Major Risks

Risk category Mitigating activities
Finance Risk
Lack of funding resulting in inability to meet business plans, satisfy liabilities or breach of covenants.
  • Funding requirements for business plans are reviewed regularly.
  • Regular dialogue with main lenders.
  • Options for alternative sources of funding monitored.
  • Financial ratios and covenant headroom monitored and regularly reported to the Board.
  • Working capital forecasts stress tested and regularly reported to the Board.
Valuation Risk
Value of our properties declining as a result of external market or internal management factors.
  • Independent valuations conducted quarterly by CB Richard Ellis.
  • Alternative use opportunities pursued across the portfolio and planning consent progressed.
  • Market yields and pricing of property transactions monitored closely across the London market.
  • Headroom on Loan to Value banking covenants is maintained and reviewed.
Occupancy Risk
Demand by SMEs for our accommodation declining as a result of social, economic or competitive factors.
  • Weekly monitoring of occupancy levels and update of pricing at each estate.
  • Quarterly customer satisfaction surveys.
  • Weekly monitoring of reasons for customers vacating and exit interviews conducted.
  • On-site staff maintain regular contact with customers and local monitoring of competitors offering space.
  • Extensive marketing using the ‘Workspace’ brand.
  • Flexibility offered on deals by dedicated in-house marketing and letting teams.
  • External research conducted on the SME sector to understand trends in demand.
Development Risk
Plans being inhibited as a result of regulations. Risk of cost overrun.
  • Regular monitoring of Government announcements and active involvement in industry responses.
  • Alignment of our regeneration proposals with the London Plan and local strategic plans.
  • Timing of actual developments can be deferred with properties retained for existing rental use.
Property Investment
Acquisitions do not generate the expected valuations or rent roll resulting in losses.
  • Thorough due diligence conducted ahead of any property acquisitions.
  • Regular monitoring of acquisition performance against target returns.
Transactional Risk
Joint ventures or other ventures with third parties do not deliver the expected return.
  • Potential joint ventures reviewed and monitored before agreed.
  • