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Edited Transcript of WKP.L earnings conference call or presentation 13-Nov-19 10:30am GMT

Half Year 2020 Workspace Group PLC Earnings Call

London Nov 25, 2019 (Thomson StreetEvents) -- Edited Transcript of Workspace Group PLC earnings conference call or presentation Wednesday, November 13, 2019 at 10:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Graham Clemett

Workspace Group plc - CEO & Director

* John Robson

Workspace Group plc - Asset Management Director

* Vivienne Frankham

Workspace Group plc - Head of Finance

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Conference Call Participants

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* John Michael Cahill

Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst

* Robert Alan Jones

Deutsche Bank AG, Research Division - Research Analyst

* Robert Andrew Duncan

Numis Securities Limited, Research Division - Property Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the Workspace Half Year Results Presentation. My name is Hailey, and I will be the operator for your call this morning. (Operator Instructions)

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Graham Clemett, Workspace Group plc - CEO & Director [2]

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Okay. I think we're ready to go. So good morning, everyone, and welcome to both people here in person and those attending on the call to Workspace's Interim Results Presentation. For those of you who don't know me, my name is Graham Clemett, and I'd say, it's great to have a really good set of results for my first presentation as CEO.

Turning to the agenda for today. After a quick overview by me, I'll be handing over to John Robson, our Asset Management Director, who will be running through some operational aspects of our performance in the first 6 months. And then Viv Frankham, our Head of Finance, will be joining you to run through the financial performance, and then I'll be wrapping up with a quick update on the outlook for the business.

But before we start, I just want to reiterate what I said in the RNS that came out this morning. And that is that I do see no change for us to make any thing -- changes to our proven successful strategy for the business that served us so well over recent years.

Just a quick reminder of our business model. We continue to focus on London, which is the U.K.'s economic powerhouse and the stats there sort of highlight that. In terms of the market that we're in, we're in the flexible space market and that's now a really well-established and growing sector of the overall commercial property market.

I mean it's fair to say that there is some challenges to the viability of some of the models, most notably, of course, in recent time, WeWork, and I'm sure we'll come back to that later.

In terms of our portfolio, we've got an attractive portfolio that we've built up over the last 30 years. And most importantly of all, we own all of those assets. And lastly, in terms of our model, our platform, we have a distinctive and recognizable offer that tracks significant level of demand.

Just a quick look at the financial highlights. First of all, on financial performance. Delighted with the performance in the first half of the year. Good strong growth in rental income, and most importantly, good growth in our trading profit. Trading profit after interest up 13% to just over GBP 40 million. And I've highlighted the chart, on the left there, actually, their trading profit over the last 4 years. It's quite notable, though, in terms of the growth that we're now achieving in the half year of GBP 40 million, the same profit pretty much as we achieved in the full year in 2016.

Just highlights that the rate of growth, in terms of our trading profit over the last 4 years, pretty much is doubling in profitability.

On the property side, we've seen a good tick up in the property valuation, up 2.2%, still of, what I would call, an undemanding capital value of GBP 670 a square foot.

From our operational perspective, surprisingly, given that challenge around the Brexit endless debate and the sort of that impact that's had on the economic landscape, we've seen very strong operational statistics for the 6 months. Inquiries, viewings and lettings all strongly up on the prior year. Huge amounts of activity, sometimes, actually, you forget just the level of activity we deal with.

When you break back those numbers to a daily basis, that's talking about 50 inquiries every single day, about 32 viewings across our portfolio every day, about 6 lettings every single day, huge amounts of activity managed in-house by our Workspace team.

Lastly, in terms of our strategy, the 3 pillars continue to drive the business forward. Our like-for-like portfolio, I'm pleased to report an uptick in the rent roll in the first half of this year, which I did forecast at our year-end results. I'm pleased to say it's actually come to fruition after a small drop in the second half of last year.

On the project side, we've delivered another 4 projects in the first half of the year, delivering 200,000 square feet of new and upgraded space. And then also, in terms of portfolio management, while we didn't make any acquisitions in the first half of the year, we did sell 3 of our smaller assets for a significant premium, 27% premium to the book value. And there, the pricing paid was well ahead of what we thought we could achieve by running those assets ourselves.

So all in all, a very active and successful first half of the year.

What I'd like to do now is hand over to John to give you a little bit more insight into the operational performance of the business.

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John Robson, Workspace Group plc - Asset Management Director [3]

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So thank you, Graham. I'm now going to talk you through the operational highlights for the first 6 months.

