Watkin Jones (LON: WJG), the AIM-listed developer and manager of build-to-rent and student housing, saw its shares drop sharply after warning that a number of investor transactions it had expected to complete this year will now likely slip beyond its 30 September year-end.
The stock fell from yesterday’s close of 18.00p to an intraday low of 16.80p earlier today, a decline of 6.1%, before recovering slightly to trade at 16.90p. That leaves shares near the bottom of their 52-week range of 17.04p to 35.152p.
In a trading update released this morning, Watkin Jones said a small number of investor transactions previously flagged as potential Q4 completions are now unlikely to all finalise before the financial year closes on 30 September. As a direct result, full-year adjusted operating profit, earnings before one-off items, is now expected to come in at a similar level to the first half, rather than the stronger second-half improvement previously guided.
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The setback centres on deal timing rather than operational performance. Watkin Jones confirmed it had completed two build-to-rent schemes in Belfast and Cardiff, totalling 1,345 units, at margins in line with guidance. Year-end net cash is also expected to come in ahead of the £61m reported at the half-year. The business itself is delivering as planned; it is the pace at which institutional investors sign off on forward-sale transactions, deals to sell completed developments to long-term investors, that is now dictating the group’s reported profit.
The RNS carried no named management commentary on the update, leaving the market to react to the disclosure itself. The scale of today’s fall, against completions and cash that both came in as expected, shows how sensitive the shares remain to any sign that the deal pipeline underpinning the recovery is slower than hoped.
Watkin Jones’ full-year results, due shortly after the 30 September year-end, will show whether any of the delayed investor transactions have since completed.
