Workspace (LON:WKP) revealed a solid set of full-year figures. Profit before tax jumped by 91.9% to £170.4 million, which comfortably exceeded the Reuters consensus estimate of £80.65 million. Net rental income rose by 21% and underlying property valuation ticked up by 5%. The strong performance helped the property company increase its return to shareholders as the total dividend was boosted by 30% to 27.39p – slightly ahead of analysts’ expectations. Investors are likely to be pleased with these figures as the company is clearly firing on all cylinders.
Workspace announced plans to place over 16.3 million shares with institutional investors, and that would represent approximately 9.96% of current issued share capital. The move would help finance capital expenditure which is needed for existing projects. The property firm believes it would add to valuations and rental income. This is a sign that Workspace have a positive outlook. The company understands that competition is tough, and upgrades to buildings are required to keep attracting clients.
The property firm had a strong start to the year, as profit, rental income and property valuations all rose. In the first six-months of the year, adjusted net trading profit jumped by 25% and net rental income rose by 21%. The all-important property valuation showed an increase of 3.5%. These solid numbers helped the company boost its return to shareholders as the interim dividend was lifted by 30%.
In August last year, the firm raised £20 million via a private debt placing. At the time, Graham Clemett, the CFO announced he was ‘delighted with the investor appetite’ as it shows there is confidence in the business. The debt issuance allows Workspace to continue investing in new properties, and take advantage of the relatively low borrowing costs.
Workspace is more office-space focused than other property specialists, and this gives it an advantage over some of its competitors, as footfall at retail parks is in decline. The rise of online shopping is hurting traditional retailers, and in turn some real estate companies.
Workspace is going from strength to strength as their well-connected properties and flexible terms are increasingly popular with a wide range of clients. At the end of last year, the company sold-off non-core industrial assets, and acquired buildings in the City of London and the West End. This suggests the firm is keen to follow its customers' needs.
The London commercial property market has held up well since the UK’s referendum on EU membership, but the market could be in for a slowdown. According to Savills (LON:SVS), the transaction value of City properties in the first quarter was 11% below the 10-year average. Savills pointed out that demand is high, and the drop in transaction value might have more to do with inadequate supply.
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