The group, which provides flexible offices for small and medium-sized enterprises around London, reported net rental income of £12.1m for the three months to 30 June, up 2.5% on last year. Revenue increased 9.3%.
However, the group slid to a pre-tax loss of £45m after it wrote down property valuations by 4% to £954m. Like for like occupancy levels remained near target at 84.1%, down 1.7% on the previous year.
The group said that demand for space remained strong with new enquiries averaging 875 per month over period. The conversion rate from enquiries to lettings remains unchanged and the group is achieving rents ahead of reversionary rental levels. It has also seen no significant increase in bad debts.
That said, Workspace has seen an increase in turnover of tenants and the time taken to complete new deals has increased. It expects yields to soften in the second quarter.
The only major development in the period was the completion of the first phase of the acquisition of International House, Brentford, (to be rebranded as Q West) on 30 June 2008 for £4m. It will be available for letting from September.
The shares rose 3p to 138.25p. This is their first rise on an uninterrupted fall from over 500p at the start of 2007. The net asset value per share remains at 285p, providing a significant cushion against further losses. However, sentiment remains poor in the commercial property sector and it is feared that Workspace’s SME customers may well suffer in a downturn. The shares could bounce quickly when sentiment changes but expect news flow to remain poor for the time being.