Watkin Jones boss on doing deals in the ‘eye of the storm’

The chief executive of residential developer Watkin Jones says the company has found ways to get deals done in the “eye of the storm”. In results for the year ending 30 September 2024, the build-to-rent and student accommodation developer posted a £9.2m pre-tax profit, back in the black after a near-£3m loss a year ago. Revenue dropped by 12% to £362.4m. Chief executive Alex Pease says the business focused on “controlling the controllables” over the year. “The transactional market has inevitably remained slow,” he adds. “We all know the challenges – interest rates, gilt rates, stubborn inflation, surprise general elections. The key focus for us is that despite all of those headwinds, being in the eye of the storm, we have made transactions work and profitably work for the business, although there have not been as many as we would like.” The company sealed two forward funding deals over the year. One was with Housing Growth Partnership, the Lloyds-backed equity investor, for a 397-bed purpose-built student accommodation development in Stratford, east London. The other saw it sell the 260-bed Gas Lane project in Bristol to Hines.  “We still think that there could be opportunities to do more interesting, innovative funding structures with the investment markets, which might catalyse and be accretive to us in terms of rebuilding revenues and margins quicker,” Pease says. “We are having some interesting conversations. The market in ‘24 wasn’t the right time to be having detailed conversations with investors, but people are coming into 2025 with some optimism.” Pease says the company now wants to “evolve and create a more stable, foundational resilient revenue”, as the traditional forward funding market continues to struggle. The year saw the launch of Watkin Jones’ refurbishment and redevelopment arm, Refresh. The business was a central part of Watkin Jones’ diversification strategy. The team is tracking a pipeline of £100m in assets and is in conversations and negotiations for about £50m. Over 2024, the business doubled Watkin Jones’ budget targets with revenue of £10.9m at a gross margin of 13.8%. Pease and colleagues see the fledgling division turning a challenge into an opportunity, with clients recognising the high standard of its building safety remedial work and asking it to apply that skill and experience to assets. The business will now expand the offering to include a fuller refurbishment and repositioning of an asset. “It has been a really interesting interaction with the markets and has been well received,” says Pease. “The pipeline has grown quicker than we anticipated. The conversion of it is slower because the level of due diligence you need to do to make sure you get the deals right is higher – they’re existing assets, not cleared sites.” Also part of that diversification play are new development partnerships, such as one with Torus to build 295 affordable homes in Moss Nook, St Helens, and asset management division Fresh. “We think there could be some good asset management plays which could drive income for us,” Pease says. “And we think that’s a really sensible thing to do to augment our wider, more transactional and planning-led activities.”