The first slide is an overview of our -- all of our inquiry levels, which I'm pleased to say are up over the same period from last year. Our inquiries have averaged 1,109 over the last 6 months, which were up by 9% over the previous half year. The growth has been maintained into October, with nearly 1,150 new inquiries.

So what does this mean? Well, as Graham said earlier, it means that we're very, very busy. So the 3 blue boxes to the left are the last 6 months and the ones on the right are the previous 6 months. So the good news is that we've got more customers joining, over 300 people moving internally and less customers moving out.

So where do our customers join from? Well, almost 30%, they're joining from other flex space providers. That's the likes of Office Creep, WeWork and Regus, all of the usual trade names. A good example of this is Next Door. They're are one of the world's largest neighbored social media companies. They took nearly 1,000 square foot with us at the Metal Box Factory in Bankside.

40% of our customers, they join it from the other space in the market, which is generally larger space on conventional landlords on longer leases.

A good example of this is iManage, who are a U.S-owned IT company, who took nearly 12,000 square foot with us at the frames in shortage and namely from a private local landlord.

For 50% of our customers, this is their first office. So NEOUS, who are a huge retailer. They moved from their home in North London to take nearly 1,000 square feet with us in Archer Street in the Westend. And finally, 13% moved to us from outside London. So Fabiia, an online furniture retailer, they moved from Dubai to take 1,000 square feet with us in a The Light Box in Chiswick.

I thought it would be useful just to pick up on these 300 or so internal moves I mentioned earlier. So the 2 customers I want to focus here are the top 2, which is Pulselive and Limejump. And the reason of this is twofold. Firstly, both customers, they agree with us in the portfolio. And most importantly, it was the center manager at Kennington Park, who knew both customers very well and needed -- and knew that both needed more space. So Pulselive are a digital sports company, and they moved from Kennington Park to our new scheme called Edinburgh House, which is only a 10-minute walk away, and they took an additional 4,000 square feet to 8,600 square feet.

In turn, Limejump, they expanded their office space at Kennington Park as our base next door, and they took nearly 4,700 square feet, thereby, almost doubling in size to 9,800 square feet.

So this is just one example of the type of moves that we see day-to-day all across our portfolio.

And the final piece to jigsaw, when our customers leave, where do they move to? Well, the bulk of the customers who leave us, about 70% being both the blues in the chart, they move for 2 main reasons. Firstly, 33% moved to a more conventional space, which is likely to be a larger space outside of a business center on the longer lease and maybe with the same front door. While, secondly, 37%, they no longer need the space. So they consolidate, they merge, they downsize or they close their business.

Now, before we get into like-for-like trends, this is just a reminder, the type of properties we now hold in our like-for-like category. These profits now account for over 70% of the total rent roll. As you can see, they all have certain things in common. Firstly, their scale. They're all now large properties, many are now over 100,000 square feet. And this means that they can house all the things that we know that our customers like. That's cafes, that's meeting rooms, co-working space and breakout space. And because of their size, it means many of them, they're dominant in their locations.

Also, many are characterful. So they have interesting histories, and so they are interesting places to work. They're not just ordinary office buildings.

Now, turning to our like-for-like rent roll trends. The overall rent roll has returned to growth by 1% to GBP 94 million in the half year, and occupancy is also up by 1.1% to 91.8%, but the ramp per square foot is down marginally by 0.2% to a shade over GBP 41 a foot. But we do expect to see further overall rent roll growth into the second half of the year.

I just thought it was [good to give] an update on 2 projects over the last year, both of which we're really pleased with. So the first is The Frames, which we launched in September 2019. This is a 52,000 square foot business center, and that's basic shortage. It has around 80 offices. It's taken 12 months to let. It's now practically full at 99.9%, and we're looking at raising the prices.

It's fair to say that we are very pleased with the performance of this center. And second is Edinburgh House, which is the right, which we also launched in September 2019. This is a 65,000 square foot business center located in Vauxhall with around 97 offices. As of today, we stand at 85% let. So we're not though quite as quick at The Frames but we're still very happy with this progress.

Now finally, I'm just going to leave you with a snapshot on a couple of new launches this year. So Brickfields, which is to the left, is located in Hoxton, and we launched it in June 2019. It's a 57,000 square foot business center with just over 100 offices. As of today, we're now 33% let, and we expect to be fully let within 12 months from launch.

