Watkin Jones chief executive Richard Simpson has hailed the “gradual” return of forward-funding deals, after securing its first forward sale of the year.
The student housing and build-to-rent developer has sold a £110m GDV, 819-bed purpose-built student accommodation development in Bristol to private equity giant KKR, with Simpson saying the deal fortifies his expectations of the forward-funding market in H2.
It has a further two projects under offer and three others being marketed.
Simpson said the deal has boosted confidence in its future forward sales. However, he warned there was still a “possibility that these transactions will not close in time” or that “some commercial terms could change” by the end of its current financial year, against a backdrop of ongoing market volatility.
He said: “The market is clearly volatile… It is a little fragile and it is open to macro shocks, and therefore it is right that we adopt a cautious approach.”
Watkin Jones acquired the Bristol Bedminster site from Deeley Freed in 2022. Located close to Bristol University’s new Temple Quarter Enterprise Campus, it is leased to the University of Bristol on a 15-year term.
Amenities include communal lounges, a courtyard, public realm and the newly restored River Malago corridor. It will be operated by Watkin Jones’ third-party management business Fresh.
The scheme will generate £5m profit this year for Watkin Jones, as well as a £25m net cash receipt on day one of the deal. Works will complete in 2024.
The news comes after the developer’s pretax adjusted profit fell to £300,000 during the six months to the end of March, a 97.4% fall on the same period last year. Statutory results show an £800,000 loss from gross profit of £16.1m.
Shares in Watkin Jones had fallen by around 15% mid-morning, to 81.7p.
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