Workspace’s EPRA net asset value per share was down 0.9% over the six months ended 30 September 2016, falling from 923p to 915p. Adjusted underlying earnings per share rose 15.2% to 14.4p as net rental income was up 6% to £38.0m. The interim dividend has been upped by 40% to 6.8p.
Net initial yields shifted from 5% to 5.3% and this contributed to a small decline in their average capital value per square foot (£374 vs. £376). The higher yield was offset by an uplift in the value of completed projects.
The like-for-like rent roll was up 5.5% as rent per sq ft rose by 4.5% and occupancy edged up from 90% to 90.3%. More recently available spaces are filling up – Metal Box Factory (Southbank), The Light Bulb (Wandsworth), Vox Studios (Vauxhall), The Print Rooms (Southbank) and Grand Union Studios (Ladbroke Grove) added £4.2m to the rent roll in the six month period.
Against this, properties being refurbished cost £1.3m in lost rent, notably Cremer Business Centre, Hoxton (which is now vacant as they prepare to demolish and rebuild it and Lombard Business Centre, Croydon which they are selling to someone who will turn it into flats.
In June 2016, we exchanged contracts to acquire 29,000 sq. ft. of commercial space at 175-179 Long Lane, SE1 for GBP9.5m (payable upon completion) at a capital value of GBP328 per sq. ft. This property is located adjacent to The Leather Market, our business centre near Borough High Street. The commercial space being acquired is part of a larger mixed-use development which is currently under construction and is expected to be completed in mid-2018.
Disposals:
They completed the disposal of the remaining eight properties in Blackrock Workspace Property Trust (“BWPT”) joint venture in May and June 2016 for GBP131m at a net initial yield of 4.7%. The disposals marked the conclusion of the joint venture with BlackRock in which Workspace made an initial investment of GBP20m in 2011. Based on the strong performance achieved over the five-year life of the joint venture, Workspace received a performance fee from BWPT of GBP25m.
In October 2016 they contracted to sell three mixed-use redevelopments:
Arches, Southall which has planning consent for 110 residential units, was sold for GBP13.0m which was a 52% premium to the 31 March 2016 valuation.
The second phase at The Light Bulb, Wandsworth comprising 77 residential units, was sold for GBP7.75m together with the return of 17,000 sq. ft. of new commercial space in line with the 31 March 2016 valuation.
Lombard Business Centre, Croydon which has planning consent for 96 residential units, was sold for GBP5.75m in line with the 31 March 2016 valuation.
Refurbishments:
During the first half they obtained two planning permissions for the extension and upgrade of Pall Mall Deposit, Ladbroke Grove and Mare Street Studios, Hackney. They will provide 115,000 sq. ft. of new and upgraded space at an estimated cost of GBP27m.
Developments:
In September 2016 they received planning consent at Stratford Office Village for a mixed-use redevelopment comprising 101 residential units and 13,000 sq. ft. of new commercial space.
WKP : Workspace NAV barely moves but interim dividend up 40%