Workspace collects 50% of rents and puts dividend under review

Workspace collects 50% of rents and puts dividend under review

Workspace Group, one of London’s leading providers of flexible office space, collected around 50% of rents for the quarter.

The group said it expects a significantly lower level of cash rental income in the short term, as its 3,000 business tenants battle against the impact of the coronavirus pandemic.

Workspace said it had received a “large number of requests for various forms of rent relief for the duration of the current government restrictions on movement”.  It added that it hoped to agree appropriate solutions with customers in due course.

The company will “reflect on whether it is appropriate to recommend a final dividend” at the appropriate time.

As at 31 March 2020, the group had around £70m in cash, undrawn revolving credit facilities of £96m and no material debt maturities until June 2022. 

Its proforma loan-to-value (LTV) ratio is 21%. Workspace estimates that it could withstand a reduction in net rental income of 61% or a fall in asset valuation of 63% before any debt covenants were breached.

The group has implemented cost reduction measures across the business including the postponement of its planned launch of two new centres: Mare Street Studios, Hackney and Lock Studios, Bow.

For the financial year to the end of 31 March 2020, the group said it expects trading profit to be in line with market expectations. Preliminary results are due to be announced in early June 2020.

[QD comment: Several office landlords have reported a drop off in rent collection since the covid-19 enforced lockdown, with Great Portland Estates reporting last week that it had collected 63% of rent for the quarter. The serviced office market, in which Workspace is one of the biggest operators, has been harder hit than the traditional office landlords. With a large portion of the tenant base being made up of SME’s, the serviced office market is more exposed to companies that may be struggling in the current climate. Workspace is one of the best in the game and has considerable cash resources and a relatively low LTV, which should see it through.]

WKP : Workspace collects 50% of rents and puts dividend under review

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