Finally, we used to launch massive studios, Hackney in spring 2020. It's a 55,000 square foot business center with 95 offices. Like Brickfields, this will be a state-of-the-art business center, and we're very excited about its prospects going forward. I'm now going to hand you over to Viv, who will talk you through the financials.

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Vivienne Frankham, Workspace Group plc - Head of Finance [4]

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Thanks, John. So I will now take you through the financial highlights for the 6-month period, which demonstrate continued growth for Workspace.

So starting with the income statement, which I'm sure you'll agree present another solid set of results. As Graham highlighted earlier, net rental income has increased by 11%, and this translates to 13% increase in trading profit after interest.

Our net finance costs have increased by 12%, and this is due to additional funds we've drawn down for recent acquisitions.

The growth in earnings per share of 9% is below our increase in trading profit, and this is following the share placed in June of 2018. And as a result of this growth, and in line with our continuing aim for dividend cover of 1.2x trading profit, we are proposing a dividend of 11.67p per share, which I'm pleased to say is a 10% increase year-on-year.

Taking a more in depth look at the increase in net rental income, we have seen underlying growth of 4%, once acquisitions and disposals are stripped out. There has been a small drop in income from like-for-like properties, and this follows the decrease in rent roll as reported in the second half of last year. As rent roll has since increased, we fully expect this to return to growth in the second half of the year. And as John explained earlier, our completed projects are performing well, and this has led to an additional GBP 3.2 million of income, which is back to our 16% increase in rent roll at these properties. This has been offset by a small reduction of just under GBP 1 million in income from current projects, where we vacate space before we start.

And then income from our recent acquisitions, Centro and Shepherds Building, has increased by GBP 5 million, and we have a small reduction of GBP 0.8 million in income from prior year disposals.

So looking at our cash flow, this is split into 2 elements, trading and investment.

On the trading side, we continue to distribute the majority of our trading profit as dividends, in line with our dividend policy and our requirements as a REIT. On the investment side, we have GBP 33 million of capital expenditure, which we expect to increase to GBP 70 million for the full year. This has been partially funded by the GBP 11 million of proceeds we received from the disposal of our Marshgate property, which exchanged last year. And all this together combines to a net cash outflow of GBP 17 million.

The 3 disposals recently announced did not complete before the full year, so GBP 50 million of cash we received is not included in these numbers. This cash once received will be recycled to continue funding our refurbishment program.

A small level of bad debt charge, this continues to be a very minimal cost of around GBP 200,000 for the half year.

Moving on to our balance sheet, net assets have now moved above the GBP 2 billion mark, and this follows a 2.2% underlying increase in our property valuation, taking it to just under GBP 2.7 billion.

This has driven a 2.7% increase in our net asset value per share to GBP 11.15. Although debt has increased, we continue to manage loan-to-value at 22%. This gives us financial flexibility for future investment and is well below our guideline maximum of 30%.

Undrawn facilities and cash of GBP 111 million for this one will increase to GBP 161 million following receipt of cash from the disposals. And our LTV will then cause 21% on a pro forma basis.

Now taking a closer look at our revaluation. The underlying increase in properly revaluation is GBP 59 million. Although like-for-like ERV has fallen, this has been offset by moving NVO's of 0.1% to 5.8%. Balances increased around half of our like-for-like properties, and the increases are supported by recent market comparables in these areas. Completed projects have contributed GBP 15 million to the increase, and this reflects the strong demand and tight pricing levels at these properties.

This includes The Frames, a very successful scheme, as commented on by John earlier, and also the Ink Rooms, where we refurbished a small building adjacent to one of our larger business centers. The Ink Rooms opened in June of this year, and is already around 70% let.

The valuation of current refurbishments remained steady as the increase in value is in line with capital expenditure. We tend to only capture the increase in value at our refurbishments once they're open and we are able to prove pricing.

And then held for sale assets. These are those assets which exchange to sale around half year-end. We achieved a premium of 27% on March valuations. And as Graham said, these premiums are well in advance of the expected returns we've achieved from our plans to refurbish and reposition the assets.

And finally, a quick update on our debt position. The average interest cost has fallen from 3.7% to 3.6%. This has also benefit from the new private placing notes we drew down in January of this year at a cost of 3.6%, and these were in place of 6% retail bond, which we paid in September 2018.

This extended our maturity to 2029. And as you can see, we have a good range of maturities now with an average of 5 years. I'm sure you'll agree, these have been some positive numbers, and I will now pass you back to Graham.

