Watkin Jones’ market update and ESG targets

Watkin Jones releases its market update alongside its ESG targets at its Capital Markets Day on 2 November.

Hove Gardens Build to Rent scheme on a one acre site in Hove - Watkin Jones | BTR News
Hove Gardens Build to Rent scheme.

Watkin Jones has confirmed in yesterday’s (2 November 2021) trading update that operating profit for the year to September 2021 will be in line with expectations, but year-end net cash of £125m is £40m ahead of estimates.

The statement precedes its Capital Markets Day where Watkin Jones highlights its sustainability and affordable homes strategies against what they see as a backdrop of increasingly supportive Build to Rent and student markets.

For the year to September 2021, five of the company’s Build to Rent developments and seven PBSA schemes which were scheduled for delivery in FY21E were completed and handed over, and 13 developments in the build stages remain on track.

Since its 6 September update, new forward sales agreements worth £227m have been added to the forward sold pipeline. The secured pipeline for Build to Rent and PBSA now has a future revenue value of c.£1.75bn.

Institutional investors have underpinned Watkin Jones’ capital-light growth model – by acquiring developments on a forward-sale basis. The company recently announced forward funding from LGIM for its Lewisham Build to Rent scheme and Hove Gardens scheme in Brighton. The Group reports that demand for Build to Rent has remained robust because of long-term visibility of rental income.

Previously, Watkin Jones announced it expected long-term growth in the Build to Rent sector – which is driven by demand from renters and from investors attracted by the income prospects.

The Group’s accommodation management division – Fresh – has increased its Build to Rent apartments and student beds under management by 10.1% to 22,210. Watkin Jones sees Fresh as a stable income stream from regular management fees, but also to use its brand and insights to tie together Build to Rent, PBSA and possibly Co-living as graduates move into work.

The Group’s Capital Markets Day (on 2 November 2021) also focused on sustainability – with Watkin Jones updating its sustainability strategy and targets across the three themes of ‘people, places and planet’.

The company will work with their supply chain to reduce carbon emissions, make workplaces and developments more energy and water efficient, and will reduce its waste. Watkin Jones has set clear ESG targets, including:

  • By 2030, Net Zero on scope 1 emissions which are direct emissions from own sources.
  • By 2030, Net Zero on scope 2 emissions which are indirect emissions generated from heating, cooling and electricity from own sources.
  • By 2030, a ‘meaningful impact’ on scope 3 emissions which are all other indirect emissions from the supply chain.
  • By 2025, all suppliers to be ISO 14001 accredited.
  • By 2023, all new developments will have new heat pumps.
  • By 2030, all developments will have an EPC rating of ‘A’.
  • By 2025, over 95% of waste will be diverted from landfill, and by 2030 this will rise to over 97.5%.
  • By 2025, a reduction of 40% of waste produced and by 2030, an 80% reduction.
  • By 2025, a 10% reduction in water usage.
  • By 2026, a full electric car fleet.