Watkin Jones Share Discussion Threads

[goodpick] 07/6/2023 16:12

We’re beginning the week with some fantastic news. In partnership with Lacuna Developments, we’re pleased to share we have secured institutional investment with L&G and Clanmil Housing Association to forward fund the new urban residential community, Loft Lines, at Titanic Quarter in Belfast to create 778 new sustainable BTR homes.

Our Chief Investment Officer, Alex Pease, commented on the deal saying:

“We are delighted to have secured institutional investment from both L&G and Clanmil Housing Association for this landmark scheme in Belfast’s iconic Titanic Quarter. This is further evidence of the attractive investment and operational fundamentals of both BTR as a sector and Belfast as a city and a good sign of capital markets re-opening.
 
“Watkin Jones has a strong track record of developing large regeneration sites and we are delighted to bring the first BTR scheme to the city of Belfast. Titanic Quarter will develop an area that is steeped in rich history, transforming this brownfield site into a thriving place to live and acting as a catalyst for wider regeneration. We are very pleased to continue investing to support Belfast’s ambitions. The development is being brought to fruition by a true partnership approach between all stakeholders and funders and we are grateful for the genuine collaboration we have experienced with our partners. The scheme offers excellent employment opportunities with growth across many industries in the city. Belfast offers a wide range of shops, bars, and restaurants along with a thriving arts and music scene, making it a truly fantastic place to both work and live.”

[sikhthetech] 07/6/2023 14:33

PPCEH,

"Predicting interest rates is a mugs game. It’s like calling heads on a 50:50 coin toss. No one has a clue. "

I'm with Hybrasil on this. Everyone has their own reasons for their investment decisions, be it going long, short, buying, adding, trading etc etc

It's about predicting the direction of interest rates.

I use company/sector newsflow as well as predicting where the sector/economy is heading and the consequences.

After all, every likes to trade by predicting which direction the share price is heading.


On housing market, on TW/PSN threads my views were that there's inflationary pressures, which means interest rate rises. I stated that I wouldn't buy any HB due to challenges, affordability, inflationary pressures etc whilst majority of posters and HB/sector newsflow was positive.
PSN share price has 1/2 since then.




sikhthetech - 15 Jul 2021 - 12:10:20 - 4203 of 13761
Markets look forward.
Govn support is ending.
I think H2B is toxic and will contribute to another financial crisis.
Inflationary pressures, so interest rate rises.


sikhthetech - 07 Jul 2022 - 16:22:15 - 2901 of 3086 PERSIMMON PLC
I wouldn't buy any HB at the moment...
Affordability issues still mounting up with energy cap set to rise to around £3000 pa in Oct, inflationary pressures pushing up interest rates.

[hybrasil] 07/6/2023 14:04

2 more raises of ecb rate predicted for June and July and it now looks likely that rates will stay high for longer than previously predicted

[christw1234] 07/6/2023 12:24

Hybrazil
Thank you, that's my point about generating cash for the assets, WJG can't afford to pay any dividends for the next two years at least

[hybrasil] 07/6/2023 11:12

There is no way that they can make the margins they were previously getting

[christw1234] 07/6/2023 09:05

PPCEH
With respect, you are missing the point.
Everything is presold at what profit margin, BTR is less profitable than PBSA the days are long gone when you can develop PBSA and return a profit margin of 20% on costs.
I have no doubt that the October results will reflect that.
WJG can be very busy developing and making no money in the present economic climate they are at the institutional investor's mercy unfortunately to pre-sell developments at discounted prices

[ppceh] 06/6/2023 21:40

But they don’t build speculatively, everything is pre sold.

Exeter was a one off where fixed price builder went bust.

Hence there are no risky major cash outflows.

[christw1234] 06/6/2023 19:11

Like any business, if the profit margins are under pressure you have no alternative but to increase the volume of sales, I can't see that happening with WJG for a good couple of years.
The pipeline is not robust enough to withstand the time scales of returning to profit unfortunately

[christw1234] 06/6/2023 14:08

Disco
Yes, and you can soon burn cash if you are not making any profit.
Let's see how much cash they have on their balance sheet in October figures

[disc0dave45] 06/6/2023 13:59

Balance sheet here is strong IMO. From H1 numbers, NTAV was £153m (intangibles only £11.8m) and nearly 30% of their NTAV is net cash.

[christw1234] 06/6/2023 12:58

PPceh
They are not tangible, they are hope value look at the Exeter scheme things can soon go out of kilt.
They are not secured income-producing stabilized assets
Xxx

[ppceh] 06/6/2023 10:57

Christw

Balance sheet is virtually all tangibles!

They build to order so WIP is forward sold. Plus Land bank.

There is no speculative development

Hybrasil

So how accurate was the 5 year and 10 year as of 3 years ago? Anyone who thinks they can reliably predict interest rates is deluded!

