Shares in Watkin Jones (WJG:AIM), the UK’s leading for-rent developer and operator, sank 30% in a day last week after the firm cut its operating profit forecast for this year and warned profit next year would likely be even lower rather than rebounding.

The group, which focuses mainly on student accommodation but also develops mixed-tenure schemes of affordable housing, said market activity had been ‘slower than anticipated’ due to continued uncertainty over the pace of interest rate cuts and it was unlikely to close any deals before its financial year end in September.

As a result, adjusted operating profit will be in the range of £10 million to £12 million compared with the previous guidance given in May of ‘at least £15 million’.

Worse still, the lower number of transactions this financial year will impact next year’s results, given schemes don’t contribute to revenue in future periods until they are forward-sold, so profit for the year to September 2025 will be below this year’s level.

The group also cautioned that while its net cash position underpins its committed spending requirements, ‘it is a limiting factor on the extent to which we can take advantage of market conditions and further develop our pipeline.

‘In light of this, the board is undertaking a review of a range of options that may be available to enhance its medium- and longer-term funding position, thereby allowing the group to capitalise on a market recovery.’ 

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