REG - Workspace Grp PLC - McKay Disposal & Update

WorkspaceAnnouncement

16/05/2023 07:00

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RNS Number : 4828Z  Workspace Group PLC  16 May 2023

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE RETAINED
UK LAW VERSION OF the eu MARKET ABUSE REGULATION (REGULATION 596/2014/EU)
PURSUANT TO THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019 (SI
2019/310) ("UK MAR"), AND IS DISCLOSED IN ACCORDANCE WITH THE COMPANY'S
OBLIGATIONS UNDER UK MAR.  THE INSIDE INFORMATION IS NOW CONSIDERED TO BE IN
THE PUBLIC DOMAIN.

 

16(th) May 2023

 

WORKSPACE GROUP PLC

DISPOSAL OF NON-CORE MCKAY PROPERTIES AND PROGRESS UPDATE

Workspace Group PLC ('Workspace'), London's leading owner and operator of
sustainable, flexible work space, is pleased to announce the exchange for sale
of five non-core properties in the South-East of England for a total
consideration of £82m. Completion will take place in June 2023. This follows
the sale of a medical centre in Newbury for £7m in July 2022. These disposals
are from the portfolio of assets acquired as part of the McKay acquisition
completed in May 2022.

The properties being sold comprise light industrial and logistics properties
in Bracknell, Crawley, Poyle, Theale and Weybridge. The site in Weybridge has
been recently vacated with planning for refurbishment. The sale price
represents a discount of 27% to the 30 September 2022 book value of these
properties and is at a net initial yield of 4.5% (5.5% prior to the vacation
of the Weybridge site).

We are progressing with the sale of the remaining non-core properties from the
McKay acquisition. They comprise light industrial properties in Farnborough,
Banbury and two in Folkestone valued in total at £28m as at 30 September 2022
and a vacant commercial property in Woking town centre where we obtained
planning consent on appeal in December 2022 for a 366-unit residential scheme.
This asset was valued at £10m as at 30 September 2022, prior to the grant of
planning permission.

The acquisition of McKay in May 2022 allowed us to acquire, at a discount to
book value, good quality office buildings in London, an office and business
park portfolio in South-East and a number of non-core assets, principally
light industrial and logistics properties.

We still anticipate an attractive return from this acquisition and we are
making good progress, most notably:

·     We completed the operational integration ahead of schedule in
November 2022 with all activity now being managed on the Workspace platform

·    The seven London properties, valued at £162m on 30 September 2022,
are now managed as part of our London portfolio. These buildings are well
suited to our business model and are in areas where we see good demand from
our SME customers through our operating platform. We are progressively
adapting them to our multi-let configuration and flexible offer which we
expect will deliver premium pricing

·    The South-East office and business park portfolio comprises thirteen
buildings valued at £134m as at 30 September 2022. These are good quality,
attractive income yielding properties which are largely fully let. Over time
these assets will allow us to selectively test demand for our business model
in well-connected feeder towns to London which we believe are under-served
with quality flexible space catering to the demands of SMEs

·     Cost synergies are well ahead of our 50% cost reduction target,
with McKay corporate costs reduced from £6.4m pa prior to acquisition to
£0.9m pa at March 2023

·    We successfully novated a £65m long-term loan maturing in 2030,
securing an attractive loan at a margin of 4% and avoiding a potential £13m
break cost. Alongside this we have transferred £135m of McKay revolver bank
facilities on the same terms as our existing Workspace facilities and extended
the maturity to April 2025

The sale of these five non-core properties is being made to Tudor Investment
Holdings Limited, acting as General Partner for ARGO DFI Logistics Partnership
II LP. Net proceeds will be initially used to pay down the group's bank
facilities.

 

Graham Clemett, Chief Executive Officer of Workspace, commented:

 

"This sale of a substantial element of the non-core assets from our purchase
of McKay is an important step in our acquisition plan. There is still more to
do but we are confident our acquisition will generate attractive returns for
shareholders as we complete the delivery of these plans."

 

 

- ENDS -

 

 

 

 For media and investor enquiries, please contact:
 Workspace Group PLC

 Paul Hewlett, Director of Strategy & Corporate Development       020 7138 3300

 Duncan Pelham, Senior Corporate Communications Manager
 FGS Global

 Chris Ryall                                                      020 7251 3801

 Guy Lamming

 Notes to Editors
 About Workspace Group PLC:

Workspace is London's leading owner and operator of flexible work space,
managing five million sq ft of sustainable space, with 77 core 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.

 

Our ownership model 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, please visit www.workspace.co.uk
(http://www.workspace.co.uk/)

 

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