Workspace Group (LSE:WKP) reported a pre-tax loss of £120.5 million for the year ended 31 March 2026, compared with a profit of £5.4 million in the previous year, as falling property valuations weighed heavily on results. The London-focused flexible workspace provider also outlined a new strategic plan aimed at rebuilding earnings and driving long-term shareholder returns.
The loss was largely attributable to a £159.2 million reduction in the fair value of the company’s investment property portfolio, which declined 7% on an underlying basis to £2.13 billion. As a result, EPRA net tangible assets per share fell 11.2% to £6.87.
Operating performance was also affected by softer market conditions. Trading profit after interest declined 9.4% to £60.5 million, while net rental income fell 7.1% to £113.4 million. Excluding the impact of property disposals, underlying net rental income decreased by 2.4% to £109.9 million, reflecting higher vacancy costs, increased marketing expenditure and rising service-related expenses.
Occupancy across the stabilised portfolio stood at 81.6% at year-end, down 1.4 percentage points from the previous year, although management noted improving trends during the second half. Average rent per square foot within the stabilised portfolio declined 2.1% to £46.31.
During the year, Workspace completed £125.7 million of asset disposals as part of its two-year £200 million capital recycling programme. The sales were completed at an average discount of 7.2% to prior book value. The company also reduced its annual dividend to 26.1p per share from 28.4p, aligning distributions with a revised policy targeting minimum earnings cover of 1.2 times.
New chief executive Charlie Green, who joined the company in February alongside chief financial officer Tom Edwards-Moss, introduced a new “Fix, Accelerate, Scale” strategy designed to improve profitability and operational performance. The plan focuses on low-risk refurbishment projects, the rollout of a Managed workspace offering alongside the existing Space-only model, and continued portfolio recycling.
“Our focus is on earnings through disciplined execution, driving higher occupancy while controlling costs,” Green said.
“We believe this is the best strategy to maximise income and capital returns for shareholders,” he said.
Management has set a medium-term objective of generating more than £125 million of annual trading profit before interest (EBIT), compared with an estimated current underlying EBIT of around £80 million after allowing for planned disposals. Analysts noted that achieving the target would likely require occupancy levels to recover to approximately 88%.
Looking ahead, Workspace expects trading profit after interest to decline materially in the year ending 31 March 2027 due to a lower opening rent roll, the impact of ongoing disposals, higher financing costs and reduced non-recurring income. Beyond the remaining £75 million of its current disposal programme, the company is also evaluating the sale of an additional £100 million or more of properties by the end of FY27, with proceeds intended for reinvestment across the portfolio.
The group added that it is reviewing refinancing options, although existing undrawn facilities are sufficient to cover all debt maturities through to March 2028.
More about Workspace Group
Workspace Group plc is a leading provider of flexible business space in London, owning and operating a portfolio of offices, studios and light industrial properties tailored to small and medium-sized enterprises. The company focuses on creating adaptable workspaces in well-connected locations across the capital, generating income through a combination of rental growth, active asset management and strategic property investment.
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