[christw1234] 06/6/2023 10:16

Hybrazil
Not sure £219 per unit is true, Belfast is under pressure on rental income.
The average rent is £150-£175 per week, to spec develop property on that income is not viable in the present economic climate

[hybrasil] 06/6/2023 08:52

£219k per unit. Anyone have a handle on Belfast ? Is that good?

As to interest rate predictions it’s not that difficult to form a reasoned view and mr market helps. Look at the 5 and 10 year rates.

Don’t get me wrong. I believe in property and I enjoy speculation. It is despite its supposed glamour very difficult to get spec building continuously right.

I got chided when I said they would have issue an rns on deals as they are material


WJG will have its day and the time to buy is getting closer.

I think however the conservative in me says wait until the next trading statement

[christw1234] 05/6/2023 18:44

POceh
Not sure I agree with you on a solid balance sheet, name me tangible assets they own on the balance sheet, the cash reserves will soon be eroded if WJG is not generating cash or profit

[ppceh] 05/6/2023 18:06

Hybrasil

Predicting interest rates is a mugs game. It’s like calling heads on a 50:50 coin toss. No one has a clue. QE to QT at same time as record % increase in interest rates off record amounts of debt. No one can model this.

WJG is a cyclical business since exposed to interest rates. However it is more defensive than many interest rate sensitive shares since they can batten down the hatches, as they are doing. Student accommodation is reasonably recession proof and the business model is sound.

Price appears oversold on any mid term view, they have a solid balance sheet and will survive. The low share price has no bearing on reality and is down to big sellers exiting. This is apparent throughout the REIT sector as some test new lows at the same time as others enjoy decent bounces when overhang is cleared.

[christw1234] 05/6/2023 10:26

Archy
Its alright selling these sites, however at what price? and more importantly have WJG made any profit with the sales
I suppose we will have to wait until October to see the real figures. I hope they are haven’t become fire sales

[18bt] 05/6/2023 09:20

Archy - well said. It requires buyers and sellers to make a market. Well informed negative comment can be very illuminating on these threads.

[zangdook] 05/6/2023 08:48

Sensible arguers are sadly too few, most fall somewhere between arrant nonsense and gaslighting. The usefulness of these boards is more or less dependant on the ability to filter signal from noise.

[archy147] 05/6/2023 08:27

Well there we see something that can generate some momentum!

I appreciate your applause hybrasil. That's quite a piece of luck I’ve had there with the sequence of my trades and the news on this occasion. Thank you again for your contribution :).

What a lot of people don’t realise on these forums is that bears are people we should be thanking for their alternative views (if sensibly argued), not berated - as they usually are - for saying things we’d prefer not to hear. Overconfidence from investors is one reason why markets are not always efficient.

[skinny] 05/6/2023 07:01

Forward sale of Loft Lines, Titanic Quarter to L&G and Clanmil

Watkin Jones is pleased to announce the forward sale of Loft Lines, at Titanic Quarter in Belfast, to L&G and Clanmil Housing Association ('Clanmil'). The development funding comprises 627 Built to Rent ('BTR') units and 81 social rent affordable homes.

This project will be the first BTR scheme in Belfast, part of one of the largest waterfront regeneration sites in Europe. Loft Lines will be a brand-new urban riverside community built on Queen's Island, in the centre of Titanic Quarter, Belfast. The development will help to further catalyse the regeneration of Queens Island, alongside helping to transform Belfast city centre living, bringing attractive residential homes to the area for the first time and a significant boost to the local economy.

The total consideration payable to the Group over the course of the development will be approximately GBP155 million. The scheme is scheduled for delivery in summer 2026 and is expected to deliver a margin in line with current target returns. Construction work on the development will not start meaningfully until FY24 and therefore the profit contribution to FY23 will be restricted to a small profit on the land transaction, as expected.

Richard Simpson, Chief Executive Officer of Watkin Jones, said: " We are delighted to have secured institutional investment from both L&G and Clanmil Housing Association for this landmark scheme in Belfast's iconic Titanic Quarter. This is further evidence of the attractive investment and operational fundamentals of both BTR as a sector and Belfast as a city and a good sign of capital markets re-opening."

- Ends -

[hybrasil] 04/6/2023 21:48

I don’t see any such momentum.

However I applaud Archie’s trade. He is now back as a shareholder for1/3rd less than he sold at

[christw1234] 03/6/2023 20:55

Hybrasil
Where is the momentum coming from for increase in profits, i can’t see that this year or 2024.
Please correct me if I’m wrong

[hybrasil] 02/6/2023 22:09

Archy

Well done. Back in at nearly 1/3rd cheaper. It makes a lot more sense at this level

[archy147] 02/6/2023 17:27

Well, having sold out at 96p (Thank you to the two resident bears for that), I couldn't resist re-entering at 66p today when the momentum turned positive.

If they get over the current tricky patch ok this will be back over £1 in no time. The risk/reward looks worth it to me.

GLA