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Workspace looks for further development work

Demand for office space remains strong in London
June 6, 2018

Workspace (WKP) continued to benefit from strong demand for flexible office space from smaller companies operating in London, which helped to push the like-for-like rent roll ahead by 8.6 per cent in the year to March 2018.

IC TIP: Buy at 1110p

Headline profit was boosted by a doubling in the valuation uplift to £82.5m and, together with a 21 per cent jump in rental income, helped to push adjusted net asset value (NAV) ahead by 9 per cent. Demand for space meant that there were on average 1,016 enquiries per month, which translated into 93 lettings per month.

Six projects were completed during the year, generating a rent roll of £3.6m, and there are currently 12 refurbishment projects under way, although this meant a loss of £1.6m in income. However, when completed these are expected to generate £26.4m of rental income. Acquisitions included The Salisbury in Finsbury Circus and The Centro buildings in Camden. To help finance these purchases and the ongoing refurbishment and development programme, Workspace plans to raise around £180m through a share placing equal to 9.9 per cent of the existing share capital.

Analysts at Peel Hunt are forecasting adjusted NAV of 1,106p at the March 2019 year-end.

WORKSPACE (WKP)   
ORD PRICE:1,110pMARKET VALUE:£1.82bn
TOUCH:1,110-1,112p12-MONTH HIGH:1,176pLOW: 840p
DIVIDEND YIELD:2.5%TRADING PROPERTIES:nil
PREMIUM TO NAV:7%NET DEBT:30%
INVESTMENT PROPERTIES:£2.29bn   
Year to 31 MarNet asset value (p)*Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201449625316710.63
201570336023112.04
201692339124015.05
2017953895521.07
2018103717010527.39
% change+9+92+92+30
Ex-div:5 Jul   
Payment:3 Aug   
*EPRA adjusted