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Graham Clemett, Workspace Group plc - CEO & Director [5]

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Very well. Well, thanks, Viv. And what I'd like to just finish by looking at our future performance and what also, I see, as our priorities now as a business.

Firstly, a chart that many of you have seen before, which is really to look at the potential for organic growth across our portfolio. And as you'll recall, the 2 key drivers of that growth, that organic growth is from the rent roll up if we can achieve in our like-for-like portfolio. And also the new income from all of the project activity as and when we complete those projects and let them up.

So in this chart here, there are a lot of numbers, but just quickly running through it. In terms of that like-for-like growth, this is really looking at the potential to capture the reversion on our existing like-for-like portfolio. And appreciate this does assume that pricing has stabilized, but if that -- on that basis, then there's around GBP 8 million of uplift in rent roll to come on our like-for-like portfolio. Added to that is the uplift from -- of new income from all of the projects, both completed and still letting up, and those projects that we are underway on and that should complete near term. If we can let all those projects up to 90%, in total, there's around GBP 17 million of uplift in rent roll to come. So in total, around GBP 25 million uplift in rent roll that we potentially can receive over the next 3 years or so. The majority of that will drop-through to the bottom line in terms of trading profit growth. And obviously, that also underpins our potential dividend growth near term.

So quite a good firm base for the potential growth of the business near term. And obviously, that's before taking into account any future pricing growth, the impact of new projects, and we've got a pipeline of additional projects coming through in due course, and, of course, also acquisitions.

And next, I've just highlighted here some of the operation initiatives that I've been driving forward since I've been appointed as Chief Executive, and we will continue to focus on as we go forward.

We had a great run of success over the last 5 to 10 years. But from an operating perspective, we can't stand still. We need to adapt our operating model, and we also have to learn from others in the industry. I've given you 4 examples here of where we're actually really focusing on our operating model. First of all, on our channels to market. We're very fortunate that the majority of our customers come directly to us in terms of inquiries. But we're also seeing an increasing number of customers, particularly those new to the market in the flexible space market, that are using their first protocol is the aggregators, the brokers within the market. We've been tracking this activity for some time now and actually identified that quite a few of those would be suited by us -- by our proposition. So we've been now developing quite strong relationships with those aggregators. And actually, they've been a valuable source of additional inquiries and actually lettings to us. And as you've seen, that's part of the reason why we've seen that upsurge in inquiries and demand.

In terms of data and technology, we've talked about the rich source of data we have by virtue of the fact that we run all of our operations in-house. I just want to give you an example of something we're trialing at the moment. We're actually trialing using AI techniques to track the characteristics of the sort of customers that take space with us. And we're using that data to actually analyze and optimize our inquiries activity, but we're also using that to sales research for potential customers not yet actively searching for space that might be suited to our offer. And there'll be more detail on that as we progress through that trial.

Looking at our sales capability, we've been looking a lot of detail at our sales process. And one of the most important parts of that sales process is our first customer contact, which is generally at the viewing stage. Currently, that's the role of our center manager team along all their other responsibilities. And what we're doing there is, actually, we think we can improve that experience for our customers as well as improve the conversion rate by having a team of dedicated sales specialists, and we're rolling that out now across our clusters of -- across clusters of our properties.

It will also have the benefit that the center teams will have more time to actually provide a better service to our existing customers.

Lastly, linked to that is actually a general focus on raising the level of customer service. I mean Customer service is at the heart of this organization, and we do a good job I think. And we do do customer surveys every 6 months just to actually monitor that. But our customers are very helpful in identifying areas where we can improve that service. And equally, they're also highlighting areas where actually there are new income opportunities. And so, we're now progressing with a whole range of new initiatives to actually improve customer satisfaction. But alongside that, I would hope that that will improve customer retention and also generate some additional income sources for us.

Lastly, in terms of our portfolio priorities, this is much more straightforward. Firstly, we will continue to exploit the opportunities within our existing portfolio. We already have a long pipeline of potential projects, which are set out in the appendices to the presentation. But alongside that, there's more to go for. And obviously, over time, hopefully, we can see that project pipeline extend much further.

Alongside that, we will continue to look for acquisition opportunities. However, we're rigorous in the returns that we require and the great thing for our model is that we don't need to acquire to grow the business, as I've highlighted from organic potential.

So in summary, we've got a clear strategy, we're seeing strong levels of customer demand, we've got significant potential to unlock income from our existing portfolio, and we are well-positioned to take advantage of acquisition opportunities as and when they arise.

