Workspace : issues Q3 Interim Management Statement

RNS Number : 3095M

22 January 2016

WORKSPACE GROUP PLC INTERIM MANAGEMENT STATEMENT

GOOD LEVELS OF RENTAL GROWTH CONTINUE DRIVEN BY STRONG CUSTOMER DEMAND AND ACTIVE ASSET MANAGEMENT

Workspace Group PLC ("Workspace"), home to new and growing companies across London, announces its Interim Management Statement covering the period from 1 October 2015 to the date of this announcement, including the operational statistics for the quarter to 31 December 2015.

HIGHLIGHTS

• Total rent roll up 2.3% (£1.8m) in the quarter to £80.8m and up 16.4% (£11.4m) over the nine months from 31 March 2015.

  
  

• Like-for-like rent roll up 2.3% (£1.1m) in the quarter to £49.9m and 11.1% (£5.0m) over the nine months from 31 March 2015.

  
  

• Like-for-like rent per sq. ft. up 1.9% in the quarter to £20.58 and up 13.0% over the nine months from 31 March 2015.

  
  

• Like-for-like occupancy 91.2%, up from 91.0% at September 2015 (31 March 2015: 92.2%).

  
  

• Two refurbishment projects and one new building completed in the quarter providing 161,000 sq. ft. of new and upgraded business space.

  
  

• Three properties acquired in the quarter for £50m and two disposals of industrial properties for £30m.

  
  

• Two planning permissions obtained in the quarter for 200 residential units and 91,000 sq. ft. of new business space.

  
  

  Commenting on the performance, Jamie Hopkins, Chief Executive Officer said:

  
  

  "It's been another very active period for Workspace with three new business centres delivered from our refurbishment and redevelopment programme, investment in three targeted acquisitions and a further recycling of capital from the sale of industrial properties.

  
  

  We continue to see strong levels of customer demand for our high quality space, with our new business centres letting up quickly, as well as solid growth in pricing levels across the portfolio. Enquiry and letting activity has also picked up significantly in the New Year, ensuring the business is well positioned for continued growth."

  
  

  For media and investor enquiries, please contact: Workspace Group PLC	020 7138 3300
  Clare Dundas, Head of Corporate Communications
  Bell Pottinger Victoria Geoghegan Nick Lambert Elizabeth Snow	020 3772 2562
  Notes to Editors:
  About Workspace Group PLC:

  
  

  • Workspace is a FTSE250 property company and has been listed on the London Stock Exchange since 1993

    
    

  • Workspace owns and manages over 80 properties all across London and is home to some 4,000 new and growing companies

    
    

  • Workspace provides the right properties in the right locations to attract its customers and the right services to retain them and help them grow

    
    

  • Workspace is growing through deep market knowledge, operational excellence and strong customer relationships

    
    

  • For more information on Workspace, please visit www.workspace.co.uk

    RENT ROLL PERFORMANCE

    
    

    Total cash rent roll is £80.8m at 31 December 2015, up 16.4% (£11.4m) from 31 March 2015 as detailed below:

    
    

    £m
    At 31 March 2015	69.4
    Growth at like-for-like properties	5.0
    Increase in rent at completed projects	4.3
    Increase in rent from acquisitions	3.0
    Reduction in rent from disposals	(1.1)
    Current refurbishment and redevelopment projects	0.2
    At 31 December 2015	80.8

    
    

    LIKE-FOR-LIKE PROPERTIES

    
    

    We have achieved another quarter of good like-for-like rent roll growth, with rent roll up 2.3% (£1.1m) in the quarter to £49.9m and up by 11.1% (£5.0m) from 31 March 2015. The growth rate fluctuates from quarter to quarter, impacted by the timing of leasing events and renewal activity, but overall growth in rent roll remains strong. The main driver of rental growth continues to be pricing, with rent per sq. ft. up 1.9% in the quarter and 13.0% from 31 March 2015.

