FTSE 250 office space provider Workspace (LON:WKP) saw its share price increase by 3.67% to 818.50p (as of 12:25 BST) despite reporting a drop in pre-tax profits for the year ended 31st March due to changes in property valuations. Rent rolls climbed by 4.2% with an increase in occupancy offsetting a decline in average rates per square foot. The company said that there had been a significant slow down in enquiries during the COVID period and the majority of existing clients have taken advantage of reduced rent offers for the period.
CEO Graham Clement commented: “As a Company, we felt it was important to support customers where we could and hope that the 50% rent reduction and deferral agreements we have offered to the majority of our customers have gone some way to lessen the burden of this crisis. We have been readying our business centres for the increasing return of customers, putting in place extensive measures to enable social distancing and promote good hygiene. Freehold ownership of our properties means we can quickly adapt them to cater for these new requirements.
“Against this backdrop, the business has delivered a strong trading performance in the year to March 2020, with trading profit up 12% to £81m, driven by a 10% increase in net rental income. We have a strong balance sheet, prudent funding liquidity and substantial headroom on our covenants, which has meant we have not seen the need to take Government financial support. On this basis, the Board is proposing a 10% increase in the final dividend payment, a total dividend payment for the year of 36.16p per share.
“Looking forward, we will undoubtedly see subdued levels of operational performance in the short term with a reduction in rental income. However, we expect that the structural shift in the office market towards flexibility will now accelerate more broadly. We believe that, with our well established flexible offer and the quality of our space and services, Workspace is ideally positioned to benefit as London recovers from the impact of the Covid-19 pandemic“.