On track & underpinned by strong momentum
For centuries, home ownership has proved to be reliable path to riches. However nowadays, due to elevated prices and an acute lack of supply, this is a dream for many, especially those trying to initially get on the property ladder.Not surprisingly therefore, more and more people are turning to the buoyant Build-to-Rent sector, which real-estate adviser Savills expects to ultimately be worth £543.6bn, equivalent to 1.749m apartments compared to 30.4k today (£9.6bn).
What’s more this isn’t simply down to affordability either. People and even cash-strapped students prefer large-scale purpose-built accommodation - providing security, convenience, communal spaces and quality of life vs dingy old digs.
Watkins Jones benefits from both of this secular trends. Today announcing 6 deals, to build 1,074 new PBSA beds and 370 BtR units over the next 3 years. Thus providing investors with not only multi-year visibility and downside resilience - but also an attractive entry point, with the shares trading on a modest 13x PER, whilst paying a 3.9% dividend yield. We make no change to our forecasts or 250p/share valuation.
CEO Richard Simpson concluding: “We continue to see positive momentum across all key areas of the business. Our 6 PBSA schemes for delivery in FY19 are on track for completion ahead of the 2019/20 academic year and we continue to see an encouraging pipeline of potential future sites across the UK. The sectors in which we operate are highly attractive to investors and we continue to make solid progress against our internal targets."
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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