Workspace (WKP) is braced for a deterioration in occupancy and rental rates this year, after reporting a substantial fall in enquiries since the end of March. The flexible office landlord has halved second-quarter rent for customers representing around three-quarters of its income, or £15m, and has suffered a 30 per cent shortfall in the rent it had expected to collect for that same quarter.
The question is to what extent rent reductions and rent-free periods will have to be extended in order to retain and entice customers. "We will be looking to move away from discounting but making sure all our customers are paying rent that's appropriate for what they need," said chief executive Graham Clemett. That could mean tenants downsizing the space they rent, he added.
This financial year is likely to be a reversal of what was a solid lettings performance in FY2020, in which the group reported a 1.9 per cent increase in like-for-like rental income thanks to increased occupancy and rent charged per square foot. However, caution from asset valuers resulted in a 0.3 per cent reduction in the underlying value of the portfolio in the year to March.
Peel Hunt has downgraded its NAV forecast for March 2021 by 5 per cent to 920p a share.
| WORKSPACE GROUP (WKP) | ||||
| ORD PRICE: | 813p | MARKET VALUE: | £ 1.47bn | |
| TOUCH: | 813-815p | 12-MONTH HIGH: | 1,317p | LOW: 421p |
| DIVIDEND YIELD: | 4.4% | TRADING PROP: | £79.2m | |
| DISCOUNT TO NAV: | 25% | |||
| INVESTMENT PROP: | £2.59bn | NET DEBT: | 29% | |
| Year to 31 Mar | Net asset value (p)* | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 923 | 391 | 240 | 15.05 |
| 2017 | 953 | 89.0 | 55.0 | 21.07 |
| 2018 | 1,037 | 170 | 105 | 27.39 |
| 2019 | 1,086 | 137 | 78.9 | 32.87 |
| 2020 | 1,089 | 72.5 | 40.0 | 36.16 |
| % change | +0 | -47 | -49 | +10 |
| Ex-div: | 02 Jul | |||
| Payment: | 07 Aug | |||
| *EPRA adjusted | ||||