    
    

    Like-for-like properties	31 Dec 2015	30 Sep 2015	30 Jun 2015	31 Mar 2015	31 Dec 2014
    Number	40	40	40	40	40
    Occupancy	91.2%	91.0%	90.7%	92.2%	92.7%
    Rent roll	£49.9m	£48.8m	£47.2m	£44.9m	£43.4m
    Rent per sq. ft.	£20.58	£20.19	£19.41	£18.22	£17.68

    
    

    We are seeing stronger growth at our business centres where we have achieved rent roll growth of 12.3% over the nine months from 31 March 2015, compared to growth of 1.6% at our industrial estates.

    
    

    COMPLETED PROJECTS

    
    

    We are seeing strong demand for the new space at our completed refurbishment and redevelopment schemes. Rent roll is up £0.9m in the quarter and up £4.3m over the nine months since 31 March 2015 to £12.4m. At the Metal Box Factory, occupancy has now reached 93.8% with rent roll up £2.4m since 31 March 2015 to £5.3m.

    
    

    In December 2015, we transferred a further three completed properties with 161,000 sq. ft. of new and upgraded space into this category. Vox Studios, Vauxhall, and the Print Rooms, Southbank (formally Linton House) are now available for let, and the new business centre, Grand Union Studios, in Ladbroke Grove, will be opening in February 2016. We are already seeing very strong levels of interest in these properties, most notably a completed letting at Vox Studios of 10,600 sq. ft. to Nutmeg, the online investment company, at £55 per sq. ft.

    
    

    ACQUISITIONS

    
    

    Rent roll has increased by £0.8m since 31 March 2015 at the properties acquired in prior years, as we deliver on our acquisition plans. In addition, we have added £2.2m of rent roll from the £101m of acquisitions made in the year-to-date. During the quarter we have completed on three acquisitions for £50m, comprising:

    
    

  • A former Mecca Bingo site in Garratt Lane, Wandsworth, acquired in October 2015 for

    £26.1m. This site, which comprises a vacant 43,000 sq. ft. bingo hall and 200 space car park has been a long-term land assembly target for Workspace. It adjoins Riverside, an existing Workspace property. The combined site provides nearly six acres of land with significant redevelopment potential.

    
    

  • Alexandra House, N22, acquired in October 2015 for £14.0m. This is a 55,000 sq. ft. office building currently let to the London Borough of Haringey at a low passing rent of

    £10 per sq. ft. The property was purchased at a capital value of £255 per sq. ft. and at a net initial yield of 3.7% with a rent roll of £0.6m.

    
    

  • Cannon Wharf, SE8, acquired in October 2015 for £10.4m. This newly built 33,500 sq. ft. business centre in Surrey Quays was acquired at a capital value of £310 per sq. ft. At 31 December 2015, the centre was 15% occupied with a rent roll of £0.2m.

DISPOSALS

In November 2015, we completed the sale of Leyton Industrial Estate, E10, for £23m. This 135,500 sq. ft. industrial estate was sold at a premium of 10% to the 30 September 2015 valuation, at a net initial yield of 4.8%. Rent roll at disposal was £1.1m.

We exchanged contracts in December 2015 for the sale of a light industrial portfolio in Park Royal, NW10, for £7.0m. These buildings were sold at a premium of 16% to the September 2015 valuation at a net initial yield of 4.9%. Rent roll at these properties at 31 December 2015 was £0.4m.

ENQUIRIES AND LETTINGS

Enquiry levels remain strong, averaging 1,016 per month in the nine months since 31 March 2015. We saw a seasonal downturn in activity levels in December but have seen a strong pick up in enquiry levels in the first two weeks of January 2016, with enquiries averaging 285 per week and lettings 25 per week.

Quarter Ended
Average number per month	31 Dec 2015	30 Sept 2015	30 June 2015	31 March 2015	31 Dec 2014
Enquiries	994	1,034	1,020	1,232	1,141
Lettings	73	108	102	120	105