REG - Workspace Grp PLC - WORKSPACE GROUP PLC SECOND QUARTER BUSINESS UPDATE

WorkspaceAnnouncement

15/10/2024 07:00

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RNS Number : 1342I  Workspace Group PLC  15 October 2024

15 October 2024

Workspace GROUP PLC

 

SECOND Quarter business update FOR THE

PERIOD ENDING 30 SEPTEMBER 2024

 

Workspace Group PLC ("Workspace"), London's leading owner and operator of
sustainable, flexible work space, provides a business update for the second
quarter ending 30 September 2024.

 

HIGHLIGHTS

 

·    Good customer demand with 296 new lettings completed in the quarter,
with a total rental value of £7.4m per annum (HY24/25: 603 new lettings with
a rental value of £15.8m per annum)

·    Pricing momentum maintained with like-for-like rent per sq. ft. up
1.6% in the second quarter and up 2.8% in the half year to £47.00

·    Like-for-like occupancy down 0.7% in the second quarter to 87.5%
(stable in the first quarter), with like-for-like rent roll down 1.4% in the
half year to £109.0m, driven by a higher than usual level of larger customers
vacating in the period

·    Good progress on disposals of non-core assets, with £29.9m completed
in the first half and a further £26.9m exchanged and expected to complete in
the second half of the year

·    Robust balance sheet with £144m of cash and undrawn facilities and
proforma LTV of 35% (based on 31 March 2024 valuation)

 

Graham Clemett, Chief Executive Officer, Workspace Group PLC, commented:

 

"We have seen good customer demand in what is typically a quieter quarter for
lettings over the summer. Our strong track record of consistently driving
pricing growth continued in the quarter, demonstrating the appeal of our offer
to businesses looking for high quality, well connected and sustainable work
space.

 

We saw a drop in like-for-like occupancy due to an unusually high number of
customer vacations in the quarter, including a number of larger customers who
have grown with us over many years. While this churn is higher than usual, it
is part of the regular rhythm of our business. Many of the larger units will
be subdivided into smaller units, where we see stronger demand and achieve
higher pricing. We are encouraged by the improving leasing activity we have
seen in September.

 

We continue to recycle capital from disposals into our extensive project
pipeline and have recently completed the refurbishment of Leroy House in
Islington. This ongoing activity, coupled with the strong demand we see from
London's SMEs, gives us confidence in the exciting growth opportunities ahead
for Workspace."
 

Customer activity

 

We have seen good demand with 296 new lettings completed in the second quarter
with a total rental value of £7.4m.

 

            Monthly Average               Monthly Activity
            Q2        Q1        FY        30 Sep  31 Aug  31 Jul

            2024/25   2024/25   2023/24   2024    2024    2024

 Enquiries  700       688       788       698     685     717
 Viewings   486       499       524       476     457     525
 Lettings   99        102       103       145     76      75

 

The good level of customer lettings has been offset by a higher than usual
level of customer vacations in the period and, as a result, we have seen a
drop in like-for-like occupancy in the quarter of 0.7% to 87.5%. However, good
customer demand has driven continued improvement in pricing with like-for-like
rent per sq. ft. up 1.6% in the quarter to £47.00.

 

                                        Quarter Ended
                                        30 Sep 24  30 Jun 24(1)  31 Mar 24(1)
 Like-for-like occupancy                87.5%      88.2%         88.2%
 Like-for-like occupancy change(2)      (0.7)%     (0.0)%        (0.0)%

 Like-for-like rent per sq. ft.         £47.00     £46.28        £45.73
 Like-for-like rent per sq. ft. change  1.6%       1.2%          2.0%

 Like-for-like rent roll                £109.0m    £111.8m       £110.5m
 Like-for-like rent roll change         (2.5)%     1.3%          2.4%

 

(1) Restated for the transfer in of Old Dairy, Shoreditch, where occupancy is
now stabilised post-acquisition and the transfer out of

The Biscuit Factory site in Bermondsey which is undergoing major refurbishment
and redevelopment activity

(2) Absolute change

 

Total rent roll decreased by 2.3% (£3.3m) in the first half to £140.1m, as
detailed below:

 

 Total Rent Roll          £m
 At 31 March 2024         143.4
 Like-for-like portfolio  (1.4)
 Disposals                (2.0)
 Other                    0.1
 At 30 September 2024     140.1

 

 

Portfolio activity

 

In July, we exchanged on the sale of Ashcombe House, Leatherhead and The
Planets, Woking for a combined total of £15.7m, in line with the March 2024
valuation.

 

We received a total of £29.9m in cash during the first half of the year from
the completions of non-core disposals; Poplar Business Park in Poplar, Mallard
Court and Cygnet House in Staines and 5 Acre Estate in Folkestone, with a
further £26.9m of disposals exchanged and expected to complete in the second
half of the year.

 

We completed the refurbishment and extension of Leroy House in Islington in
October 2024, delivering 58,000 sq. ft. of new space across 101 units. This is
a great example of our refurbishment-first, sustainable approach and is
designed to be our first Net Zero building in construction and operation. The
building, which has a striking double height entrance and fantastic
light-filled communal space, has already captured the imagination of London's
SMEs, with 11 units let or under offer in the first two weeks of marketing.

 

Financing

 

Net debt increased by £28m in the quarter to £856m (31 March 2024: £855m),
following payment of the full year dividend. Cash and undrawn facilities were
£144m as at 30 September 2024, with LTV at 35% on a proforma basis, based on
the 31 March 2024 valuation.

 

Half year results

 

Workspace will publish its half year results for the six months to 30
September 2024 on 22 November 2024. A presentation to analysts and investors
will be held at 9:00am at our

Eventspace, Salisbury House, 114 London Wall, EC2M 5QA.

 

- 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

 

 

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 73 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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