Workspace Group (LSE:WKP) reported stable trading in the fourth quarter, with enquiry levels holding firm and conversion rates from enquiry to lettings remaining consistent. However, softer pricing weighed on performance, resulting in a 1.4% decline in total rent roll to £127.3 million and a drop in rent per square foot, despite a slight improvement in occupancy.
Management is now pursuing a repositioning strategy aimed at enhancing its offering for smaller businesses, including upgrades across its flexible office portfolio. This shift is expected to come at the expense of near-term profitability, with the company also adjusting its dividend policy to a lower earnings cover starting from FY 2025/26.
Workspace continued to execute its £200 million disposal programme, completing or agreeing sales worth £125.7 million, primarily involving assets considered lower priority. Discussions on additional disposals are ongoing. The group retains a strong financial position, with £241 million in cash and undrawn facilities and a pro forma loan-to-value ratio of 35%.
Looking ahead, the company expects ongoing pressure on rents and pricing, combined with the disposal of higher-yielding properties and increased interest costs, to impact both valuations and trading profit in FY 2026/27. Despite these headwinds, management believes the current strategy will support more sustainable earnings growth over the longer term.
More about Workspace Group plc R.E.I.T.
Workspace Group PLC is a London-focused real estate investment trust specialising in flexible office and studio space for start-ups, SMEs, and growing businesses. The company owns and manages a portfolio of multi-let properties across the capital, targeting the value segment of the flexible workspace market with an emphasis on sustainability and adaptability.
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