REG - Workspace Grp PLC - FIRST QUARTER BUSINESS UPDATE

WorkspaceAnnouncement

Wed 07:00

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RNS Number : 1968R  Workspace Group PLC  16 July 2025

16 July 2025

Workspace GROUP PLC

 

FIRST Quarter business update FOR THE

PERIOD ENDING 30 JUNE 2025

 

Workspace Group PLC ("Workspace"), London's leading owner and operator of
sustainable, flexible work space, provides a business update for the first
quarter ending 30 June 2025.

 

Lawrence Hutchings, Chief Executive Officer, Workspace Group PLC, commented:

 

"Last month we set out a clear strategy to deliver an income-led business,
with a focus on dividend growth. While our new strategy will take some time to
fully implement, we are moving forward at pace to fix our backyard and
accelerate our transformation, whilst identifying opportunities to scale the
business.

 

As expected, occupancy declined slightly in the quarter and we have more large
vacations to come in Q2. Our immediate focus remains on stabilising and, over
time, rebuilding occupancy. We have made good progress implementing the pilot
projects at two of our high conviction sites, Vox Studios and The Leather
Market, to test capital-light, high impact upgrades to our product. We have
also seen success in leasing up some of the larger spaces thanks to more
targeted marketing initiatives. We are confident that these strategic actions,
once rolled out more widely across the portfolio, will help us retain and
attract more customers.

 

"We know that our assets with the best strategic fit outperform on occupancy
and income growth measures, so we are also pushing ahead with our new, more
clinical conviction approach to portfolio management. We continue to dispose
of low conviction assets, most recently with the sales of Q West in Brentford
and The Shaftesbury Centre in Ladbroke Grove for a combined total of £15m.

 

Having validated through extensive third-party research that we are in the
right market, serving London's thriving SMEs, I am excited to see us moving in
the right direction - from legacy player to market leader - towards the
delivery of income-led shareholder value."

 

Highlights

 

·    Good progress against strategy, with immediate focus on stabilising
and rebuilding occupancy

·    278 new lettings completed in the quarter, with a total rental value
of £7.1m per annum

·    Like-for-like(1) rent per sq. ft. at £47.42, no change to March 25

·    Like-for-like(1) occupancy down 0.3% in the quarter to 82.2%

·    Like-for-like(1) rent roll down 0.3% in the quarter to £111.6m

·    Further progress on disposal of non-core assets, with £15.0m
completed since 31 March 2025 and a further £15.4m exchanged and due to
complete in the next 12 months.

·    Robust balance sheet with £267m of cash and undrawn facilities and
proforma LTV flat at 34% (based on 31 March 2025 valuation)

(1) Restated for the transfer in of Barley Mow, Chiswick, Pall Mall Deposit,
Ladbroke Grove and the development part of The Light Bulb, Wandsworth, where
occupancy is now stabilised post refurbishment.

Customer activity

With Easter falling into Q1 this year, enquiry levels were lower in the
quarter but our more targeted marketing efforts, in line with the new
strategy, have improved conversion to viewings.

 

We completed 278 new lettings in the quarter for a total rental value of
£7.1m.

 

              Monthly Average     Monthly Activity
              Q1        Q1        30 Jun  31 May  30 Apr

              2025/26   2024/25   2025    2025    2025
 Enquiries    634       688       628     644     631
 Viewings     495       499       474     547     465
 Lettings     93        102       121     92      65

 

As expected, we have continued to see larger customers vacating in the quarter
and occupancy has also been impacted as the recent completion of large unit
subdivisions, which are now available to let, has increased the total
available floor area. This has resulted in a reduction in like-for-like
occupancy of 0.3% in the quarter to 82.2%. As stated previously, we expect to
see a further decline in like-for-like occupancy in the second quarter due to
the impact of a large customer vacating at The Centro Buildings in Camden.

 

We are rolling out a number of initiatives to support retention and attract
new customers, including targeted local marketing for lower occupancy centres,
using customer feedback to determine our events strategy and scaling our
value-add services to help customers deliver business growth. In addition, we
are taking a pragmatic approach to pricing. Like-for-like rent per sq. ft. was
stable in the quarter at £47.42.

 

                                        Quarter Ended
                                        30 Jun 25  31 Mar 25(1)  31 Dec 24(1)  30 Sep 24(1)
 Like-for-like occupancy                82.2%      82.5%         82.3%         83.7%
 Like-for-like occupancy change(2)      (0.3%)     0.2%          (1.4%)        (3.1%)

 Like-for-like rent per sq. ft.         £47.42     £47.42        £47.04        £46.50
 Like-for-like rent per sq. ft. change  0.0%       0.8%          1.2%          1.5%

 Like-for-like rent roll                £111.6m    £111.9m       £110.2m       £110.9m
 Like-for-like rent roll change         (0.3%)     1.5%          (0.6%)        (2.5%)

 

(1) Restated for the transfer in of Barley Mow Centre in Chiswick, Pall Mall
Deposit in Ladbroke Grove and the development part of The Light Bulb in
Wandsworth, where occupancy is now stabilised post-refurbishment.

