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Workspace Group PLC Delivering Value into the Future

Workspace Group PLC Delivering Value into the Future Strategy Presentation to Equity Research Analysts Friday 2 November 2007. Aims for the Presentation. Reconfirm our strategy: We are a property based business Clear identifiable brand Servicing a vibrant customer base

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Workspace Group PLC Delivering Value into the Future

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  1. Workspace Group PLC • Delivering Value into the Future • Strategy Presentation to Equity Research Analysts • Friday 2 November 2007

  2. Aims for the Presentation • Reconfirm our strategy: • We are a property based business • Clear identifiable brand • Servicing a vibrant customer base • Proven acquisition model • Capability to realise redevelopment potential • Deliver superior returns …..and introduce new members of the team

  3. Aims for the Presentation - Structure • Our Market Place Harry Platt • Acquisition Activity Patrick Marples • Redevelopment Opportunity Angus Boag • Financial Performance Graham Clemett • Summary Harry Platt

  4. The Brand – Hotelier of Space to SMEs • “ We provide affordable, flexible space for new and small businesses in London” • c.4,500 customers over 119 estates; 6.2 million sq .ft • Over 10,000 enquiries a year; market leading brand in • fragmented market • A simple product offer • Superior service from in-house management • Customer focused

  5. London is our Market Place • London is THE Global city • London drives the UK economy • Most multicultural – home to more than 300 languages • 42 immigrant populations of 10,000 or more • Home to 12.5% of UK population, produces 16.5% of its output • Highest concentration of fastest-growing, most productive • business sectors • London is our Knowledge Base

  6. Statistics Support London Growth • Population expected to grow from 7.5 million to 8.8 million in 2029 • Households expected to grow from 3.2 million to 3.6 million by 2021 • (source: ONS, Population trends 128; Summer 2007) Source: GLA Working paper 24: An analysis of London’s employment by sector Source: Domestic & International Net Migration in London, 1981-2005

  7. London is Key for Business Business Starts and Closures Source: Enterprise Directorate Analytical Unit, Business Starts & Closures: VAT Registrations & De-Registrations in 2005 Businesses in London by number of employees Source: Enterprise Directorate Analytical Unit, SME Statistics, 2005

  8. Workspace Customer Base Classification based on DTI categories

  9. Typical Workspace Customer • Entrepreneurs • Creative industries/professional services (knowledge economy) • Employs less than 10 people (50% plus employ less than 4) • Has been in current unit 2-3 years - traded for 5 years plus • Describe themselves as “going for growth” • 3 in 10 are serial entrepreneurs - 2 in 10 are portfolio entrepreneurs

  10. Typical Workspace Customer • Rent under 5% of turnover • Average rents at 31 March 2007: £11. 34 per sq. ft • Average customer occupies 1,100 sq. ft • Average rent per week about £240 Source: Enterprise & Entrepreneurs: Profiles of the Workspace Customer base, Kingston University, May 2005

  11. Workspace Group Portfolio

  12. Clerkenwell Workshops, EC1 Before After

  13. Kennington Park, SW9

  14. Kennington Park, SW9 Before After

  15. Patrick Marples Acquisitions

  16. Acquisitions – The Fundamentals • Stock Selection • Investment properties with an “angle” • - Undermanaged • - Underlet • - Above average rental growth prospects (areas of change) • - Added value potential (change of use or intensification) • Vacant or Part let - Using the BRAND to create value

  17. Acquisition Activity Average 72

  18. Acquisition Performance Lightbox (2005) Chiswick Greville Street (2006) EC1

  19. The Lightbox, Chiswick, W4 Before After

  20. Acquisitions Database

  21. Workspace - Components Of Return Level One: The Brand Customer focus SME’s Market Share Churn Flexibility Service Sector

  22. Workspace - Components Of Return Brand Level Two: Investment Return Property Skills Growing Rents Area of Change Gearing

  23. Workspace - Components Of Return Brand Investment Return Level Three: Land Potential Change of UseDevelopmentIntensification Acquisitions targeted at all three types of return

  24. Latest Deal - Neil House, E1 Neil House

  25. Neil House, Whitechapel Road, E1 Purchase Price £10.8 m Floor Area 43,592 sq.ft Value psf £248 per sq.ft Current Rent £415,260 pa Estimated rental value £879,000 Office Repositioning Total Area 23,260 sq.ft Vacant 14,632 sq.ft (62%) Average Passing Rent £13.79 psf ERV £26.00 psf

  26. Angus Boag Leveraging the Redevelopment Potential

  27. Workspace’s Unique Position • The London Plan • Employment led regeneration • Workspace Brand • Relationships with local authorities • Ability to own and manage mixed-use schemes

  28. Redevelopment Potential • Over 50% portfolio will be subject to • Intensification / Change of Use • over next ten years • 20% of portfolio on a five year basis

  29. Progress to Date • Workspace Portfolio • 18 sites identified for immediate progress: • 3 schemes submitted for planning consent • 4 schemes in negotiation with planners • 6 schemes being prepared for negotiation • 5 schemes being worked up for applications in 2009 Joint Ventures • 1 Scheme granted consent • 2 Schemes to Committee imminently • 1 Scheme in planning negotiation – application 2008 • ‘

  30. Future Intensification

  31. Aberdeen Works, Islington, N5 Before 66,000 sq. ft commercial (Rents £12 - £15 per sq. ft) After 45 apartments for sale 27 affordable apartments(37%) 66,000 sq. ft commercial (rents £25 per sq. ft) Proposed scheme has 2.0 times more floorspace than the existing scheme

  32. Greenheath, Bethnal Green, E2 Before 46,000 sq. ft commercial (rents £8 - £10 per sq. ft) After 74,000 sq. ft commercial (rents £20 per sq.ft) 230 student housing rooms Proposed scheme has 2.6 times more floorspace than existing

  33. Wandsworth, SW18 Before Existing 86,000 sq. ft workspace (rents £15 per sq. ft) After Planning consent for: 156 apartments for sale 53 affordable apartments (25%) 86,000 sq. ft new workspace (rents £22 per sq. ft) Consented scheme has 2.5 times more floorspace than existing schemes

  34. The Pipeline

  35. Graham Clemett Financial Performance

  36. Dynamics of Growth – Next 5 Years CORE BUSINESS Strong Rental Growth High Occupancy + ACQUISITIONS Proven Track Record Extensive Database + REDEVELOPMENT In-house expertise USP vs “traditional” developers

  37. Core Business Valuation What if….. Rent per week £264 £288

  38. Funding Options REIT Joint Ventures Other

  39. Summary • Workspace = Robust Business • ….with massive opportunities • The Workspace Difference • - Strength of Brand • - At the Heart of London • - Ability to buy well • - Acceleration of redevelopment potential • - Scale of London market • - We can add scale to the business

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