So on that note, I'd like to thank you for your time this morning and ask if anyone just has some questions in the audience.

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Questions and Answers

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Graham Clemett, Workspace Group plc - CEO & Director [1]

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John?

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John Michael Cahill, Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst [2]

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John. John Cahill from Stifel. I just wanted to ask you about the aggregators, 2 things, really. Maybe if you could just describe to us how you manage your relationship with them? And do you release all of your space to them? Is it a select part of it? And secondly, in terms of the commissions that are paid to the aggregators, is there any materiality in terms of the sort of net rent that you would then receive after that, that we need to think about as that becomes a bigger part of the business?

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Graham Clemett, Workspace Group plc - CEO & Director [3]

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Yes. I mean -- 2 good questions. I think on aggregators, we are selective about the space that we give to them. We don't have to give them all our space. But to be honest, I mean -- I think, for the moment, there is a fair, fair amount of space that we have put on their websites. I mean, they host the sites. Second, in terms of the rates, the commission rates are typically 10% to 20% on lettings. For us, actually, that's not a bad deal because actually, typically, customers stay with us 5 to 10 years. So actually, given we only pay 4 successful lettings, actually, it's quite an attractive option for us. And actually, relative cost-wise, we're talking about GBP 100,000 to GBP 150,000 a year in terms of commission costs. So it's a good additional source of lettings demand for us.

But then, John, if you have anything to say on brokers?

Robbie?

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Robert Andrew Duncan, Numis Securities Limited, Research Division - Property Analyst [4]

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Robbie from Numis. Two questions. Just to make sure I understand Slide 19 properly. That's the September versus September, so the minus 0.5% decline on like-for-like properties doesn't tie to Page 4 of the statement but that's because Page 4 is first half '20, whereas the majority of that minus 0.5% is second half '19. Is that fair to say? I just want to make sure I'm understanding the numbers right, that's all. It's not to catch anyone out.

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Graham Clemett, Workspace Group plc - CEO & Director [5]

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So Viv, do you want to...?

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Vivienne Frankham, Workspace Group plc - Head of Finance [6]

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Yes. That's the difference for like-for-like...

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Graham Clemett, Workspace Group plc - CEO & Director [7]

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You might need to speak up.

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Vivienne Frankham, Workspace Group plc - Head of Finance [8]

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So like-for-like 0.5%. So that's for the second 6 months. So where was the other page you are looking for?

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Robert Andrew Duncan, Numis Securities Limited, Research Division - Property Analyst [9]

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So if I look at Page 4 of the statement, you've talked about plus 0.9% increase. And I think it's just a timing thing.

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Graham Clemett, Workspace Group plc - CEO & Director [10]

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It's the timing because...

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Robert Andrew Duncan, Numis Securities Limited, Research Division - Property Analyst [11]

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Which is first half, second half -- second half, first half.

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Graham Clemett, Workspace Group plc - CEO & Director [12]

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Yes, you're right, Robbie. So on rent roll, I mean, we're looking -- rent roll from March to September is one, the other one is year-on-year. We're obviously -- we've taken out the acquisitions element because otherwise you'd inflate the like-for-like given that some of that acquisitions were in the second half of last year.

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Robert Andrew Duncan, Numis Securities Limited, Research Division - Property Analyst [13]

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Yes. Okay. No, that's fine. Just a clarity point. The second one is, can you just talk about how some of your recent acquisitions have been performing? Obviously, some of them were in locations, which are perhaps outside of Workspace's traditional heartland. So some more core areas where rents been higher, obviously, of higher capital values, et cetera. Just talk about how they're performing both relative to expectations and in absolute terms as well, please?

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Graham Clemett, Workspace Group plc - CEO & Director [14]

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Yes. John, I think you're nearer to the day-to-day performance. Do you want to give us quick view.

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John Robson, Workspace Group plc - Asset Management Director [15]

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So something like Salisbury House, I think we've bought that when it was about 90% occupancy. We're now at 95% occupancy. The void rates are significantly down. And Centro, I think, a similar trend there. We've bought that with quite a large amount of void. We've only probably got 2 to 3 more units to let there. So that's going well. From the Shepherds Building, we've seeing very strong demand internally in that building from existing customers. I think, probably 4 to 5 have now expanded with us, and we've got very low vacancy level in that building.

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Robert Andrew Duncan, Numis Securities Limited, Research Division - Property Analyst [16]

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I was comparing on some of that new space, is it kind of in line with expectations?

