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Key Points:
- Workspace Group completed 296 new lettings in Q2, with an annual rental value of £7.4 million, despite a decrease from the first half.
- Like-for-like rent per square foot rose by 1.6% in Q2, while occupancy fell slightly to 87.5%.
- The company has made significant strides in disposing of non-core assets, completing £29.9 million in sales in the first half and expecting an additional £26.9 million in the second half.
Workspace Group PLC (LSE:WKP), London's premier owner and operator of sustainable and flexible workspaces, has released its business update for the second quarter ending September 30, 2024. The report highlights continued customer demand and strategic progress despite some fluctuations in occupancy rates.
Customer Demand and Lettings
The company completed 296 new lettings during the quarter, generating a total annual rental value of £7.4 million. This performance demonstrates a steady level of demand, although it represents a decrease compared to the first half of the fiscal year, where 603 new lettings were completed, resulting in a rental value of £15.8 million.
Workspace Group has successfully maintained its pricing momentum, with like-for-like rent per square foot increasing by 1.6% in the second quarter. Over the first half of the year, this figure rose by 2.8%, reaching £47.00. This indicates a healthy demand for the company’s flexible workspace solutions.
Occupancy Trends
Despite the positive indicators in demand and pricing, like-for-like occupancy experienced a slight decline of 0.7% in the second quarter, settling at 87.5%. The occupancy rate remained stable during the first quarter. Additionally, the like-for-like rent roll decreased by 1.4% over the half year, totaling £109 million. This drop is attributed to an unusually high number of larger customers vacating during the period.
Asset Disposals and Financial Health
The company has made significant progress in its strategy to dispose of non-core assets, having completed disposals worth £29.9 million in the first half. Furthermore, an additional £26.9 million in disposals has been exchanged and is expected to finalize in the second half of the fiscal year. This approach not only streamlines Workspace Group’s portfolio but also enhances financial flexibility.
Workspace Group maintains a robust financial position, reporting £144 million in cash and undrawn facilities, with a pro forma loan-to-value (LTV) ratio of 35% based on the valuation from March 31, 2024. However, net debt has increased by £28 million in the quarter, reaching £856 million as of September 30, 2024. This increase is largely due to the payment of the full-year dividend, which reflects the company’s commitment to returning value to shareholders.
