UK property market recovery drives Workspace's asset value

Wed Jun 4, 2014 8:43am BST

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(Reuters) - Britain's Workspace Group Plc reported a 43 percent jump in full-year net asset value as the landlord saw an increase in occupancy and charged higher rates in a recovering commercial property market.

Shares in the company rose as much as 6 percent, making the stock the top percentage gainer on the FTSE-250 Midcap index on the London Stock Exchange on Wednesday.

The real estate investment trust, which provides office spaces to small businesses, said EPRA net asset value (NAV) — a key measure of industry performance — rose to 496 pence per share in the year to March 31 from 348 pence a year earlier.

EPRA (European Public Real Estate Association) net asset value excludes market adjustments of effective cash flow hedges, deferred tax relating to revaluation movements and capital allowances and derivatives.

"(Full year 2014) may be hard to repeat but we still forecast Workspace to deliver the leading total returns among UK REITs on a 12-month view," analysts at Liberum Securities said in a note.

"Trading at a 6 percent discount to one-year forward NAV, we see this as a compelling entry point for a stock still in its mid-cycle."

Last year, growth in the UK commercial property business climbed to its highest level since 2010, with income returns from commercial assets rising to 6.8 percent, data from real estate benchmark provider Investment Property Databank Ltd showed. (link.reuters.com/gum36v)

The growth due to historically low interest rates and a general economic recovery has also helped Britain's two biggest REITs, Land Securities Group Plc and British Land Co Plc, post a sharp rise in full-year net asset value.

Workspace's focus on refurbishment and redevelopment drove up rents during the period, Chief Executive Jamie Hopkins said in a statement.

The company charged like-for-like rent per square foot of 15.28 pounds, up 8.5 percent from a year earlier.

Brixton Road, London-based Workspace refurbishes and redevelops properties where clients such as Ralph Lauren Corp and Britain's Metropolitan Police have taken up space.

The REIT raised its final dividend to 7.09 pence per share from 6.45 pence a year earlier.

(Reporting By Esha Vaish in Bangalore; Editing by Maju Samuel and Gopakumar Warrier)

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