Work Space Group: Quick View

Workspace continues to see the benefits of strong London occupier-demand and of value-creating improvements within its portfolio. The shares offer a 4.3% forward dividend yield and trade at a substantial 27% discount to NAV, a favourable valuation comparison with other London-focused property investments.

Final Results
Workspace has released encouraging final results to March 2012 with adjusted trading profit after interest increasing by 13% to £16.0m and the dividend increased by 10% to 8.8p per share. EPRA NAV increased by 8% to 308p, helped by an outperformance of the property portfolio that increased by 5% in value. The balance sheet is in good shape with an undemanding portfolio LTV of 41%.

Benefiting From A Strong London Economy
The company has continued to see the benefit of strong economic growth in London and tenants looking for value and quality in choosing new space. Portfolio occupancy (like-for-like) has increased progressively from 83.4% in March 2010 to 87.8% as at March 2012, with y-o-y enquiries up 5%. In turn, this has driven continued uplift in the cash rent roll up from £42.5m to £44.5m along with higher rental values being achieved.

Value-Added Development Pipeline
In addition to encouraging space take-up within the established portfolio, the company is also looking to improve rents and create new value from redevelopment activity. Six projects for refurbishment are starting this year, with a further nine in the pipeline along with two mixed-used redevelopment schemes.

Valuation: Attractive
Workspace looks well placed to benefit from the continued strength in both the London economy and occupier market. The shares offer a 4.3% dividend yield and trade on a 27% discount to 2012 NAV. This presents a good opportunity to access further growth in London property values, particularly when compared with other London property plays, such as Shaftesbury, which trades on a 5% NAV premium.

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