UK’s Workspace forecasts rental growth after posting annual loss

(Reuters) -Workspace Group forecast rental income and pricing growth in its fiscal 2023/24 year after the London-focused office-space provider posted an annual loss on Thursday, hurt by a more than 3% drop in the valuation of its properties.

Office space providers across the globe have been battling valuation declines due to the trend of people choosing to work from home.

However, firms such as Workspace have outperformed traditional property companies as tenants prefer flexible office spaces and short-term leases over traditional work locations and longer contracts during times of economic uncertainty.

The London-headquartered group said rental income for the year to end March 2024 will be underpinned by the 7.1% rent roll growth logged over the previous year and also the letting of refurbished space in the portfolio of McKay, which it bought early last year.

It declared a final dividend of 17.4 pence per share, pushing the total payout for the year ended March 31 by 20% to 25.8 pence per share.

Shares in the group rose as much as 4% to an over two-month high of 498.6 pence in morning trade.

The company, however, warned that high inflation would impact service charge and administrative costs.

Workspace, which mainly serves small- and medium-sized enterprises and entrepreneurs, said 2022/23 pre-tax loss came in at 37.5 million pounds ($47.3 million), compared to a profit of 124 million pounds a year earlier.

The company, which provides unfurnished spaces to a varied client base from architects and florists to craft beer brewers and app developers, said a per-share measure that reflects the value of its buildings — EPRA net tangible assets — fell 6.2% to 9.27 pounds.

Workspace said it had collected to date 98% of rent due for the year, while its like-for-like occupancy was stable at 89%.

($1 = 0.7923 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Subhranshu Sahu and Emelia Sithole-Matarise)