TIDMWKP
RNS Number : 4588S
Workspace Group PLC
09 July 2020
9 July 2020
Workspace GROUP PLC
FIRST Quarter business update FOR THE
PERIOD ENDING 30 JUNE 2020
HIGHLIGHTS
-- Customer demand improved through the quarter with enquiries
in June at 765, up from 272 in April. This compares to a monthly
average of 1,060 enquiries in the first quarter last year
-- Cash collection of rent due for the first quarter now at 75%,
net of rent reductions and deferrals
-- The 50% rent reduction offered to business centre customers ended at end of June 2020
-- Received 65% of rents due for the second quarter(1) to date,
this compares to c.80% at the equivalent time last year
-- Customers slowly returning to our business centres, with
activity now at around 15% of usual levels
-- Planning consent granted for major mixed-use redevelopment in
Wandsworth, comprising 171,000 sq. ft. of new commercial space and
402 residential units
-- Pro forma LTV of 21% at 30 June 2020, based on March 2020
valuation, with cash and undrawn facilities of GBP161m
___________________________
(1) Includes both quarterly rent and monthly rent due for
July
Graham Clemett, Chief Executive Officer, Workspace Group PLC,
commented:
"Activity in the first quarter has been significantly impacted
by the lockdown. We offered our business centre customers a 50%
rent reduction for the first quarter ending in June, which was well
received. Our teams have worked hard to ensure our buildings are
safe and we have also provided guidance and resources for customers
through our Back to Business Hub.
"As our existing customers review their space requirements, we
have seen like-for-like occupancy fall by 3% to 90% in the quarter
and we expect to see continued pressure on occupancy levels in the
short-term. However, we are encouraged by the early signs of a
recovery in business confidence, with improving levels of
enquiries, viewings and lettings. Our experienced team are focused
on maintaining occupancy at our centres through retaining existing
customers where possible, alongside capturing the improving demand
from new customers.
"We remain confident in the longer-term attractions of our
flexible customer offer, despite the near-term challenges. We also
continue to create value from our project pipeline and were
delighted to receive planning consent for a major scheme in
Wandsworth during the quarter."
Customer Activity
The Covid-19 lockdown had a significant impact on customer
demand in the quarter, although as restrictions eased we saw a
strong pick-up in activity. We are encouraged to see that the level
of activity continued to increase in early July.
Monthly Average Monthly Activity
------------------------------
Q1 Q1 30 Jun 31 May 2020 30 Apr
2020/21 2019/20 2020 2020
--------- ------- ------------ -------
Enquiries 506 1,060 765 480 272
Viewings 142 709 318 95 14
Lettings 43 121 91 17 20
--------- --------- ------- ------------ -------
Overall utilisation of our business centres is increasing
slowly, currently running at around 15% of pre-lockdown levels.
Rent Collection
We offered customers in our business centres a rent reduction of
50% from the start of the lockdown period in late March to the end
of June 2020. We have also, on a case by case basis, offered
customers the opportunity to defer a proportion of their rental
payments. The rent reduction was only available to customers who
continued to pay their rent or had a deferred payment agreement in
place.
Overall, we gave rent reductions to around 80% of our customers
by rent in the first quarter, which represents a reduction in rent
of c.GBP16m. We agreed to defer around 15% of the discounted rent
amounts due from these customers.
We have to date collected some 75% of rent due for the first
quarter (c.41% of gross rents before rent reductions and
deferrals). The general 50% rent reduction offered to all our
business centre customers ended at the end of June.
Cash collection in the second quarter, comprising quarterly
rents and the monthly rents due for July, is currently at 65% (60%
of gross rents before rent reductions and deferrals). This compares
to c.80% at the equivalent time last year .
We continue to engage with customers on outstanding rents due,
with the risk of bad debts offset by the rent deposits we hold for
the majority of our customers.
Portfolio Activity
In June 2020, we opened two new business centres. Mare Street
Studios in Hackney, which provides 55,000 sq. ft. of new business
space, and Lock Studios in Bow, a new 39,000 sq. ft. business
centre.
We expect to complete another three projects during the
remainder of the current financial year, providing a further 91,000
sq. ft. of new and upgraded space.
In June 2020, we were granted planning consent for a significant
mixed-use redevelopment project in Wandsworth. The 5.4 acre site
currently comprises 145,000 sq. ft. of low quality office, leisure
and light industrial space, with a rent roll of GBP2.5m and a
property valuation of GBP46m as at 31 March 2020. The planning
consent is for a new 106,000 sq. ft. business centre and 65,000 sq.
ft. of new light industrial space, as well as 402 residential
apartments, including 35% affordable housing.
We are continuing to track acquisition opportunities across
London but remain disciplined in our returns criteria.
Financing
Net debt increased by GBP5m in the quarter to GBP546m, with cash
balances and undrawn facilities of GBP161m as at 30 June 2020.
The pro forma loan to value ratio at 30 June 2020, based on the
31 March 2020 property valuation, is 21% (31 March 2020: 21%).
Chairman Succession
As previously announced, Daniel Kitchen steps down as Chairman
following the AGM today and is replaced by Stephen Hubbard. Stephen
has been a Non-Executive Director of Workspace since July 2014 and
was previously Chairman of CBRE UK. He is also Non-Executive
Chairman of LXi REIT plc.
- ENDS -
For further information, please contact:
Workspace Group PLC 020 7138 3300
Graham Clemett, Chief Executive Officer
Dave Benson, Chief Financial Officer
Clare Marland, Head of Corporate Communications
Edelman 020 3047 2546
John Kiely
Rob Yates
Notes to Editors
About Workspace Group PLC:
Established in 1987, and listed on the London Stock Exchange
since 1993, Workspace owns and manages some 4 million sq. ft. of
business space in London. We are home to thousands of businesses,
including fast growing and established brands across a wide range
of sectors. Workspace is geared towards helping businesses perform
at their very best. We provide inspiring, flexible work spaces in
dynamic London locations.
Workspace (WKP) is a FTSE 250 listed Real Estate Investment
Trust (REIT) and a member of the European Public Real Estate
Association (EPRA).
Workspace(R) is a registered trademark of Workspace Group Plc,
London, UK.
LEI: 2138003GUZRFIN3UT430
For more information on Workspace, please visit
www.workspace.co.uk
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END
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