Workspace Group
Annual Report and Accounts 2010
2010 HIGHLIGHTS
PERFORMANCE OVERVIEW
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PERFORMANCE OVERVIEW
Enquiries up 15% on prior year
The Group has delivered a resilient trading performance in the face of challenging market conditions. A good level of demand for space at our properties has been maintained through the year with enquiries averaging 1,000 per month and new lettings running at some 100 per month.
Underlying occupancy up to 84.7%
This has led to a recovery in our underlying occupancy level from its low point of 82.9% in March 2009. However, improvement in the rent roll (the cash rents we receive from our customers) has lagged this recovery in occupancy.
Underlying rent roll now improving
In the first half of the year rent roll dropped by 6% reflecting lower pricing levels and increased incentives given on new lettings. During the second half of the year we have seen pricing levels stabilise and in the last quarter the like-for-like rent roll increased by 1.6%.
Trading Profit up 8%
Despite the fall in rental income, good cash management and tight control over costs has meant that we have still been able to deliver an 8% increase in trading profit (excluding exceptional items).
Dividend per share maintained
The strong cash generation characteristics of our business mean we have been able to maintain the dividend per share at the same level as in 2009. We would hope, as the economy recovers, to resume our progressive dividend policy which has seen the dividend (adjusted for the Rights Issue) increase at a compound rate of 8% p.a. over the last 10 years.
Glebe JV portfolio acquired
We completed the acquisition of our former Workspace Glebe joint venture in December 2009 for £83m. The acquisition was immediately enhancing to both NAV and earnings per share. The property portfolio comprises some 1.1m sq. ft. of lettable space on 34 acres of freehold land which should deliver significant added value to shareholders as we exploit its potential over the coming years.
NAV per share 27p
The overall value of our property portfolio has increased by £55m in the year, with the acquisition of the Glebe portfolio offset by property disposals. These disposals include a number of sites where we have achieved planning for alternative use such as student housing, self-storage or residential development. The net asset value (NAV) per share is up 23% in the last six months to 27p the same level as it was at March 2009.
New Debt Facilities
We reduced the level of debt on our existing borrowing facilities from disposals in the year and secured a new five year debt facility when we acquired the Glebe JV business. We are now in advanced discussions with a group of lenders in relation to a new bank facility to refinance the £200m bank facility currently provided by GE Real Estate. This would extend the term of this debt from 2012 to 2015.
