Workspace losses swell, but CEO predicts improving valuations

Office owner and operator Workspace Group reported strong rental income growth in the year to 31 March, though losses widened substantially due to falling property valuations.

However, the company predicted that valuations would start to improve from here on out.

Net rental income was up 8.2% at £12.62m, helped by stable occupancy levels and a 10.4% increase in pricing during the period to £44.27 per share foot.

"This has involved a huge amount of customer activity with our teams completing 1,238 lettings and 705 renewals, worth £53.3m in terms of rent roll," said chief executive Graham Clemett.

Trading profit after interest increased by 9% to £66m. However, reported loss before tax swelled to £192.8m from a loss of £37.5m the year before, as the company saw a 9.5% decrease in the value of its property portfolio, with net tangible assets per share falling 13.7% to £8.00.

Nevertheless, Clemett said the reduction in valuation was "significantly lower in the second half" and pointed to improvements ahead. "I would expect this valuation to be the low point of the current cycle given the forecast of interest rate reductions combined with our ability to continue to deliver pricing growth and value-add asset management activity," he said.

Despite the wider loss, the group still raised its total dividend for the year to 28.0p per share, up 8.5% on last year's payout.

Shares were up 0.9% at 556p by 0831 BST.