WOTSO Property (ASX: WOT) has reported strong revenue growth of 9% in its flexspace business to $15.8 million for the first half of FY25, and is forecasting an increase in total funds from operations (FFO) to just shy of 15% for the next six months.
CEO Jessie Glew says WOTSO’s portfolio of 16 commercial, industrial, and large format retail properties also performed well in the six months to December 31.
Leasing revenue was up 7% to $8 million, occupancy high at 97%, with performance highlighted by the extension of the Nationwide News lease at its Yandina printing complex to at least 2033, worth $2.5 million a year.
Glew says the flexspace operating business “continues to excel” as the engine of the Group, with higher returns than standard leasing deals.
“The income mix is increasingly shifting to flexspace, which earns a premium on traditional office leasing through its monthly subscription model, augmented by the high retention rates.”
WOTSO FlexSpace’s occupancy rates remained steady at 80% throughout the period, and that demand remains constant.
“We are tapping into the growing need for flexible, cost-effective spaces in the suburbs and regions, close to people’s homes and completely agnostic to industry type and size.”
WOTSO now has 27 operating flexspace sites in Australia and New Zealand, successfully opening one new workspace at Belmont in Auckland during the reporting period.
Site openings are set to accelerate with five more scheduled to open over the next four months: Melbourne CBD (late March), Jamisontown, western Sydney (early April), Kogarah, southern Sydney (April), Whangārei, NZ (June) and Te Tōangaroa, NZ (June).
CFO Chris Williams says the setup costs will be funded through FFO, a selldown of WOTSO’s investment in Pyrmont Bridge Road Mortgage Fund, and a modest increase in asset gearing, which currently sits at 28%.
In the six months to June 30, WOTSO is forecasting FFO to increase from $2.1 million for the first half year, to around $2.4 million, reflecting both organic growth and the benefits of recent investments.
WOTSO announced its a steady six-monthly dividend of 1 cent per security, and reported a statutory profit before tax of $909,000.
“As we continue to execute our strategy, WOTSO remains well-positioned to capitalise on the structural shift to flexible workspaces,” Williams says.
“By leveraging our real estate expertise, maintaining a disciplined investment approach and focusing on high potential locations, we are confident in our ability to deliver sustainable growth and long-term value for our securityholders.”
