Watkin Jones returned to profit in 2024 after completing the sale of two major purpose-built student accommodation (PBSA) schemes.
The property developer reported an adjusted pre-tax profit of £9.2m for the 12 months ending 30 September 2024, having made a £2.9m loss in the previous period.
Its improved result reflected the forward sales of PBSA developments at Gas Lane in Bristol and Stratford in East London, which have a combined total of 657 PBSA beds.
The Stratford scheme was sold to a new joint venture Watkin Jones created with the Housing Growth Partnership, which then secured a development loan from Investec Real Estate in August 2024. It is expected that the joint venture will sell the completed scheme once it is stabilised, which will provide a further cash payment if the returns exceed agreed hurdle rates.
Profits rose despite the firm’s total revenue falling by 12.3% to £362.4m, mainly due to the HGP deal being counted as the disposal of a subsidiary instead of a land sale.
Watkin Jones also achieved planning for a further c.2,600 PBSA beds across four schemes and secured two further PBSA development sites, subject to planning. The site in Belfast will deliver c.1,000 beds and the site in Bristol will deliver 358 beds.
During the year, the company delivered three PBSA developments as planned, completing Lower Parliament Street in Nottingham, Metalworks in Bedminster, Bristol, and the Lower Bristol Road scheme in Bath. Watkin Jones also forward sold the 260-bed Gas Lane scheme in Bristol – its first transaction with a new client, Hines.
Revenues from PBSA were £117.6m (FY23: £175.7m), down 33.1%, in part because the HGP transaction was accounted for as the disposal of a subsidiary rather than a land sale. As a result, it was not included within revenue, which would have been £24.8m higher if the transaction had been a traditional forward sale.
Despite reduced revenues, gross profit rose 19.3% to £13.6m (FY23: £11.4m), resulting in a much‑improved gross margin of 11.6% (FY23: 6.5%).
“The slow pace of base rate cuts and the general election meant sales activity had not improved as fast as anticipated.
“While the investment market has continued to be challenging, the sectors in which we operate remain attractive.
‘”PBSA is still undersupplied, and BTR [Build to Rent] offers a key solution to the UK’s housing shortage, helping to accelerate the delivery of new homes and fostering communities.”
Alex Pease, chief executive, Watkin Jones
Watkin Jones’ improved financial performance came despite ‘subdued’ investment demand for PBSA and Built to Rent properties.
