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Workspace announces “strong” results

Workspace collects 50% of rents and puts dividend under review

Workspace Group has announced its annual results for the year ended 31 March 2020. Graham Clemett, Workspace’s CEO, describes the results as strong, but notes that this has been overshadowed by the dramatic impact of the Covid-19 pandemic. He also comments that Freehold ownership of its properties means that Workspace can quickly adapt these to cater for new requirements posed by the pandemic. Workspace has provided the following key highlights of its results:

Financial highlights

  • Trading profit after interest up 12% to £81.0m driven by a 10% increase in net rental income to £122.0m
  • Total dividend up 10% to 36.16p per share (2019: 32.87p), with a final dividend of 24.49p per share
  • Profit before tax at £72.5m (2019: £137.3m), with a small reduction in underlying property valuation of 0.3% (£8m) compared to a £61m increase in the prior year
  • EPRA net asset value per share up 0.3% to £10.89
  • Loan to value of 21% (2019: 22%) with £166m of undrawn facilities and cash

Operating performance

  • Strong customer demand with enquiries averaging 1,087 per month (2019: 1,048) and lettings averaging 121 per month (2019: 103)
  • Total rent roll up 4.2% to £132.8m
  • Like-for-like rent roll up 1.9% to £90.4m with occupancy up 2.6% to 93.1%, offset by 0.7% fall in rent per sq. ft. to £43.32
  • Successful letting-up of new space adding £7.8m to rent roll

Portfolio activity

  • Four property sales completed for £65m at a 21% premium to 31 March 2019 valuation
  • Four projects delivering 200,000 sq. ft. completed in first half and letting up well, with two new buildings comprising a further 94,000 sq. ft due to open shortly
  • A healthy pipeline of refurbishment and redevelopment activity, projected to deliver 1.1m sq. ft. of new and upgraded space over the next five years

Covid-19 update

  • Significant slowdown in enquiries from the end of March 2020
  • Majority of customers (c.75% by rent) benefitting from 50% rent reduction offer until end of June 2020, as well as rent deferrals on a case by case basis
  • Overall cash collection (net of discounts and deferrals) running at c.70% in the quarter
  • Extensive social distancing and hygiene measures being implemented at all business centres
  • Actively engaged with customers as they increasingly plan their return to work

[QD comment: There are no real surprises here. At the point the results were cast, the impact on the economy from the pandemic was only just starting to be felt, and is much more likely to be seen in the results for the second quarter of 2020 and beyond. In this regard, Workspace has offered a 50% rent reduction and deferral agreements to the majority of its customers, which will be felt at lest in the short term. However, with £166m of undrawn facilities and cash (compared to an annualised rent during the year of £122m) it has the capacity to weather the impact of the crisis for some time and, with changes in working patterns likely, it could be well positioned to benefit as the pandemic subsides].

have gone some way to lessen the burden of this crisis.

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