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Watkin Jones PLC (LSE:WJG), a residential and student accommodation group, has reported challenges in deal-making due to a sluggish recovery and elevated interest rates impacting its 2024 financial year.
In a trading update released on Wednesday, Watkin Jones indicated that several of its schemes are actively being marketed. However, the overall market activity throughout the summer has been less dynamic than initially projected. This slowdown is attributed primarily to ongoing uncertainty surrounding the pace of interest rate reductions. Consequently, the company has acknowledged that it is unlikely to finalize any additional transactions before the end of the financial year.
The anticipated impact of fewer transactions in FY24 is expected to result in lower-than-forecasted performance for the year. This reduction in transaction volume will affect the results for FY25, as schemes will not contribute to revenue until they are forward sold. The company anticipates a rebound in the following financial year, beginning on 30 September.
In light of these challenges, Watkin Jones is conducting a review of various options to improve its medium and long-term funding position. This strategic assessment aims to enable the company to take advantage of any future market recovery.
Management has expressed a commitment to navigating the current market conditions and optimizing the group's financial strategy to capitalize on forthcoming opportunities. The review will focus on enhancing the company’s financial stability and positioning it for future growth as market conditions evolve.
