Workspace's (WKP) half-year results go a long way towards justifying the heady premium at which its shares trade after an extraordinary year on the stock market. Adjusted book value rose 16 per cent to 404p a share in just six months, driven by a 12 per cent portfolio revaluation. Broker Peel Hunt expects book value to rise to 430p by the March year-end.
Development assets fared particularly well. Workspace has been busy turning its inner-city business parks into densely-packed mixed-use developments, earning eye-watering planning gains by getting permission for flats on low-value ex-industrial land. The top performer over the period was the Biscuit Factory, a large business complex in Bermondsey, south east London, where Workspace obtained planning for 800 flats as well as a new business centre. The £31m uplift generated by that project alone overwhelmed rental profits of just £9.7m for the period.
The investment portfolio was marked up £38m, driven mainly by rental growth, but also by a slightly lower valuation yield. The assumptions underpinning Workspace's core portfolio valuation, nonetheless, remain cautious, with an average net initial yield of 7.1 per cent. Chief executive Jamie Hopkins believes that yield has scope to fall further, boosting book value. Judging by Workspace's current share price - now 18 per cent above Peel Hunt's net asset value forecast - investors agree.
WORKSPACE (WKP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 506p | MARKET VALUE: | £735m | |
| TOUCH: | 507-509p | 12-MONTH HIGH: | 513p | LOW: 293p |
| DIVIDEND YIELD: | 2.0% | TRADING PROPERTIES: | nil | |
| PREMIUM TO NAV: | 24% | |||
| INVESTMENT PROPERTIES: | £937m | NET DEBT: | 55% | |
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 315 | 24.6 | 16.9 | 3.22 |
| 2013 | 408 | 100.8 | 70.0 | 3.54 |
| % change | +30 | +310 | +314 | +10 |
Ex-div: 8 Jan Payment: 4 Feb | ||||
