(Alliance News) - Workspace Group PLC on Thursday said occupancy and rent per square foot fell in its third financial quarter following customer exits and short-term lease incentives.
The London office, industrial and workshop space investor reported a like-for-like occupancy decline of 3.4% for its third quarter ended December 31 to 82.1%, the result of exists from customers who has given notice to leave earlier in the year.
Moreover, rent per square foot dropped 5.3% to GBP38.48, with half of the drop resulting from short-term lease incentives that are to unwind in the next six months.
Workspace said customer demand had been "resilient" during ongoing Covid-19 restrictions, with enquiries averaging 672 per month in the quarter, down from 1,001 per month the year before. Lettings per month in the quarter dropped year-on-year to 109 from 113.
As at December 31, Workspace had a pro forma loan to value of 23%, "significant" facility covenant headroom, and GBP132 million worth of cash and undrawn facilities. Net debt increased by GBP5 million in the quarter to GBP566 million.
Additionally, Workspace has set out its net zero carbon pathway, which will target a 42% reduction in absolute scope 1 greenhouse gas emissions, and a 20% drop in scope 3 emissions from capital goods, by 2030.
Workspace is also intending to install solar photovoltaic system in all new developments and major refurbishments undertaken "where possible" while continuing to source 100% renewable electricity.
Chief Executive Graham Clemett said: "In terms of trading performance in the quarter, customer activity was impacted by government restrictions, but we were encouraged by the resilient demand for our space, which has continued into the fourth quarter. It appears that we are now coming towards the end of the significant occupancy declines we have seen over the last three quarters."
He added: "The timing and pace of our recovery will depend on the rollout of the Covid-19 vaccines and lifting of government restrictions. I am confident that once we return to more normal market conditions, our unique, character properties and truly flexible offer will be attractive and relevant to an ever-wider range of businesses across London."
Shares in Workspace were down 2.0% at 709.23 pence in London late on Thursday morning.
By Anna Farley; annafarley@alliancenews.com
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Workspace (WKP)