Real estate investment company reports 47% profit drop following "dramatic" coronavirus impact

A London real estate investment trust has reported a 47 per cent decrease in profit in the past year despite an increase in net income.

Workspace Group announced today that its net rental income was up by 10 per cent, rising from £111m to £122m.

However, the firm also reported that its profit before tax has dropped by nearly half, falling from £137.3m last year to £72.5m.

The company said that during the year, trading was affected by uncertainty around Brexit and the General Election, as well as the “dramatic” impact of COVID-19.

It saw stronger customer demand on average, with enquiries up to approximately 1,087 per month compared to 2019’s 1,048, and lettings averaging 121 per month up from 103.

Graham Clemett, CEO of Workspace Group, commented: “Over the past year, my first as chief executive, Workspace has had to deal with the uncertainty caused by Brexit and the General Election.

“However, that has now been eclipsed by the dramatic impact of the Covid-19 pandemic.

“As a company, we felt it was important to support customers where we could and hope that the 50 per cent rent reduction and deferral agreements we have offered to the majority of our customers have gone some way to lessen the burden of this crisis.

“We have been readying our business centres for the increasing return of customers, putting in place extensive measures to enable social distancing and promote good hygiene.

“Freehold ownership of our properties means we can quickly adapt them to cater for these new requirements.

“Against this backdrop, the business has delivered a strong trading performance in the year to March 2020, with trading profit up 12 per cent to £81m, driven by a 10 per cent increase in net rental income.

“We have a strong balance sheet, prudent funding liquidity and substantial headroom on our covenants, which has meant we have not seen the need to take government financial support.

“On this basis, the board is proposing a 10 per cent increase in the final dividend payment, a total dividend payment for the year of 36.16p per share.

“Looking forward, we will undoubtedly see subdued levels of operational performance in the short term with a reduction in rental income.

“However, we expect that the structural shift in the office market towards flexibility will now accelerate more broadly.

“We believe that, with our well established flexible offer and the quality of our space and services, Workspace is ideally positioned to benefit as London recovers from the impact of the COVID-19 pandemic.”

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