Demand for office and warehousing in London on short-term leases has remained strong in the run up to the EU referendum vote later this month, helping small business landlord Workspace (WKP) to beat expectations.
The FTSE 250 real estate investor saw its shares rise 4% to 866p as the value of its net assets exceeded expectations to grow 31.3% to 923p a share in the year to 31 March 2016.
The market also welcomed the recommendation of a 25% hike in the total dividend to 15p a share, a 1.7% yield.
Despite occupancy remaining flat during the period at around 90%, rents increased 28% to £74.1 million, a sign that management’s strategy of buying new properties and upgrading its existing assets is working.
The value of its portfolio increased by 21% to £1.8 million, during a year when it bought five properties paid for by the sale of 11 non-core industrial units, and completed refurbishments and a redevelopment.
The short-term nature of the leases Workspace offers has almost made the company, which operates within Greater London, immune to the uncertain surrounding the in or out vote on EU membership on 23 June.
‘While investment demand and occupier enquiries may not be immune from a BREXIT pause, Workspace’s smaller business occupiers are less exposed to any hiatus and it is clear that demand remains strong,’ Liberum analysts said.
‘The prospect for continued underlying double-digit rental growth remains well ahead of the sector,’ they add. ‘A significant pipeline of refurbishment potential in smaller schemes across Greater London with financial leverage at an all-time low (16% loan-to-value) also provides further justification for a higher rating.’