Workspace profits boosted as Britons return to the office

Workspace Group has posted improved revenues and profits after office space provider was boosted by an end to lockdown restrictions.

Profit after interest jumped by 21 per cent to £46.9million in the year to 31 March, with net rental income growing by 6.4 per cent to £86.7million, as more people and businesses sought out office space as the pandemic eased. 

Amid a ‘strong trading performance’, Workspace saw its annual pre-tax profit come in at £124million, against a loss of £235.7million the previous year. 

For investors, total dividends were up 21 per cent at 21.5p a share, again reflecting the group’s improved performance. 

The FTSE 250-listed company delivered increases in both trading profit after interest, and its property valuation, the latter of which was up 3 per cent at £2.40billion.

The group said it completed 1,520 lettings in the year, with a total rental value of £30million. Like-for-like occupancy rates were up 7.8 per cent to 89.6 per cent.

EPRA net tangible assets per share were up 5.3 per cent at £9.88, with a total accounting return of 8 per cent.

Graham Clemett, chief executive of Workspace, said: ‘Our focus over the past year has been to support our customers’ return to the office, rebuild like-for-like occupancy back to 90 per cent and drive trading profit growth.’

He added: ‘Customers want their office space to be as flexible as their working habits, without compromising on quality, identity and culture, location or sustainability. Our Workspace offer is resonating because of our deep understanding of the flexible market and what our customers want. This gives us a unique advantage in the market and underpins our confidence in our growth ambitions.

‘Our recent acquisitions and project activity give us the opportunity to grow and spread our footprint more broadly, exploiting the scalability of our operating platform. 

Last month, Workspace agreed to buy commercial property investment group McKay Securities for £272million.

Clemett said the ‘attractively priced acquisition’ will allow the firm ‘to accelerate our growth in London and provides the opportunity to extend our reach into the South-East’. 

He added: ‘We continue to be disciplined in our investment activity, recycling assets that don’t meet our demanding return requirements.’ 

Analysts at Peel Hunt, said: ‘Workspace’s prelims were broadly inline with our recently upgraded forecasts. 

‘The recovery in NAV and occupancy in 2H has been quicker than we originally anticipated, and with EPS still 40 per cent below pre-Covid levels, Workspace has much to go for. 

‘But with fierce competition from a range of flexible office operators and increasing macro headwinds, we still expect the recovery to take some time. The shares trade on a 30 per cent discount to NAV, and whilst the 3.5 per cent dividend yield is significantly higher than other London office REITs, we remain at Hold.’

Workspace shares were down 2.8 per cent to 701.5p by Wednesday afternoon.