watkin Jones anticipated that as a consequence of the sale by the Curlew Student Trust (“CST”) of a portfolio of 14 schemes (the 'Enigma' portfolio), comprising 5,124 beds, it was likely that the management of the schemes concerned would be taken in house by the new owner. FPG has since agreed to provide full management services for these schemes until 30 April 2018, after which they will continue to provide financial reporting services for the schemes until at least September 2018. FPG will be fully compensated for any difference in the level of fees receivable over the remaining periods of the existing contracts. Excluding the Enigma schemes, FPG is currently contracted to manage 14,016 student accommodation beds from the start of the 2018/19 academic year. The recent successful launch of Curlew Student Trust 2 ('CST2'), an investment vehicle focused on UK student accommodation for which FPG is the preferred property manager, provides an additional opportunity for future business growth. FPG is working with CST2 in appraising several new schemes.
Outlook
The Group's progress in implementing its operational and strategic objectives is encouraging and the Board remains confident in the outlook for the full year and beyond.
Mark Watkin Jones, Chief Executive Officer of Watkin Jones plc, said: “I am delighted with the Group's performance in the period. The outlook for the UK purpose built student accommodation market is positive and demand for our high-quality product remains strong. FPG continues to be successful in securing new contracts and, from the start of the 2018/19 academic year, is contracted to manage over 14,000 beds.
“We continue to make solid progress in the build to rent sector, having successfully acquired five build to rent development sites. We remain in positive negotiations on several other opportunities and will update the market as these opportunities progress.
“As we continue to consolidate our position as a market leader in the development and construction of student accommodation and make good progress with our build to rent developments, the business continues to demonstrate sustainable growth. Given the encouraging start to the financial year, we believe our business model will continue to deliver strong returns to shareholders.”
Notice of Results
The Group will be announcing its Interim Results on Tuesday, 22 May 2018. An analyst briefing will be held at 09.30hrs at the offices of Buchanan, 107 Cheapside, London EC2V 6DN.