Nic Simpkin: Willmott Dixon’s sister act
Willmott Dixon’s various residential companies have always been a bit of an enigma, dipping into PRS, private sale and affordable housing while struggling to break free of its construction parent.
So it was a surprise when it emerged in May that the former Berkeley Group finance director Nic Simpkin was stepping in to head up a new company that would merge all the Willmott residential brands.
Rumours quickly surfaced that Willmott Residential would consider an IPO to finance its expansion, but elections and referendums seemed to put paid to the idea, and a quiet summer followed.
Willmott Dixon’s various residential companies have always been a bit of an enigma, dipping into PRS, private sale and affordable housing while struggling to break free of its construction parent.
So it was a surprise when it emerged in May that the former Berkeley Group finance director Nic Simpkin was stepping in to head up a new company that would merge all the Willmott residential brands.
Rumours quickly surfaced that Willmott Residential would consider an IPO to finance its expansion, but elections and referendums seemed to put paid to the idea, and a quiet summer followed.
Until this week, when its parent’s interims announced that Willmott Residential would spin out as a sister company, with a separate board and a new impetus.
Nic Simpkin is sitting in the residential developer’s newly expanding offices in Hanover Square, W1. So are they still going to IPO?
“We’re going to IPO next year,” he jokes, causing the PR’s face to sink.
On a more serious note, in the long term, everything is on the cards.
In the meantime, however, financing to keep up with what Simpkin wants to do will come from a variety of sources.
“You’re looking for the whole shooting match, and the reality is, in order to meet our aspirations as a developer, we need a strong balance sheet to grow the business,” he says.
“The strong balance sheet will be long-term equity money, plus some debt, to put ourselves on a strong footing.
“But all of that is done off the back of what the guys have created to date.”
Being at the helm of expanding that model, with 7,500 units so far across 15 sites, is what tempted him to come back after two years in the wilderness. Simpkin left Berkeley abruptly in September 2014.
“I want this business to be really successful, that’s my driver. In 10 years’ time, I want to say: ‘I did that.’ Do I think I can help and add value over and above what’s happening at the moment? Yes.”
Changing the model
Through having a rather disparate set of companies, Willmott Residential has been able to expand across different tenures, based on what most suits the market cycle. Simpkin sees this as the future.
“We are residential planning class experts, and you have to be able to do all types of planning class in residential, whether it is affordable, private sale, student, PRS or retirement living.
“When you operate in a cyclical market, your model changes with the cycle.”
People forget that Berkeley started working on one of the first bulk sales to a PRS operator back in 2009, a 534-home portfolio across the South East that was eventually sold to M&G in 2013.
Simpkin was part of that deal, and saw great potential.
He says: “That was a case of, well, how hard can it be?
“But actually it was a really interesting journey to understand what the real drivers are and what happens when you get tenants in.
“This is the detail of how you manage it. But when you can manage that, then you can take an asset, turn it into an income stream and sell it to a pension fund.
“That’s the mechanics of it, which no one wants to touch.
“There are always three barriers to entry – size, value and the management hassle. If you can solve those, that’s a great way to unlock a real market.”
Nailed to the PRS mast
Simpkin is putting his chips on PRS. At the moment, Willmott Residential has 2,500 rental homes and 5,000 for sale homes in the pipeline.
Simpkin says he can see that switching over the next four years.
“Just because of where we are in the market cycle, and as we get good at doing PRS, we will rapidly close the viability point.”
He is not the only big name from the housing-for-sale crowd to nail his colours to the PRS mast – last month Jean-Marc Vandevivere, formerly head of residential at British Land, took the reins at WestRock’s PRS outfit, Platform.
As the housing market slows, rental development is an attractive proposition, says Simpkin.
“Where are we now? Certainly towards the top of the cliff looking down, rather than towards the bottom, looking up.
“Given a choice, if it was your money, where would you put it? At risk in the market or do you want PRS?”
Recent policy announcements show just how true that may be.
After years of lobbying, build-to-rent homes are to be treated as a separate type of development in London planning guidance, and in a favourable light to build for sale (26 November, p29).
Simpkin says he intends to double output to around 15,000 units in London and the South East in the coming years, with schemes of up to £100m in capital investment.
Rental development will be just one part of that, but a big part.
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