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

WorkspaceAnnouncement

23/01/2025 07:00

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RNS Number : 3444U  Workspace Group PLC  23 January 2025

23 January 2025

 

                                                              Workspace GROUP PLC

 

THIRD Quarter business update FOR THE

PERIOD ENDING 31 DECEMBER 2024

 

Workspace Group PLC ("Workspace"), London's leading owner and operator of
sustainable, flexible work space, provides a business update for the third
quarter ending 31 December 2024.

 

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

 

"The macroeconomic environment continued to weigh on customer activity in the
third quarter. Within that environment, we are laser focused on optimising
what we can control. We are making good progress with the refurbishment and
subdivision of larger spaces which have become available this year, building
on the work already underway across the portfolio to meet the demand from our
customers. Recycling larger spaces back into smaller units, which are our core
product and achieve higher pricing growth, is an integral part of our business
model.

 

I've spent the last two months looking under the bonnet of the business and,
despite the current market uncertainty, I remain confident about our potential
to capture the structural growth opportunity that lies ahead. The more I see
our scalable platform in action, and the more customers I meet, the more I am
convinced of Workspace's enduring appeal to London's vibrant SMEs. Whilst the
macroeconomic environment may remain challenging in the near term, I am
pleased that we have seen a good start to trading in Q4.

 

Our balance sheet remains robust and our capital recycling programme continues
at pace. We agreed £34.2m of disposals in the quarter which we expect to
complete by year-end. The proceeds are being recycled into our accretive
project pipeline, which further underpins our optimism for the future of
Workspace."

 

Highlights

 

·    273 new lettings completed in the quarter, with a total rental value
of £6.0m

·    Pricing momentum maintained, with like-for-like rent per sq. ft. up
1.1% in the third quarter to £47.54

·    Like-for-like occupancy down 1.3% in the third quarter to 86.1%, with
like-for-like rent roll down 0.6% to £106.8m

·    Good start to trading in the fourth quarter, with 531 enquiries and
337 viewings in the first half of January

·    Continued progress on capital recycling, having exchanged on the
disposals of two non-core assets in the quarter for a total of £34.2m

·    Robust balance sheet with £233m of cash and undrawn facilities and
LTV of 35% (based on 30 September 2024 valuation)

 

Customer activity

 

We have seen robust demand with 273 new lettings completed in the third
quarter with a total rental value of £6.0m, down slightly on the previous
year reflecting current market sentiment.

 

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

              2024/25   2023/24   2024    2024    2024
 Enquiries    628       759       501     626     757
 Viewings     457       488       329     503     540
 Lettings     91        104       93      102     78

 

We have continued to see higher levels of customer churn, including customers
vacating larger spaces, resulting in a reduction in like-for-like occupancy of
1.3% in the quarter to 86.1%. We are selectively reviewing unit pricing where
appropriate, however customer demand for our core product has driven continued
overall improvement in average pricing, with like-for-like rent per sq. ft. up
1.1% in the quarter to £47.54.

 

We have had a good start to trading in the new year with 531 enquires and 337
viewings completed by 17 January 2025, including our strongest week for
viewings since before the Covid pandemic.

 

                                        Quarter Ended
                                        31 Dec 24  30 Sep 24(1)  30 Jun 24(1)
 Like-for-like occupancy                86.1%      87.4%         88.2%
 Like-for-like occupancy change(2)      (1.3)%     (0.8)%        (0.0)%

 Like-for-like rent per sq. ft.         £47.54     £47.01        £46.32
 Like-for-like rent per sq. ft. change  1.1%       1.5%          1.2%

 Like-for-like rent roll                £106.8m    £107.4m       £110.4m
 Like-for-like rent roll change         (0.6)%     (2.7)%        (1.2)%

 

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

Archer Street Studios, Soho, Rainbow industrial Estate (part), Raynes Park to
non-core as they have been exchanged for sale and The Biscuit Factory site in
Bermondsey which is undergoing major refurbishment and redevelopment activity

(2) Absolute change

 

Total rent roll decreased by 1.3% (£1.8m) since September 2024 to £138.3m,
as detailed below:

 

 Total Rent Roll                       £m
 At 30 September 2024                  140.1
 Like-for-like portfolio               (0.7)
 Completed projects                    0.2
 Projects underway and design stage    (0.5)
 South East portfolio                  0.1
 Non-core                              (0.6)
 Disposals                             (0.3)
 At 31 December 2024                   138.3

 

 

Portfolio activity

 

We have continued to dispose of non-core assets. In November 2024, we
exchanged on the sale of Rainbow Industrial Estate, Raynes Park, for £20.3m
and in December 2024, we exchanged on the sale of a small office building on
Archer Street in Soho, for £13.9m. Both these disposals are expected to
complete in the fourth quarter and together will deliver £34.2m of proceeds
at a net initial yield of 5.0%.

 

We completed the refurbishment and extension of our first net zero building,
Leroy House in Islington, in October 2024, delivering 57,000 sq. ft. of new
space across 101 units.

 

Activity is ongoing at our major refurbishment projects; Chocolate Factory in
Wood Green, where we are delivering 40,000 sq. ft. of new and upgraded space
and expect practical completion in late Spring, and The Biscuit Factory in
Bermondsey, which will deliver 30,000 sq. ft. of additional space towards the
end of 2025. We have also started on site at The Centro Buildings in Camden,
where we are transforming a traditional office building, Atelier House, into a
Workspace business centre with 40 units, a café and meeting rooms.

 

We have also made good progress with our ongoing programme of refurbishment
and subdivision of larger units, with marketing commencing shortly on around
30,000 sq. ft. largely completed in the quarter.

 

Financing

 

In November, the terms of the £135m RCF were amended to extend the maturity
to 30 November 2028, with options to extend by up to a further two years and
an option to increase the facility amount to £255m, subject to lender
consent. In addition, an £80m term loan facility was agreed with an initial
maturity of November 2026 and with the option to extend by up to two further
years, subject to lender consent.

 

Net debt decreased by £9m in the quarter to £847m (30 September 2024:
£856m). Cash and undrawn facilities were £233m as at 31 December 2024, with
LTV at 35% based on the 30 September 2024 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

 

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 72 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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