Stock picking is never easy. Many investors employ a smorgasbord of different styles, including technical, momentum, growth and value, with some even trusting their hard earned cash to the ‘dart board’. However shrewd property owners tend to be far more rigorous - focusing instead on long term returns. In fact most, before pumping leverage into the equation, want to know their expected ungeared ROIs – which, after stripping out the distortive effects of debt finance, provide a useful yardstick of a project’s ‘pure intrinsic worth’.
On this score Watkin Jones, a UK developer/manager of large scale, multi occupancy accommodation – ranks as the best ‘money making machine’ out of the entire UK property universe (see below). Derived from sustainable secular tailwinds (eg student & Build-to-Rent), a forward funded model, high asset turns, low cost base and leading industry expertise.
Well after posting record results for the past umpteen years, one would have imagined it was going to be a challenge to ‘go one better’, especially in light of the wider economic uncertainty. No so. This morning the company said that trading for the 6 months ending March 2019 was “good” and importantly “in line with its expectations”.
In fact, it was pleasing to hear that not only was WJG’s bread-and-butter PBSA (>70% of gross profits) powering along at a fair rate of knots - sporting a “secure development pipeline of >7,500 beds across 17 sites” (worth circa £650m). But also the group’s new growth engines of BTR, property management and (to a lesser extent) house building were making great strides too.