(2) Absolute change.

 

Total rent roll decreased by 0.6% (£0.8m) since March 2025 to £138.6m, as
detailed below:

 

 Total Rent Roll          £m
 At 31 March 2025         139.4
 Like-for-like portfolio  (0.3)
 Completed projects       0.1
 Disposals                (0.6)
 At 30 June 2025          138.6

 

 

Portfolio activity

 

In line with our conviction approach to capital recycling, in April, we
exchanged and completed on the sale of Q West in Brentford for £10.3m and in
July, we exchanged and completed on the sale of The Shaftesbury Centre,
Ladbroke Grove for £4.7m. Both sales were in line with the March 2025
valuations and at an average net initial yield of 6%.

 

There is a further £15.4m of exchanged disposals which are expected to
complete within the next 12 months and we will continue to dispose of low
conviction assets throughout the year.

 

In May, we achieved practical completion at Chocolate Factory in Wood Green,
where we delivered 40,000 sq. ft. of new and upgraded space across 80 units
(an average unit size of 500 sq. ft.) of which 13 units are already let (14%
occupancy of the new and upgraded space).

 

Activity is ongoing at our major refurbishment projects; The Biscuit Factory
in Bermondsey, which will deliver 31,000 sq. ft. of additional space towards
the end of 2025, and The Centro Buildings in Camden, where we are transforming
a traditional office building, Atelier House, into a Workspace business centre
with 41 units, a café and meeting rooms.

 

The capital-light refurbishment works carried out at high conviction sites,
Vox Studios in Vauxhall and The Leather Market in Bermondsey, have received
positive feedback from both customers, supporting our retention efforts, and
prospects on viewings.

 

We have continued to make progress with our ongoing programme of refurbishment
and subdivision of larger units, with c.28,000 sq. ft. completed in the
quarter and marketing commencing shortly on a further c.9,000 sq. ft. largely
completed in the quarter. In tandem, we have made good progress on letting
some of our larger spaces in their current form, with eight units totalling
47,000 sq. ft. let in the quarter.

 

Financing

 

With long-term interest rates expected to remain high and some debt maturing
this year, we maintain a disciplined approach to gearing. Net debt reduced by
£7m in the quarter to £813m, with cash and undrawn facilities of £267m as
at 30 June 2025 and LTV flat at 34% on a proforma basis, based on the 31 March
2025 valuation.

 

 

- ENDS -

 

For further information, please contact:

 

Workspace Group PLC
 
020 7138 3300

Paul Hewlett, Director of Strategy & Corporate Development

Clare Marland, Head of Corporate Communications

 

FGS Global
 
                        020 7251 3801

Chris Ryall

Guy Lamming

Emma Black

 

 

Notes to Editors

 

About Workspace Group PLC:

 

Workspace is London's leading owner and operator of flexible workspace,
currently managing 4.3 million sq. ft. of sustainable space at 65 locations in
London and the South East.

 

We are home to some 4,000 of London's fastest growing and established brands
from a diverse range of sectors. Our purpose, to give businesses the freedom
to grow, is based on the belief that in the right space, teams can achieve
more. That in environments they tailor themselves, free from constraint and
compromise, teams are best able to collaborate, build their culture and
realise their potential.

 

We have a unique combination of a highly effective and scalable operating
platform, a portfolio of distinctive properties, and an ownership model that
allows us to offer true flexibility. We provide customers with blank canvas
space to create a home for their business, alongside leases that give them the
freedom to easily scale up and down within our well-connected, extensive
portfolio.

 

We are inherently sustainable - we invest across the capital, breathing new
life into old buildings and creating hubs of economic activity that help
flatten London's working map. We work closely with our local communities to
ensure we make a positive and lasting environmental and social impact,
creating value over the long term.

 

Workspace was established in 1987, has been listed on the London Stock
Exchange since 1993, is a FTSE 250 listed Real Estate Investment Trust (REIT)
and a member of the European Public Real Estate Association (EPRA).

 

Workspace® is a registered trademark of Workspace Group PLC, London, UK.

 

LEI: 2138003GUZRFIN3UT430

 

For more information on Workspace, visit www.workspace.co.uk
(http://www.workspace.co.uk)

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