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John Robson, Workspace Group plc - Asset Management Director [17]

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They're all in line with expectations. Actually, probably, slightly ahead on Shepherds, actually. The Centro is pretty much in line and so is Salisbury.

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Graham Clemett, Workspace Group plc - CEO & Director [18]

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Any more questions from the audience. Rob?

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Robert Alan Jones, Deutsche Bank AG, Research Division - Research Analyst [19]

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It's Rob Jones from Deutsche Bank. Just on the last point you made on the outlook slide on Page 26. On customer surveys, I guess as part of that satisfaction so that you are able to compute a kind of quantitative number to compare to the previous survey. Just wondering how the kind of overall satisfaction has trended over the last, say, 3 to 4 surveys. And then secondly, are there any recurring themes of areas of interaction that your tenants have with your business that they would like to see improve?

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Graham Clemett, Workspace Group plc - CEO & Director [20]

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Right. In terms of trends, I mean, obviously, we report our customers satisfaction numbers every year as part of our annual report and all of the executives. In fact, all of Workspace is incentivized on them. So they get quite a lot of focus. Pretty much on -- consistently around 80% satisfaction rate, which is good. I mean, I think, if I was benchmarking against other landlords, it's very good. Against what you'd expect for a high-end retailer, probably with still room for improvement. I think, in terms of your second point, are there recurring themes? Yes. I mean, I think, general facilities there, I'd say, toilets and common parts, keeping them clean is absolutely always absolutely key area for focus. I think there is opportunity for us to improve the quality of quite a few of our services. And really, that's what I'm highlighting today is that, I think, particularly because, I think, customers are becoming more demanding, but equally willing to pay more, and we do need to upgrade the quality of the facilities we provide. And that cuts across a whole other range of opportunities for us. For example, meeting rooms. I mean that's one of the areas of focus that we've had for the last 2 or 3 years is to improve the quality of our meeting rooms, and actually on the back of that, it's now a very lucrative source of income. In fact, we're actually now vacating some of our office space to actually dedicate to meeting room. So we've got around already 100 meetings across our portfolio, and we're looking to increase that.

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Unidentified Analyst, [21]

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Two questions, if I may. Can you talk us a little bit who is buying your assets, the buyer profile? And why they are paying such a premium? And if they are managing then the assets themselves? And also, if you can talk us about the pricing power you are going to see in the coming months? We've seen on your like-for-like portfolio that rent per square feet is flattening. So is -- because there is a lot of competition on flexible space outside? Or is that because you want to increase occupancy over pricing?

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Graham Clemett, Workspace Group plc - CEO & Director [22]

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Okay. I'll pick up the first one, and then I'll ask John to talk about pricing, because, obviously, it's a pretty important aspect of our business model. In terms of the buyers, I mean, while I can't give specific names because of confidentiality reasons. I mean, all 3 buyers are for different reasons. So in the case of Congreve Street, it's a joining owner. So you could argue a special purchaser. And in case of Alexandra House up in North London, they're looking to do a more co-living hotel type scheme at that building. And Vestry Street is just a private investor looking to run that as a private commercial building.

So no, there's nothing specific around any of our buildings. What I think it highlights is the characteristics of our buildings mean that they actually are multipurpose. So while we run them for multi-let opportunity, equally, others see other opportunities in those buildings. John, would you like to talk about pricing?

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John Robson, Workspace Group plc - Asset Management Director [23]

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Yes. I mean, I think, obviously, the rent per square foot has dropped very marginally by 0.2%. So that's, I would say, is pretty much flat. I think that's probably the -- probably to be expected in the wake of Brexit, which is, we having thought of we haven't spoken to customers. That's obviously a shadow over their expansion plans, but they want to employ more people, ultimately to take more space with us. Nothing seems to be quite stable now. And hopefully, with the shadow in the gloom of Brexit lifted, we will have stronger growth in the future.

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Graham Clemett, Workspace Group plc - CEO & Director [24]

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And so as I was talking to John about this the other day, I mean, we do feel, within our portfolio, that there's a degree of pent-up sort of ambition of our customers, but equally, I think, held back by concerns around Brexit, which has -- this is myself, I can fully understand. But -- so while we're not profit sizing any significant growth in pricing, we do think, potentially, there is potential there across our portfolio. Any other questions?

Okay, right. Well, thank you very much for your time.

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Operator [25]

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Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.