Major PBSA development funded with HGP

Watkin Jones plc

('Watkin Jones' or the 'Group')

Major PBSA development funded with HGP

Watkin Jones, the UK's leading developer and manager of residential for rent, is pleased to announce the forward sale of a new 397 bed purpose-built student accommodation ('PBSA') development together with workspace and commercial units in Stratford, East London, to the Housing Growth Partnership ('HGP') (the "Transaction").

The Transaction is the Group's first with HGP, a social impact investor and part of Lloyds Banking Group. It is being delivered via an innovative structure which is expected to generate receipts for Watkin Jones over the course of the three year development of approximately £96m, at margins in line with the Group's stated targets, with the potential to participate further from future value generated by the scheme.

In order to effect this structure, a newly created joint venture, Watkin Jones (Grove Crescent) Holding Limited (the "JV Entity") has been established, which is owned as to 75% by HGP and 25% by the Group. Under this arrangement, the Group will be responsible for the delivery of the scheme through to completion as well as its ongoing management through Fresh, Watkin Jones' accommodation management business. Funding of the JV Entity will be provided by HGP as well as third party debt finance. Completion of the PBSA accommodation is targeted in time for the start of the 2026/27 academic year.

The initial contribution from this transaction is reflected in the Group's existing guidance for the current financial year, with initial net cash receipts of approximately £20m. Further income will be phased over the course of the construction process. It is expected that the scheme will be sold by the JV Entity following completion and stabilisation (the "Realisation Sale").

The Group's ability to participate in additional value upside will be driven by the returns generated by the JV Entity as a result of the Realisation Sale. In the event that the Realisation Sale generates returns in excess of agreed hurdle rates, the Group will be entitled to a further incentive payment in cash, with the quantum linked to the level of outperformance. The opportunity to participate in future value creation is a distinguishing factor from the Group's traditional forward fund model.

Given the time required to complete construction, it is not expected that any future sale of the scheme would occur before Q4 2026 and consequently there can be no certainty at this stage as to the terms of any potential Realisation Sale.

Alex Pease, Chief Executive Officer of Watkin Jones, said: "We are pleased to collaborate for the first time with Housing Growth Partnership on this exciting development. The innovative nature of the transaction underlines Watkin Jones' ability to find attractive structuring solutions for our institutional partners.

"While we remain encouraged by signs that confidence is returning to our residential for rent funding markets, this is tempered by continued uncertainty around the trajectory of interest rate cuts. We, nevertheless, have a number of schemes in the market which are generating good levels of interest."

Related party transaction

For operational purposes, the JV Entity will have two statutory directors, being Simon Jones, the Group's CFO, and George Dyer, Group Investment Director. Accordingly, the JV Entity will be a related party of Group, and the entry into the Transaction (including the associated development, financing and management agreements between the Group and the JV Entity), constitutes a related party transaction pursuant to Rule 13 of the AIM Rules for Companies.

The Independent Directors, being all directors of the Group other than Simon Jones, having consulted with the Company's nominated adviser, Peel Hunt, consider the entry into the Transaction is fair and reasonable insofar as the Company's shareholders are concerned.

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This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR")

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Notes to Editors

Watkin Jones is the UK's leading developer and manager of residential for rent, with a focus on the build to rent, student accommodation and affordable housing sectors. The Group has strong relationships with institutional investors, and a reputation for successful, on-time-delivery of high-quality developments. Since 1999, Watkin Jones has delivered over 49,000 student beds across 147 schemes, making it a key player and leader in the UK purpose-built student accommodation market, and is increasingly expanding its operations into the build to rent sector. In addition, Fresh, the Group's specialist accommodation management business, manages over 16,800 student beds and build to rent apartments on behalf of its institutional clients. Watkin Jones has also been responsible for over 50 residential developments, ranging from starter homes to executive housing and apartments.

The Group's competitive advantage lies in its experienced management team and capital-light business model, which enables it to offer an end-to-end solution for investors, delivered entirely in-house with minimal reliance on third parties, across the entire life cycle of an asset.

Watkin Jones was admitted to trading on AIM in March 2016 with the ticker WJG.L.  For additional information please visit www.watkinjonesplc.com

About Housing Growth Partnership

Housing Growth Partnership ('HGP') is an equity investor and part of Lloyds Banking Group. HGP invest patient capital with the purpose of delivering social impact through partnership with selected residential developers and housebuilders to increase the number of homes being delivered and help its partners grow. HGP does this through its unique investment approach, which shares both risk and reward with its partners.

Since 2016 HGP has supported over 7,500 new homes on over 100 sites.

HGP invest all over the UK into multiple housing tenures, including family housing, apartments, build to rent, retirement living, student accommodation and more, with the flexibility to support its partners through a variety of deal structures across the development lifecycle. To find out more, visit www.housinggrowth.com.