REG - Workspace Grp PLC - Workspace Group Plc Third Quarter Business Update

WorkspaceAnnouncement

19/01/2023 07:00

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RNS Number : 1839N  Workspace Group PLC  19 January 2023

19 January 2023

 

 

Workspace GROUP PLC

 

THIRD Quarter business update FOR THE

PERIOD ENDING 31 DECEMBER 2022

 

Workspace Group, London's leading provider of sustainable, flexible work
space, provides a business update for the third quarter ending 31 December
2022.

 

HIGHLIGHTS

 

·  Continued resilient levels of customer demand highlighting the appeal of
our flexible offer and strength of our operating platform

·  Good conversion of demand into new lettings with 330 new lettings
completed in the quarter, with a total rental value of £8.8m per annum

·   Further improvement in pricing with like-for-like rent per sq. ft. up
2.5% in the quarter, up 6.6% since March 2022, to £39.56

·    Like-for-like occupancy broadly stable at 89.2% (30 September 2022:
89.6%)

·    Strong demand at recently completed projects with occupancy up 2.8%
in the quarter to 79.5%

·   Like-for-like rent roll up 2.2% (£2.0m) in the quarter, up 5.9% since
March 2022, to £96.5m. Total rent roll up £3.2m in the quarter to £137.9m

·   Progress on planned disposals expected in the fourth quarter, with
vacant possession achieved at Riverside, Wandsworth in December 2022 ahead of
the contracted sale of the residential component

·   Robust balance sheet with £215m of cash and undrawn facilities and
proforma LTV of 32% (based on 30 September 2022 valuation) before proceeds
from our planned disposal programme

·   Successful one-year extension in December 2022 of our £335m revolving
credit facilities on existing terms, with average maturity of drawn debt of
4.1 years

 

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

 

"We saw resilient demand for our distinctive flexible offer in the third
quarter and a strong start to the fourth quarter with a good conversion of
enquiries to lettings. Building on the momentum from the first half of the
year the high level of customer demand has enabled us to move pricing further
forward, although it still remains below pre-Covid levels.

 

Our customers are innovative and agile SMEs operating across a diverse range
of sectors and industries; We are mindful, however, of the challenges some of
our customers are facing in the current economic environment and remain
focused on offering good value and great service.

 

We are making good progress on our project pipeline and alongside this we
expect to complete on a number of our planned disposals during the fourth
quarter to further improve our already robust financial position.

 

Our distinctive offer, proven operating track record and ownership of an
extensive, high quality property footprint across London set us apart from
others in the growing flexible market - providing an exciting market
opportunity to deliver sustainable long-term growth."

 

Customer activity

 

We have seen resilient underlying demand in the third quarter, despite the
seasonal downturn in December and the disruption caused by rail and tube
strikes.

 

            Monthly Average     Monthly Activity
            Q3        Q3        31 Dec  30 Nov  31 Oct

            2022/23   2021/22   2022    2022    2022

 Enquiries  724       831       540     826     806
 Viewings   479       513       324     583     529
 Lettings   110       117       111     118     101

 

Despite the transport strikes in the first week of January, we have seen good
levels of demand at the beginning of the fourth quarter with 440 enquiries in
the first two weeks of January 2023.

 

Total rent roll increased by 2.4% (£3.2m) in the third quarter to £137.9m,
as detailed below:

 

 Total Rent Roll          £m
 At 30 September 2022     134.7
 Like-for-like portfolio  2.0
 Completed projects       0.9
 Projects Underway        (0.8)
 Recent acquisitions       1.1
 At 31 December 2022      137.9

 

Like-for-like rent per sq. ft. increased by 2.5% in the third quarter (6.6% in
the year to date) to £39.56, still below pre-Covid levels, with like-for-like
occupancy marginally down by 0.4% to 89.2%. The overall result was a 2.2%
increase in like-for-like rent roll, to £96.5m.

 

                                        Quarter Ended
                                        31 Dec 22  30 Sep 22  30 Jun 22
 Like-for-like occupancy                89.2%      89.6%      89.6%
 Like-for-like occupancy change         (0.4)%     -          0.1%

 Like-for-like rent per sq. ft.         £39.56     £38.59     £38.07
 Like-for-like rent per sq. ft. change  2.5%       1.4%       2.6%

 Like-for-like rent roll                £96.5m     £94.5m     £93.8m
 Like-for-like rent roll change         2.2%       0.7%       2.9%

 

Project activity

 

We have obtained vacant possession at our Riverside property in Wandsworth in
December 2022, ahead of a major mixed-use redevelopment. We are now
progressing with the contracted sale of the residential component of this
scheme for £55m.

During the quarter, we lodged a planning application for a major project at
Havelock Terrace, Battersea which will deliver a new 217,000 sq. ft. business
centre adjacent to Battersea Power Station.

 

Recent acquisitions

 

We continue to make good progress in letting up the vacant space in the McKay
portfolio, with 15 new lettings worth £1.2m completed in the third quarter.
Occupancy is now at 89.4% across the portfolio (up 4.7% from 84.7% in
September) with rent roll increasing by £1.0m to £21.8m. We also achieved
planning permission for a 366 unit residential redevelopment of the Planets,
Woking.

 

We are in active discussions to progress the disposal of non-core assets in
the McKay portfolio, primarily the light industrial and logistics assets, with
the timing dependent on market conditions.

 

At Busworks, Islington, which we acquired in October 2021, we have lodged a
planning application for an extensive phased refurbishment and upgrade of this
104,000 sq. ft. Victorian bus factory to create an attractive, destination
business centre in this dynamic location, north of Kings Cross, to high
environmental standards.

 

Financing

 

In December 2022, we extended the maturity of our £335m revolving credit
facilities by one year on existing terms, with £200m of these facilities now
maturing in December 2025 and £135m in April 2025.

 

Net debt decreased by £1.5m in the quarter to £935m, with cash and undrawn
facilities of £215m as at 31 December 2022 and LTV at 32% on a proforma
basis, based on the 30 September 2022 valuation, before proceeds from our
planned disposal programme. At 31 December 2022 our average cost of debt was
3.9% with 70% at fixed rates  and an average maturity of drawn debt of 4.1
years.

 

- ENDS -

 

 

 For further information, please contact:

 Workspace Group PLC                                             020 7138 3300
 Graham Clemett, Chief Executive Officer
 Dave Benson, Chief Financial Officer
 Paul Hewlett, Director of Strategy & Corporate Development

 FGS Global                                                      020 7251 3801
 Chris Ryall
 Guy Lamming

 

Notes to Editors

 

About Workspace Group PLC:

 

Established in 1987 and listed on the London Stock Exchange since 1993. We are
home to thousands of businesses, including fast growing and established brands
across a wide range of sectors.

 

Workspace is geared towards helping businesses perform at their very best. We
provide inspiring, flexible work spaces in dynamic London locations.

 

Workspace (WKP) 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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