Student housing and build-to-rent developer Watkin Jones has grown its development pipeline to a record £2bn in the six months ending 31 March.
The company’s pipeline has increased by 43% on H1 last year, with £600m already forward-sold. The BTR pipeline is expected to generate around £1bn in future revenue, while the student aspect is worth some £900m.
Elsewhere, Watkin Jones said it planned to increase the amount of modular construction within its build programmes to reduce waste and build times.
It will also trial timber frame construction, which is “scheduled to commence shortly”.
The business has set aside £28m for possible remedial works under the Building Safety Act. That provision mainly drove a statutory pretax loss of £16.6m for the period, compared with a pretax profit of £25.8m for H1 2021, on revenue of £193m, which was 8.2% higher than in the first half last year.
Statutory basic earnings per share were in negative territory, at -5.2p, compared with 8.11p for H1 2021. Underlying earnings per share for the period (calculated before the impact of the £28m exceptional charge) stood at 3.65p, a 55% fall from 8.11p in the first half last year.
Underlying operating profit was down by nearly 50% to £14.6m compared with H1 2021, partly driven by a higher proportion of lower-margin land sales. Its statutory operating loss totalled £13.4m, compared with a profit of £29.1m in the first half last year.
The business has also completed the sale of a PBSA portfolio to EQT Exeter, comprising three developments and two operational properties offering 2,063 beds in total. Those are located across Bath, Nottingham, Swansea, Bristol and Glasgow and will be managed by Fresh. Watkin Jones said the deal has generated profit of around £20m for its 2022 financial year.
Watkin Jones said the underlying market fundamentals supporting residential for rent in particular remained “strong”, underpinning its confidence in “the future prospects for the group”.
Richard Simpson, chief executive of Watkin Jones, said: “We are continuing to build on the positive momentum from the second half of last year and have demonstrated operational resilience through the strength of our business model.”
He added: “Our proactive management of build costs and sales values has ensured that our overall development margins are maintained, and we are confident going into the second half.”
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