Shares in Workspace Group PLC (LSE:WKP), the London flexible office landlord, fell 15% to 317.94 pence after the company warned of a substantial step down in profitability in the financial year to March 2027.
The FTSE 250 company cited lower opening rent roll, higher interest costs, reduced capitalised interest, and increased operating expenses as factors weighing on the outlook, alongside the dilutive effect of higher-yielding asset disposals.
The warning came alongside a fourth-quarter trading update in which total rent roll fell 1.4% to £127.3 million, with overall rent per square foot down 1.3% to £41.96 as pricing pressure continued across the portfolio.
Occupancy edged up 0.6 percentage points to 79.4% over the quarter, with the stabilised portfolio, comprising assets at least 24 months post-refurbishment or acquisition, seeing occupancy rise 0.3 percentage points to 81.6%.
New chief executive Charlie Green, who joined in early February, said the business would require investment to reposition its offering for the start-up, small business and scale-up market, and that the strategic shift would take time to deliver.
The board also revised its dividend policy, intending to return cover to 1.2 times earnings for the financial year to March 2026 onwards, reflecting what it described as a more disciplined approach to capital allocation.
On disposals, Workspace exchanged or completed on £38.1 million of asset sales in the quarter, bringing the total to £125.7 million against a two-year £200 million target, with a further eight assets worth approximately £58 million in active discussions.
Sales in the quarter included Havelock Terrace in Battersea for £20 million, a 16% discount to the September 2025 valuation, and The Planets in Woking for £7.3 million, sold at a 44% discount.
Net debt fell £20 million in the quarter to £759 million, with cash and undrawn facilities of £241 million and a loan-to-value ratio of 35%.