UK's Watkin Jones warns on profit after delays to investor deals

Aug 28 (Reuters) - British rental property developer Watkin Jones lowered its annual profit expectations on Friday, citing delays in closing real estate deals amid elevated interest rates and larger economic uncertainty.

• The company that constructs built-to-rent properties had earlier expected to deliver stronger second-half profit, contingent on the conclusion of certain investor-backed contracts in the final quarter

• However, Watkin Jones said it was unlikely all of the deals would be finalised by the September 30 fiscal year-end, leaving annual adjusted operating profit at a similar level to the first half.

• Elevated interest rates and rising geopolitical uncertainty have made institutional investors hesitant to close deals, squeezing profits for British residential developers such as Watkin Jones, which rely on selling or forward-funding properties to those buyers.

• Those pressures, alongside elevated construction costs and hefty building safety remediation bills, are being felt across the sector, from housebuilders to student and rental accommodation providers such as Unite

• Watkin Jones said a robust balance sheet left it well placed to benefit from long-term demand in its target sectors as conditions improve

• The company's shares were down 5.6% in early trading

(Reporting by Simone Lobo in Bengaluru; Editing by Shounak Dasgupta)