Workspace (WKP) continues to deliver some of the best returns seen anywhere in the real-estate sector, and in the year to March 2016, adjusted net asset value (NAV) jumped by 31 per cent to 923p, which means that since 2012 the valuation has more than trebled. And, unlike most of its contemporaries, where valuations have come in markedly lower than last year, Workspace enjoyed an uplift on its portfolio of £297m; that's only a tad lower than the £318m in the previous year.
Demand for quality office space in and around London shows no sign of diminishing, and total net rental income jumped by 28 per cent to £74.1m. On top of this, there is a reversionary element still to be crystallised, because if all rents were marked to market the estimated rental value would be £114m.
Workspace has been busy putting its money to good use through capital recycling, and during the year 11 industrial properties were sold for £95m, which helped to finance five acquisitions costing £101m. Identifying and acting on customer needs has been one of the company's strong points. Most small companies stress the need for intelligent building-wide Wi-Fi connection and a super-fast network. To provide this, Workspace has focused its development portfolio on providing new business centres, and where appropriate refurbishing existing centres. This also means that upgraded space commands a higher rent.
As well as completing six refurbishment and redevelopment sites in the past two years, a further four projects are under way, involving demolition and construction of new purpose-built centres. There are also five mixed-use projects under way, where Workspace cleverly de-risks the process by selling the site to a housebuilder which, as well as building new houses, also provides Workspace with a brand new business centre.
Analysts at Peel Hunt are forecasting adjusted NAV of 1,053p at March 2017.
| WORKSPACE (WKP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 866p | MARKET VALUE: | £1.41bn | |
| TOUCH: | 864.5-866p | 12-MONTH HIGH: | 990p | LOW: 705p |
| DIVIDEND YIELD: | 1.7% | TRADING PROPERTIES: | nil | |
| DISCOUNT TO NAV: | 6% | |||
| INVESTMENT PROP: | £1.77bn* | NET DEBT: | 18% | |
| Year to 31 Mar | Net asset value (p**) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 305 | 49 | 36 | 8.79 |
| 2013 | 348 | 76 | 53 | 9.67 |
| 2014 | 496 | 253 | 167 | 10.63 |
| 2015 | 703 | 360 | 231 | 12.04 |
| 2016 | 923 | 391 | 240 | 15.05 |
| % change | +31 | +9 | +4 | +25 |
Ex-div: 7 Jul Payment: 5 Aug *Includes joint ventures **EPRA adjusted | ||||
