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Highlights
- Rental growth and stable valuation: Underlying rental income rose 4.3% to £60.2m, with portfolio valuation stabilizing at £2.42 billion.
- Sustainability milestones: First net-zero building completed; operational energy intensity reduced by 10%.
- Dividend increase: Interim dividend up 4.4% to 9.4p per share.
Workspace Group PLC (LSE:WKP), London's leading operator of sustainable, flexible workspaces, released its half-year results for the period ending September 30, 2024. The company reported growth in rental income, stable property valuations, and notable progress in its sustainability initiatives, reinforcing its position in the flexible workspace market.
Financial Performance
Workspace recorded a 4.3% increase in underlying net rental income, reaching £60.2 million compared to £57.7 million in the same period last year. The company’s trading profit after interest rose by 5.1% to £32.7 million, bolstered by strong operational performance.
Despite some disposals, the total portfolio valuation remained stable, decreasing by just 0.8% (£20 million) to £2.42 billion. Profit before tax stood at £10.2 million, a significant recovery from the £147.9 million loss reported in September 2023, driven by improvements in property valuations.
Workspace increased its interim dividend by 4.4% to 9.4p per share, reflecting confidence in its ongoing performance.
Customer Demand and Operational Growth
Customer demand remained robust, with 603 lettings completed during the period, generating a total rental value of £15.8 million. The like-for-like rent per square foot rose by 2.8% to £47.00.
However, like-for-like rent roll declined slightly by 1.3% to £109 million, largely due to a higher-than-usual departure of larger customers. Occupancy also dipped by 0.7%, settling at 87.5%.
Sustainability and Asset Management Milestones
Workspace delivered significant sustainability milestones during the half year, including the completion of its first net-zero building, Leroy House in Islington, which offers 57,000 sq. ft. of flexible workspace across 101 units.
Progress continued on major refurbishment projects at the Chocolate Factory and The Biscuit Factory, adding approximately 1 million sq. ft. of workspace to the company’s pipeline. In addition, 60,000 sq. ft. of refurbishment and unit subdivision projects were completed to meet customer demand, achieving strong income returns.
Environmental performance improved notably, with a 10% reduction in operational energy intensity, a 30% decrease in gas usage, and a 5% increase in EPC A and B-rated space, now representing 56% of the portfolio.
Outlook
Workspace continues to enhance its scalability with an extended £135 million credit facility and an additional £80 million term loan. The company is well-positioned to meet evolving customer needs, supported by its sustainable practices and flexible offerings.
