Workspace Group PLC

Investor Presentation • Sep 30, 2014

INVESTOR AND ANALYST PRESENTATION 12 NOVEMBER 2014

WORKSPACE INTERIM RESULTS DRIVING VALUE

WORKSPACE

Jamie Hopkins Chief Executive Officer

PERFORMANCE

Graham Clemett Chief Financial Officer

DIRECTION

Jamie Hopkins Chief Executive Officer

QUESTIONS

	September 2014	March 2014	Change
Strong Growth
Rent Roll (lfl)	£42.4m	£39.8m	+7%
Property Valuation	£1,230m	£1,078m	+15%*
Like-for-like Capital Value per sq. ft**	£227	£202	+12%
EPRA NAV (per share)	£5.97	£4.96	+20%
Operational Momentum
Enquiries (per month)	1,258	1,063	+18%
Occupancy (lfl)	90.2%	90.0%	0.2%
Rent per sq. ft (lfl)	£15.47	£14.59	+6%
Interim Dividend (per share)	3.89p	3.54p***	+10%

* Underlying increase

** Excluding industrial portfolio sold October 2014

*** Interim dividend for September 2013

PERFORMANCE HIGHLIGHTS

Income Statement	September 2014	September 2013	Change
Net Rental income	£27.9m	£24.4m	+14%
Adjusted Trading Profit After Interest	£12.4m	£9.7m	+28%
Profit Before Tax	£173.7m	£107.8m	+61%
Adjusted Underlying Earnings (per share)	8.4p	6.6p	+27%
Interim Dividend (per share)	3.89p	3.54p	+10%
Balance Sheet	September 2014	March 2014
Portfolio Valuation	£1,230m	£1,078m	+15%*
EPRA NAV (per share)	£5.97	£4.96	+20%
Net Debt	£331m	£338m	£7m
Loan to Value	27%	31%	4%

* Underlying increase

PERFORMANCE TRADING PROFIT AFTER INTEREST

PERFORMANCE RENT ROLL GROWTH

LIKE-FOR-LIKE

Industrial Portfolio sold October 2014 Refurbishment Redevelopment

COMPLETED PROJECTS

Refurbishment Redevelopment

PROJECTS UNDERWAY

		£m
Trading
Net cash from operations	14
Dividends paid	(11)	3
Investment
Capital Expenditure	(16)
Property Acquisitions	(19)
Capital Receipts	38	4
Investment in joint ventures	1
Net movement in six months		7
Net Debt at March 2014		(338)
Net Debt at September 2014		(331)

	September 2014	March 2014
Investment Property Valuation	£1,230m	£1,078m
Investment in Joint Ventures	£29m	£23m
Net Debt	(£331m)	(£338m)
Other	(£27m)	(£37m)
Net Assets	£901m	£726m
EPRA NAV per Share	£5.97	£4.96
Loan to Value	27%	31%
Facility Headroom	£79m	£72m

PERFORMANCE PROPERTY VALUATION METRICS

	September 2014	March 2014
Total Portfolio	£1,230m	£1,078m
Equivalent Yield	6.8%	7.3%
Net Initial Yield	5.3%	6.2%
Capital Value per sq.ft	£281	£240
Like-for-like*	£626m	£553m
ERV per sq.ft	£17.06	£16.05
Equivalent Yield	6.9%	7.2%
Net Initial Yield	6.0%	6.4%
Capital Value per sq.ft	£227	£202

* Excludes Industrial Portfolio sold October 2014

PERFORMANCE REVALUATION UPLIFT

	Uplift HY 2015	Main movements
Like-for-Like	£80m	Pricing £36m Yield Movement £33m Industrial Portfolio £11m
Redevelopments	£48m	Overage Payments £12m Poplar £11m Screenworks £11m
Refurbishments	£28m	Completed Buildings £18m Projects in Progress £10m
Other	£1m
Total	£157m

PERFORMANCE GLEBE PROCEEDS SHARE

	September 2014	March 2014
Glebe Portfolio Valuation	£222m	£217m
Comprising:
Commercial properties – no plans to sell	£129m	£110m
Properties with residential sales potential	£93m	£107m
Proceeds Share Calculation:
Proceeds from sales to date	£45m	£14m
Potential proceeds from property sales (see above)	£93m	£107m
Deductible costs	(£7m)	(£7m)
Net Proceeds	£131m	£114m
Allocated to Workspace	£111m	£103m
Allocated to former lenders*	£20m	£11m

* Provision made

	September 2014	March 2014
Net Debt	£331m	£338m
Total Facilities (unsecured)	£410m	£410m
Hedged/fixed rate facilities	73%	73%
Average Borrowing Cost	5.3%	5.3%

