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Tue June 15 2021

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Watkin Jones sets its sights on private rented sector

9 Jun 16 Welsh builder/developer Watkin Jones has made a strong start to life as a listed company and is now diversifying from its core business of student accommodation to the private rented sector.

Chief executive Mark Watkin Jones
Chief executive Mark Watkin Jones

Watkin Jones’s first purpose built PRS development is in Leeds and is scheduled for completion next year.

Watkin Jones joined the Alternative Investment Market (AIM) on 23rd March 2016 after an initial public offering (IPO). Its maiden half-year results for the six months to 31st March 2016 show revenue up 41% to £145.9m (2015 H1: £103.8m).

Operating profit, excluding the exceptional costs associated with the IPO, was up 83% to £17.0m (2015 H1: £9.3m). Costs associated with the IPO include transaction related fees and commissions amounting to £6.5m.

The performance represents increased activity in its core business of building student accommodation. Watkin Jones has nine such developments in progress for completion in the current financial year. Revenue from student accommodation development for the half-year was £122.6m. Its student accommodation pipeline amounts to 31 development sites.

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Student accommodation management services are provided by Fresh Student Living , which Watkin Jones acquired on 25th February 2016 for £15m, so did not make much contribution to these results. Fresh is currently contracted to manage 8,310 beds across 32 schemes, with an annual management fee income of £2.3m. By 2020, Fresh is currently contracted to manage 17,924 beds across 59 schemes.

Chief executive Mark Watkin Jones said:  "Following on from our successful admission to AIM in March this year, we are delighted to report such a strong maiden set of half year results today.  Our student accommodation development business remains positively underpinned by the fundamentals of the student accommodation market and the forward sale model provides us with excellent visibility as to future earnings and cash flow.  The current student accommodation pipeline of 31 development sites underpins the business outlook to FY 2018, with 16 of the 17 developments for delivery by the end of FY 2017 already forward sold.  We are at advanced positions regarding the acquisition of a number of site opportunities that will be for delivery in FY 2019 and beyond.”

The chief executive said that he was now looking at new markets and has set up Five Nine Living Ltd to manage multi occupancy property assets in the private rented sector (PRS) “leveraging the expertise of Fresh”. It is in negotiations regarding a number of PRS opportunities.

He said: “An opportunity exists for our residential business, with the potential for Watkin Jones to apply its student accommodation model to the development and management of purpose built PRS schemes.”

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