Workspace hikes dividend after first-half growth

Workspace Group reported a 4.3% increase in underlying net rental income to £60.2 for its first half on Friday, driven by strong customer demand and portfolio management.

The FTSE 250 company said trading profit after interest rose 5.1% to £32.7m for the six months ended 30 September, as it hiked the interim dividend per share by 4.4% to 9.4p.

Its like-for-like portfolio valuation showed stability, declining by just 0.2%, with growth in estimated rental value offsetting a slight expansion in equivalent yields.

Workspace said its total portfolio valuation stood at £2.42bn, a marginal 0.8% decline from March.

Profit before tax reached £10.2m, reflecting a more stable property valuation environment compared to the £147.9m loss recorded in the same period last year.

Operational highlights included solid demand, with 603 lettings completed during the half year, yielding a total rental value of £15.8m.

Like-for-like rent per square foot grew 2.8% to £47, although occupancy levels dipped slightly to 87.5%, partly due to the departure of larger customers.

Asset management efforts saw £29.9m of disposals in the first half, with an additional £47.2m expected to complete in the second half.

Workspace said it also continued to focus on sustainability, completing its first net zero building at Leroy House in Islington and advancing major refurbishment projects at sites such as the Chocolate Factory and the Biscuit Factory.

Operational energy intensity dropped 10%, and the proportion of EPC A and B rated spaces increased to 56%.

The group maintained a robust balance sheet, with £144m in cash and undrawn facilities and a stable loan-to-value ratio of 35%.

Its average cost of debt remained low at 3.6%, with 89% at fixed rates.

Workspace also secured a £135m credit facility extension and an £80m term loan, enhancing its financial flexibility.

“Workspace is a leader in the London flex market, with a deep understanding of what our customers want from their work space and a focus on championing the needs of the capital's fastest growing businesses,” said chief executive officer Lawrence Hutchings.

“Today's results, reflecting good customer demand and continued pricing growth, demonstrate the enduring appeal of the Workspace offer for these businesses.

“With over 35 years of experience and a unique, scalable business model, Workspace is well positioned for further success as we continue to capture demand and, over the medium term, look to increase our share of London's growing SME market.”

Hutchings said it was an “exciting time” for the business, adding that he was “delighted” to be Workspace's new CEO.

“Over the coming weeks and months, I am looking forward to spending more time in Workspace's centres across London, meeting our diverse range of customers and getting to know the teams responsible for making Workspace the unique place it is.”

At 0823 GMT, shares in Workspace Group were flat at 539p.

Reporting by Josh White for Sharecast.com.