FACILITIES BY TYPE MATURITY PROFILE

DIRECTION THE RIGHT STRATEGY

CURRENT

• 274,000 sq. ft of brand new business space

Completed Underway

Note: Further details on the redevelopment projects are set out in Appendix I

DIRECTION REDEVELOPMENT PROJECTS

CURRENT

• 274,000 sq. ft of brand new business space

PIPELINE

• Planning obtained for a further 4 schemes
• In discussions with planners on a further 7 schemes

Note: Further details on the redevelopment projects are set out in Appendix I

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DIRECTION REDEVELOPMENT PROJECTS

Light Bulb, Wandsworth

The Faircharm, Deptford Creek

Grand Union, Ladbroke Grove

DIRECTION CURRENT REFURBISHMENT PROJECTS

Note: Further details on the refurbishment projects are set out in Appendix II

DIRECTION PILL BOX, BETHNAL GREEN

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DIRECTION PIPELINE REFURBISHMENT PROJECTS

Note: Further details on the redevelopment projects are set out in Appendix III

DIRECTION HOLYWELL CENTRE, SHOREDITCH

CURRENT PLANNED

DIRECTION THE RIGHT STRATEGY

DIRECTION THE RIGHT STRATEGY

160 FLEET STREET, EC4

160 FLEET STREET, EC4

RATIONALE

• Core midtown location: improving
• Prominent Fleet Street frontage: brand
• Good strategic fit: cluster efficiencies
• Optimal floor configuration: smaller units
• Refurbished 2009: M&E, Lifts, reception, meeting rooms and gym
• Under-managed: in administration

FINANCIALS

• £29.7m
• £549 per sq. ft capital value
• Minimal day one expenditure
• 3.7% net initial yield

• 48% occupied by 22 customers

	CURRENT (Last 12 months)	FUTURE
FORMAL BIDS: ACQUIRED:	24 Opportunities £575m 4 Properties	PIPELINE:	• Increasing • Market levelling • Bidding on £215m
UNDER OFFER:	£63m 1 Property	SWEETSPOT:	• £15-50m lot size • Multi-let • Undermanaged
	£6m	FOCUS:	• In-house resource expanded • Customer knowledge • Cluster efficiencies
		EXECUTION:	• Rigorous due diligence • Move at speed • Cash

REDEVELOPMENTS

• 274,000 sq. ft. of brand new business space completed or underway
• Continuing pipeline

REFURBISHMENTS

• Current programme delivering 584,000 sq. ft. of new and upgraded space at a cost of £104m
• 8 projects completed at a cost of £29m
• 7 projects in progress at a total cost of £75m
• Completed projects have delivered an IRR in excess of 15% pa
• Pipeline of a further 11 projects planned to deliver 560,000 sq. ft. of new and upgraded space at an estimated cost of £128m

ACQUISITIONS

• £63m acquired in the last 12 months
• £6m under offer and £215m of bids
• Pipeline of targets increasing

QUESTIONS

SUPPLEMENTARY INFORMATION

REDEVELOPMENT PROJECTS

	Development			Expected	Residential units
At September 2014	partner	Valuation	Rent Roll	completion	No.	Commercial space			Other proceeds
						Area	Estimated ERV	Estimated Rent*	Contracted Cash	Contracted to come	Overage **
Contracted
Screenworks	Taylor Wimpey	£32m	£1.2m	May 2014	72	61,855	£35	£1.9m	£5m	-	£1m
The Filaments (phase 1)	Mount Anvil	£28m	-	Dec 2014	209	53,000	£22	£1.0m	-	-	£12m
Grand Union Centre	Taylor Wimpey	£21m	-	Dec 2015	145	60,000	£22	£1.2m	£6m	£2m	£1m
Bow Enterprise Park (phase 1)	Peabody	£7m	-	Dec 2015	267	10,000	£12	£0.1m	£11m	-	£4m
The Faircharm	L&Q	£7m	-	Jun 2016	148	52,000	£20	£0.9m	£10m	-	n/a
Poplar Business Park (phase 1)	Telford Homes	£18m	£0.2m	Apr 2017	170	8,000	£12	£0.1m	£16m	£16m	£0m
Bow Enterprise Park (phase 2)	Peabody	£12m	-	May 2017	160	3,000	£10	£0.0m	£11m	£11m	n/a
The Biscuit Factory (part)	Grosvenor	£37m	£0.7m	Jun 2017	800	47,000	£20	£0.8m	£51m	£23m	£0m
		£162m	£2.1m		1,971	294,855		£5.9m	£109m	£52m	£18m
With Planning
Bow Enterprise Park (phase 3)					130	38,000
Poplar Business Park (phase 2/3)					222	58,000
The Filaments (phase 2)					77	18,000
		£45m	£1.0m		429	114,000
At Planning / Design stage
Marshgate					300
Rainbow					200
Highway					130
Lombard House					92
Chocolate Factory					300
Arches Business Centre Stratford Office Village					177 200
		£57m	£3.2m		1,399

