13 April 2023
WORKSPACE GROUP PLC
STRONG FOURTH QUARTER TRADING PERFORMANCE
Workspace Group, London’s leading owner and operator of sustainable, flexible work space, provides a trading update for the fourth quarter ending 31 March 2023.
HIGHLIGHTS
· Continued resilient levels of customer demand with enquiries averaging 932 per month, highlighting the appeal of our flexible offer and strength of our operating platform
· Good conversion of demand into new lettings with 341 new lettings completed in the quarter, with a total rental value of £8.3m per annum
· Further positive pricing momentum with like-for-like rent per sq. ft. up 2.7% in the quarter, up 9.4% since March 2022, to £ 40.61
· Like-for-like occupancy stable at 89.1% (31 December 2022: 89.2%)
· Like-for-like rent roll up 1.2% (£1.2m) in the quarter, up 7.2% since March 2022, to £97.7m. Total rent roll up £2.2m (1.6%) in the quarter to £140.1m
· Sale of the residential component of the Riverside mixed-use redevelopment in Wandsworth completed in March 2023 for £54m, in line with its September 2022 valuation
· Robust balance sheet with a proforma LTV of 32% (based on 30 September 2022 valuation) and an average maturity of drawn debt of 4.1 years
Graham Clemett, Chief Executive Officer, Workspace Group PLC, commented:
“We saw a strong fourth quarter of trading activity with customer demand enabling us to continue moving our pricing forward.
This performance reflects the continuing attractions of our offer to the changing needs of businesses looking for space. We provide flexibility in terms of both lease length and size of space at affordable prices within high-quality sustainable buildings, in well-connected locations across London.
Importantly in these challenging economic times we have a robust balance sheet, with the majority of our debt on long maturities. This will be further enhanced as we progress with the disposal of non-core assets.
Our distinctive offer, proven operating track record and ownership of an extensive property footprint across London sets us apart from others in the growing flexible space market. This all provides us with an exciting opportunity to deliver sustainable long-term growth.”
Customer activity
We have seen strong demand in the fourth quarter despite the disruption caused by tube and rail strikes.
| Monthly Average | Monthly Activity | |||||
| Q42022/23 | Q42021/22 | FY2022/23 | 31 Mar2023 | 28 Feb2023 | 31 Jan2023 | |
| Enquiries | 932 | 957 | 798 | 986 | 863 | 946 |
| Viewings | 589 | 634 | 518 | 613 | 578 | 577 |
| Lettings | 114 | 127 | 110 | 150 | 95 | 96 |
Total rent roll increased by 1.6% (£2.2m) in the fourth quarter to £140.1m, as detailed below:
| Total Rent Roll | £m |
| At 31 December 2022 | 137.9 |
| Like-for-like portfolio | 1.2 |
| Completed projects | 1.1 |
| Projects underway | (0.2) |
| Recent acquisitions | 0.1 |
| At 31 March 2023 | 140.1 |
We have been able to continue to move pricing forward across our like-for-like portfolio with rent per sq. ft. increasing by 2.7% in the fourth quarter to £40.61, up 9.4% in the year. We are seeing stronger demand at higher pricing for smaller units and are subdividing a number of our larger units to meet this requirement. Like-for-like occupancy was down 0.1% to 89.1% in the quarter, with an overall increase in rent roll of £1.2m (1.2%) to £97.7m.
| Quarter Ended | ||||
| 31 Mar 23 | 31 Dec 22 | 30 Sep 22 | 30 Jun 22 | |
| Like-for-like occupancy | 89.1% | 89.2% | 89.6% | 89.6% |
| Like-for-like occupancy change | (0.1)% | (0.4)% | – | 0.1% |
| Like-for-like rent per sq. ft. | £40.61 | £39.56 | £38.59 | £38.07 |
| Like-for-like rent per sq. ft. change | 2.7% | 2.5% | 1.4% | 2.6% |
| Like-for-like rent roll | £97.7m | £96.5m | £94.5m | £93.8m |
| Like-for-like rent roll change | 1.2% | 2.2% | 0.7% | 2.9% |
We have made good progress letting up space at our recently completed projects with rent roll up 9% (£1.1m) in the quarter. Good progress has also been made at the McKay London-based properties with rent roll up 12% (£0.9m). This is offset by a £0.8m reduction in rent at the McKay industrial estate in Weybridge where we now have vacant possession, with planning approved for the refurbishment of the site.
Disposals
The disposal of the Riverside residential scheme in Wandsworth completed on 10 March 2023 for £54m, in line with its September 2022 valuation, with £44m paid on completion and the remaining £10m payable in March 2024. We continue to progress discussions for the sale of other non-core properties.
Financing
Net debt decreased by £33m in the quarter to £902m, with cash and undrawn facilities of £148m as at 31 March 2023 and LTV at 32% on a proforma basis, based on the 30 September 2022 valuation. At 31 March 2023 our average cost of debt was 3.7%, with 73% at fixed rates and an average maturity of drawn debt of 4.1 years.
– ENDS –