Watkin Jones doubles profits on institutional demand for rentals
The North Wales-based developer reported a pre-tax profit of £51m for the year ended 30 September 2021, up more than 100% from £25.3m the previous year.
Watkin Jones put its growth down to strong institutional demand for rental residential assets. The company’s increase in profit comes after it suffered a £20m hit in 2020 due to exceptional costs incurred by cladding remediation work and the effects of Covid-19.
During the 12-month period to the end of September 2021, the developer forward sold 722 build-to-rent apartments and nine student accommodation schemes totalling 2,750 beds.
The group’s BTR and purpose-built student accommodation divisions also drove an increase in revenue. Watkin Jones saw income increase by 21% year-on-year from £354m to £430m.
Overall, the company’s BTR and PBSA development pipeline has an estimated future revenue value of £1.8bn, the firm said. Watkin Jones also reported £123m of cash reserves, demonstrating a “strong liquidity position”.
Fresh, the company’s accommodation management arm, had a steady year. Revenues were up by £200,000 year on year to £7.8m, hampered by lower student occupancy during the period, Watkin Jones said.
At the end of the year, Fresh had 22,155 student beds and apartments under management. This is projected to increase to 23,900 by 2024, according to the company.
Watkin Jones’ residential arm, which builds homes for outright sale, did not perform as well as the group’s three other divisions.
Revenues were down almost 14% to £22.7m from £26.3m the year before. Watkin Jones attributed this to build completion delays at a site in Preston.
The company plans to move away from purely developing homes for outright sale and pivot to an affordable housing-led business model due to the “huge demand for more social housing in the UK”.
Watkin Jones’ affordable housing pilot saw registered provider Plus Dane pay £28m for a 159-home scheme in Crewe.
“This de-risked, capital-light model offers us high returns on capital,” Watkin Jones said.
Richard Simpson, chief executive of Watkin Jones, said: “This is a very strong set of results. Watkin Jones has once again demonstrated its end-to-end development capability.
“As well as handing over 12 schemes on time, we leveraged our excellent institutional relationships to drive the forward sale of 3,800 beds and continued to enhance the depth and quality of our development pipeline, securing good visibility of future earnings.”
Watkin Jones has appealed against the refusal of a 425-home student accommodation scheme on the former USDAW trade union site in Fallowfield.