* Expected Rent at 90% occupancy

** Overage as valued by CBRE as at September 2014

REFURBISHMENT PROJECTS

At September 2014	Valuation	Actual/ Estimated cost	Cost to Complete	Estimated Completion	Unaffected area	Upgraded area	New space	Estimated ERV (Average)	Estimated Rent at 90% occupancy *	Current Rent Roll *
Completed
Canalot Studios	£19m	£5m	-	Sept 2012	-	32,702	16,268	£30	£1.3m	£1.1m
Whitechapel Technology Centre	£12m	£2m	-	Oct 2012	32,103	-	5,832	£25	£0.8m	£0.8m
Chester House (phase 2)	£19m	£2m	-	Mar 2013	27,481	-	8,903	£44	£1.1m	£1.0m
Leyton Industrial Village (phase 1)	£13m	£3m	-	Apr 2013	84,127	-	26,600	£13	£0.8m	£0.7m
Westminster Business Square (phase 1)	£4m	£2m	-	Aug 2013	-	6,137	4,464	£24	£0.3m	£0.2m
Exmouth House	£35m	£4m	-	Aug 2013	-	52,907	5,936	£51	£2.7m	£2.0m
The Pill Box	£19m	£9m	-	Feb 2014	-	-	50,409	£29	£1.3m	£1.0m
Leyton Industrial Village (phase 2)	£4m	£2m	-	May 2014	-	-	21,293	£12	£0.2m	£0.1m
	£125m	£29m			143,711	91,746	139,705		£8.5m	£6.9m
Underway
Metal Box Factory	£43m	£16m	£2m	Nov 2014	-	82,850	25,150	£36	£3.5m	£1.0m
Bounds Green Industrial Estate	£12m	£2m	£1m	Jan 2015	123,273	-	14,000	£13	£0.9m	£0.7m
Enterprise House	£46m	£3m	£2m	Mar 2015	11,532	59,000	-	£44	£2.7m	£2.1m
Westminster Business Square (phase 2)	£18m	£15m	£12m	Aug 2015	46,532	-	45,000	£31	£1.9m	£0.8m
Linton House	£16m	£9m	£8m	Nov 2015	-	30,000	16,000	£40	£1.7m	£0.7m
Barley Mow Centre	£28m	£7m	£6m	Apr 2016	60,942	-	20,000	£32	£2.1m	£1.5m
Hatton Square Business Centre	£14m	£23m	£23m	Oct 2016	-	-	60,600	£46	£2.5m	£0.0m
	£178m	£75m	£54m		242,279	171,850	180,750		£15.3m	£6.8m

* Includes rent for unaffected areas at September 2014 rental levels

PIPELINE REFURBISHMENT PROJECTS

Property	Location	Type of Scheme	Estimated Cost	Estimated Start	Upgraded area	New space	Status
Canterbury Court	Kennington	Upgrade	£4m	2015	24,000	-	With planning permission
Holywell Centre	Shoreditch	New build	£19m	2015	22,000	33,000	Planning application
Greville Street	Farringdon	New build	£8m	2015	15,000	8,000	Pre-application
Southbank House	Albert Embankment	Upgrade	£4m	2015	9,000	-	With planning permission
Riverside	Wandsworth	Upgrade	£12m	2015	99,000	-	No planning required
The Lightbox	Chiswick	Extension	£3m	2016	-	8,000	With planning permission
Cremer Street	Hoxton	New build	£17m	2016	41,000	10,000	Pre-application
Leroy House	Islington	Extend and upgrade	£14m	2016	35,000	38,000	Pre-application
Mare Street	Hackney	Extend and upgrade	£17m	2016	38,000	20,000	Design
Pall Mall	Ladbroke Grove	Extend and upgrade	£10m	2016	49,000	12,000	Design
Avro & Hewlett House	Battersea	New build	£20m	2017	59,000	40,000	Design
			£128m		391,000	169,000

INTENSIVE MANAGEMENT AND DIRECT MARKETING The information in this document may include forward-looking statements, which are based on current expectations and projections about future events. These forward‑looking statements reflect the directors' beliefs and expectations and are subject to risks, uncertainties and assumptions about the Company, including, amongst other things, the development of its business, trends in its operating industry, returns on investment and future capital expenditure and acquisitions, that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statements. None of the future projections, expectations, estimates or prospects in this document should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct or exhaustive or, in the case of the assumptions, fully stated in the document. As a result, you are cautioned not to place reliance on such forward looking statements as a prediction of actual results or otherwise. The information and opinions contained in this document are provided as at the date of this document and are subject to change without notice. No one undertakes to publicly update or revise any such forward-looking statements.

ORGANIC NEW This presentation should also be read in the light of the Company's full interim results announcement [and half year report] for the six months ended 30 September 2014 including the principal risks and uncertainties identified therein. No statement in this document is or is intended to be a profit forecast or profit estimate or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company.