Workspace has outlined plans to boost demand for its flexible offices after reporting a decline in valuations across its portfolio in annual results to 31 March 2025.
A disappointing year for the company saw the value of its portfolio fall 2.4% to £2,368m (-1.6% on a like-for-like basis). ERV was up just 1.0%, not enough to offset the impact of a 10 basis point outward investment yield move to 6.8%.
This contributed to a 3.3% reduction in EPRA net tangible assets (NTA) to £7.74 (2024: £8.00).
Underlying rental income was up 1.7% to £135.5m (2024: £133.2m), but net rental income was down 3.2% to £122.1m (2024: £126.2m) following disposals in the year.
The like-for-like rent roll was down 0.8% to £107.9m, reflecting a number of larger customers vacating space in the year. Occupancy fell to 83.0% from 88.0%, and the company expects this to drop further in the short term.
Chief Executive Lawrence Hutchings, who has been in the role for six months, said an asset recycling programme and refurbishment projects were underway to boost demand for space and bring occupancy back up – with a focus on providing operational excellence in the flexible office sector.
The company sold £100.5m assets in the year, with a further £10.3m completed post period end, broadly in line with book values. Large refurbishment projects were underway on eight assets that will deliver 509,000 sq ft of new and upgraded space.
This follows the refurbishment and extension of Leroy House in Islington, the company’s first net zero building.
Hutchings said: “Looking through a wider lens, having now been CEO of Workspace for more than six months, I have thoroughly reviewed our business, as well as conducted extensive, expert third-party market research which validates our new strategy. A number of strategic actions successfully undertaken since January have further reinforced my confidence in Workspace’s potential. We are leaders in a structural growth market, catering to the most exciting, innovative, creative and growing SMEs in London. We have a lot to play for inside a significant market opportunity.
“We have forensically analysed the portfolio and know that where we have the right properties, with the right amenities, in the right locations we are able to deliver superior returns and income growth. Having disposed of over £100m worth of assets in the year, we will look to further recycle capital in the medium-term into our conviction assets, positioning the business to scale over the longer-term.
“There is still a lot of work to do and it will take time to see the full impact, but I am confident that we have a strategy to deliver a market-leading product and experience for our customers and that we are well placed to be a growing, income-led business, with a focus on dividend growth and creating long-term, enduring value for our shareholders.”
