Flexible office and warehousing provider Workspace (WKP) rises 5.4% to 616p on a consensus-beating performance in the year to April.

The London-focused concern’s net asset value (NAV) per share jumped a massive 43% to 496p – 13% higher than expected and rents rising 8.5% to £43.7 million.

The real estate investment trust is benefiting from the gains recorded by London’s economy and its thriving smaller, especially digital, business. Its clients are also changing with chef Mark Hix opening a new restaurant in one of its properties soon, diversifying the company away from offices and creative spaces.


Improving conditions have helped the value of its portfolio grow 27%, or £228 million, to £1 billion during the year. Its refurbishment programme was also a factor. In a sign that the market is improving most of this growth (14%) came in the second half of the year.

Workspace is ensuring that shareholders are taking a slice of the company’s good fortune by hiking its dividend 10% to 7.09p.

The shares trade on a 24.1% premium to NAV but analysts say this is deserved. 'We see further valuation growth driven by a core portfolio supported by the strong fundamentals of the London property market (and economy), augmented by a significant redevelopment and refurbishment programme,' says Oriel Securities.

Liberum Capital expects 59% NAV growth over three years. ‘FY2014 may be hard to repeat but we still forecast Workspace to deliver the leading total returns among UK REITs on a 12-month view. Trading at a 6% discount to one-year forward NAV, we see this as a compelling entry point for a stock still in its mid-cycle.’

Alison Watson at Investec upgrades NAV forecast by 18% in 2015 and 2016, respectively.

Issue Date: 04 Jun 2014