Workspace Group, a London-based office space provider catering to a diverse client base, experienced a more than 3% drop in the valuation of its properties, leading to an annual loss. However, the company has outperformed traditional property firms by offering flexible office spaces and shorter lease terms, which are preferred by tenants during times of economic uncertainty. Despite the property valuation decline, Workspace Group expects rental income growth in its fiscal year 2023/24, supported by a 7.1% increase in rent roll and the leasing of refurbished spaces.
Workspace Group has predicted an increase in rental income and pricing growth for its fiscal year 2023-24, following a recent annual loss. The London-based office space provider experienced a decline in property valuations of over 3%, which impacted its financial performance. The company, like other office space providers worldwide, has been grappling with reduced valuations due to the growing trend of remote work. Nevertheless, companies like Workspace have surpassed conventional property firms because tenants favour flexible office spaces and shorter lease terms, especially during periods of economic instability.
Workspace, headquartered in London, stated that rental income for the period ending March 2024 will be supported by a 7.1% increase in rent roll from the previous year, as well as the leasing of renovated spaces in the McKay portfolio, which the company acquired in early 2022.
The company announced a final dividend of 17.4 pence per share, resulting in a total payout of 25.8 pence per share for the fiscal year ending on March 31. This represents a 20% increase in dividends compared to the previous year. In morning trading, shares of the company surged by up to 4%, reaching a peak of 498.6 pence, the highest level in over two months. However, the company cautioned that elevated inflation would have an impact on service charge and administrative costs.
Workspace primarily caters to small- and medium-sized enterprises as well as entrepreneurs. It reported a pre-tax loss of £37.5 million ($47.3 million) for the year 2022-23, contrasting with a profit of £124 million in the previous period.
The company offers unfurnished spaces to a diverse range of clients, including architects, florists, craft beer brewers, and app developers. It stated that a per-share metric, known as EPRA net tangible assets, which indicates the value of its properties, declined by 6.2% to £9.27. Workspace reported that it has successfully collected 98% of the rent owed for the year, and its like-for-like occupancy rate remained steady at 89%.
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