£180m forward sale of 4 student sites
Watkin Jones provides the end-to-end development and management of large scale, multi occupancy accommodation, focusing on purpose built student accommodation (PBSA) and residential build to rent (BTR).As further evidence of the health of the £4bn pa UK Purpose Built Student Accommodation (PBSA) market, Watkin Jones said yesterday morning that it had forward sold 4 schemes for £180m - covering 2,163 beds across Glasgow, Coventry & London (2x) – to a joint venture (JV) between KKR & Round Hill Capital.
Furthermore, a 5th in Bristol has been provisionally exchanged, subject to planning consent, for which additional consideration would be received.
The £180m will be paid over the next 2 years, hence adding to the company’s strong revenue and earnings visibility, alongside its robust balance sheet. All told, we think this is encouraging news, and underlines not only the strength of the WJG brand, but also the build quality, project management and cost control of its developments.
Indeed, considering this is the JV’s 1st UK based PBSA transaction (albeit active in Spain, the Netherlands and Europe), it represents another great endorsement for the firm that KKR/Round Hill has decided to choose WJG as their construction partner.
At this stage, we make no change to our forecasts or 230p/share valuation - but look forward in hearing news at the FY18 trading update later this month. In our view, the business deserves its premium rating vs peers, reflecting the superior growth, asset turns, lower risk and cash-flows generated.
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Springfield Properties is engaged in developing a mix of private and affordable housing in Scotland. Co. operates through two divisions: Private Housing and Affordable. The Private Housing division develops smaller to medium sized developments in Scotland, as well as a small number of larger sites. The Affordable division's operations focus on the development of land into stand-alone sites which consist entirely of affordable homes.
Telford Homes is a developer of residential-led, mixed use sites in London. Co.'s customers include individual investors from the U.K. and overseas, owner-occupiers and housing associations. Co. is working with institutional investors in the build to rent sector. Co. has only one reportable segment being housebuilding in the U.K.
Watkin Jones is a holding company. Through its subsidiaries, Co. is engaged in the property development and the management of properties for multiple residential occupation. Co. operates in the following segments: student accommodation, which is engaged in the development of purpose built student accommodation; build to rent, which is engaged in the development of build to rent accommodation; residential, which is engaged in the development of residential property; and accommodation management, which is engaged in the management of student accommodation and build to rent property.
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