SME demand boosts Workspace

This helped to drive down the loan-to-value ratio from 31 per cent to just 19 per cent, while other performance metrics completed the buoyant picture. Net rental income jumped by 15 per cent to £57.7m, and like-for-like rent forged ahead by 16 per cent to £18.37 per sq ft. To meet the growing demand from small and medium-sized enterprises (SMEs) for quality office space in and around London, the group acquired five new properties during the year, and two further acquisitions after the March year-end. It now has around 90 properties across London, proving space for 4,000 SMEs.

The scale of demand - average enquiries rose from 1,063 per month to 1,222 - can be seen from the take-up of space. Business centres opened earlier in the year in Bethnal Green and Islington both reached occupancy levels of 90 per cent within nine months, and at pricing levels well ahead of initial expectations. And at the Metal Box Factory on Bankside launched in January this year, occupancy reached 84 per cent in just two months.

Some loss of rental income is to be expected as refurbishment work takes place. However, based on the latest estimated rental values - and assuming 90 per cent occupancy - the rent roll of the eight refurbishments on completion will be £16.9m. That’s £9.4m higher than the rent at the end of March 2015.

On the development side where there are six sites, Workspace continues to secure mixed-use planning consent before agreeing terms with a residential developer, who then does all the construction work at no cost or risk for Workspace. In return, the group receives cash payments and new commercial space, while the developer gets to sell the residential component of the development.

Analysts at Panmure Gordon are forecasting adjusted net asset value of 752.7p by March 2016, rising a year later to 863.5p.