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Results look very reasonable, given prevailing market conditions. Costs reducing, gross and net cash increasing and rents definitely increasing. My btl properties grossing 20-25% year on year.
I see a very strong recovery in 2024.
Rents are up 10% yoy. If you are running low leverage then residential property is doing ok.
So the main thing is inflation. This drives interest rates up which drives 10 yr gilt yields up.
From what I believe is, this spike temporarily caused liquidity issues because forward funding dried up. Also instutional buyers have less reason to buy BTL when 10 yr gilts skyrocketed because the risk-free yields on these now made WJG properties a lot less attractive.
However, rent yields are increasing at the same rate as inflation, and as inflation comes down, the 10 yr gilts should come down which will make the BTL's much more attractive to institutions again.
Also, there's a risk with forward selling I presume, where built materials skyrocket but you have already sold the property, this means that the sell price has been locked in but the build price could still increase when they build it? Not sure if WJG mitigates this somehow, maybe with futures on the building supplies? I wish I knew the answer to this...
TLDR: WJG heavily affected by inflation & interest rates.
Anything can be renegotiated at any time, contracts can be very detailed with get out clauses etc. You just never know , every contract can be different but I'm sure wjg know what they are signing up to. For now another day and another new low on the Share price.
My understanding was that they mainly pre-sold the developments to the buyer (pension/insurance fund) and in some cases continued to take a management fee for the maintenance and general running of the accommodation. Which seemed that they were running very little market risk - only really counterparty risk in the buyer reneging.
What am I missing ? Does the buyer have the right to renegotiate down the price in a weakening market ?
I went through results and company seems to be in profit and had a decent net cash position. But I have got to say I don't understand the model fully.
Difficult one.
They have just PC'ds their development in Lewisham . The press release sounds bouncy enough with no evidence of any construction cost overuns
https://btrnews.co.uk/watkin-jones-completes-ravensbourne-place-btr-for-lg/
It doesn'yr take much of a ricket to wipe out any profit though
The investor market is still there albeit yields have moved out a tadge so they should be able to get one away shortly even if a bit squeezed
Maybe the market thinks the BODS are looking a bit lightweight for a challenging period ahead? Perhaps the spectre of Inland Homes looms? Who knows ?
And he had 4.9% left at the end of August, which is not helping share-price as it is very illiquid share. Share price should move when he is out.
Wouldn't be a problem for me if they cancelled the dividend on this occasion, but I certainly hope all the nasties are on the table already.
Definitely got that impression in the bomb RNS. It came across as laying it all out and taking the hit in one go.
Regarding the dividend, I think it will be cancelled to preserve cash until one the 3 land sales fetches a decent price and goes through & the existing student accommodation revenue and net show an increase.
Drop is very concerning, how much lower can it go I wonder. The last CEO must have been a totally misleading numpty (At least he has fallen on his sword). With the new guy buying around £200k at 46p one hopes that he believers is to be completely undervalued right now. To be open, it seems property prices and land is off about 5% but quite resilient. Also there is a student accommodation shortage. One has to think that we should be on the cusp of an upwards re-rating. I think the next trading update is this month looking at last year. So hoping for some positive news that turns this tanker around. I do feel it’s very undervalued but is there any more write downs or nasties to still come out is the worry.
Still think this is a solid play medium to long term and 38p is a steal, but hey, I've been wrong enough times before.
Stagnant house prices wiping 10%/~£10m off of the mcap?
Guessing it’s down to Nationwide house price data.
4th October last year. Can't think of any other reason for the sharp drop today.
First week of November but we had one in October last year.
When's the next TU due? This week?
What debt ? They run a capital light model. They have a £100m revolver which is largely undrawn and runs until May 2025 (standard practice) and a small £4m facility with Svenska until Sep 2024.
If you think they have a ton of debt which they are struggling to pay then please let me know the details.
Even more "priced to fail" today. Must be more institutional sales (M&G reduced a fortnight ago - more from them?).
Could and should have sold this when it was north of 110p - and I was in profit - at the start of the year.
There will be no dividends at all. Need as much cash as possible to reduce cost of debt and banking covenants. Got themselves in a hell of mess.
I would say so. Its nearly priced to fail to be honest.
Not invested here at the moment but am shocked how low it has dropped since I sold in March... is is undervalued or am I missing something?
yep, i've read many articles like that. and yet a **** ton of student housing is being sold below replacement cost. i don't know where is the truth.
A yield that high clearly indicates that the market believes the dividend will be cut… and probably substantially.
Is the yield of 18.418 a good deal? If not, what is the current yield?