- Forward sales of three sites since year-end and four more in negotiations.
- Institutional demand for build-to-rent very strong.
Annual results from Watkin Jones (WJG:203p), a developer specialising in purpose-built student accommodation (PBSA) and build-to-rent (BTR) housing, were slightly ahead of guidance given at the time of the pre-close trading update when I reiterated my buy advice, at 179p (‘Bagging a value stock hat trick’, 23 November 2020). Underlying operating profit dipped slightly to £51.7m on a 5 per cent lower revenue of £354m to produce earnings per share (EPS) of 14.7p. Net cash of £94.8m (37p a share) was almost £5m higher than expected, up more than a fifth year-on-year, and the board declared a 7.35p a share dividend.
Of far more interest is commentary from chief executive Richard Simpson who notes that institutional investors are returning to the market to forward fund developments. In the past three months, Watkin Jones has secured £65m of forward sales across three PBSA schemes (York, Bristol and Leicester) for handover in the 2022 financial year, and is in negotiations on a £35m sale of 462 bed site in Leicester to complete the forward funding of all 3,192 beds slated for delivery this year. Importantly, operating margins achieved are in line with pre-Covid-19 levels.