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Investing.com -- Workspace Group (LON:WKP) on Thursday reported full-year results for the period ended March 31, 2025, broadly in line with expectations despite market challenges.
The real estate investment trust based in London delivered a steady operational performance, supported by increased underlying rental income and a higher proposed dividend.
Underlying rental income rose 1.7% to £135.5 million. However, net rental income declined 3.2% to £122.1 million, primarily due to property disposals. Trading profit after interest increased by 1.2% to £66.8 million.
Profit before tax came in at £5.4 million, a rebound from a £192.8 million loss in the prior year, reflecting stronger trading profit and a smaller negative impact from property valuation movements.
Workspace proposed a total dividend of 28.4p per share, up from 28.0p. Jefferies reported earnings per share (EPS) at 34.5p.
The total property portfolio was valued at £2,368 million, reflecting a 2.4% underlying reduction (£58 million).
Like-for-like portfolio valuation fell by 1.6%. EPRA net tangible assets per share dropped 3.3% to 774p (from 800p), in line with the decline in property values. Jefferies confirmed the NAV at 774p.
The balance sheet remains solid, with £260 million in undrawn facilities and cash, and a loan-to-value (LTV) ratio of 34%. The average cost of debt stood at 4.1%, with 91% of debt fixed or hedged.
Customer demand remained strong, with 1,266 lettings and 500 renewals, generating a total rental value of £46.4 million.
Like-for-like rent per square foot rose 4.8% to £48.08. However, like-for-like occupancy fell to 83% from 88%, mainly due to larger customers vacating.
Consequently, the like-for-like rent roll declined 0.8% to £107.9 million. Jefferies noted a 1% increase in ERV per square foot to £50.85.
Workspace pursued active capital recycling, completing £100.5 million in disposals at values close to book, with an additional £10.3 million sold in April 2025.
The company also advanced its refurbishment strategy, delivering 57,000 sq. ft. at Leroy House in Islington across 101 units, and progressing eight major projects targeting 509,000 sq. ft. of upgraded space.
Due to macroeconomic headwinds and large customer exits, the company expects occupancy to remain pressured in the first half of the year.
In spite of this, it remains confident in its strategy based on operational efficiency, capital-light refurbishments, and marketing initiatives aimed at improving occupancy and driving growth.
CEO Lawrence Hutchings stated, “We will look to further recycle capital in the medium-term into our conviction assets, positioning the business to scale over the longer-term.”
Jefferies maintained a “buy” rating with a 575p price target, while cautioning that rent growth may fall short of estimates.