LONDON, UK: Workspace Group PLC, London’s leading owner and operator of sustainable, flexible work space, today announced the sale of five non-core properties in the South-East of England for a total consideration of £82m. Completion will take place in June 2023.

The properties being sold comprise light industrial and logistics properties in Bracknell, Crawley, Poyle, Theale and Weybridge. The site in Weybridge has been recently vacated with planning for refurbishment. The sale price represents a discount of 27% to the 30 September 2022 book value of these properties and is at a net initial yield of 4.5% (5.5% prior to the vacation of the Weybridge site).

The sale of these five non-core properties is being made to Tudor Investment Holdings Limited, acting as General Partner for ARGO DFI Logistics Partnership II LP. Net proceeds will be initially used to pay down the group’s bank facilities.

The acquisition of McKay in May 2022 allowed Workspace to acquire, at a discount to book value, good quality office buildings in London, an office and business park portfolio in South-East and a number of non-core assets, principally light industrial and logistics properties.

Workspace still anticipates an attractive return from this acquisition and is making good progress, most notably:

• Completed the operational integration ahead of schedule in November 2022 with all activity now being managed on the Workspace platform
• The seven London properties, valued at £162m on 30 September 2022, are now managed as part of Workspace’s London portfolio. These buildings are well suited to Workspace’s business model and are in areas where they see good demand from their SME customers through their operating platform. Workspace is progressively adapting them to their multi-let configuration and flexible offer which they expect will deliver premium pricing
• The South-East office and business park portfolio comprises thirteen buildings valued at £134m as at 30 September 2022. These are good quality, attractive income yielding properties which are largely fully let. Over time these assets will allow Workspace to selectively test demand for their business model in well-connected feeder towns to London which they believe are under-served with quality flexible space catering to the demands of SMEs
• Cost synergies are well ahead of Workspace’s 50% cost reduction target, with McKay corporate costs reduced from £6.4m pa prior to acquisition to £0.9m pa at March 2023
• Successfully novated a £65m long-term loan maturing in 2030, securing an attractive loan at a margin of 4% and avoiding a potential £13m break cost. Alongside this Workspace has transferred £135m of McKay revolver bank facilities on the same terms as their existing Workspace facilities and extended the maturity to April 2025

Graham Clemett, Chief Executive Officer of Workspace, commented: “This sale of a substantial element of the non-core assets from our purchase of McKay is an important step in our acquisition plan. There is still more to do but we are confident our acquisition will generate attractive returns for shareholders as we complete the delivery of these plans.”

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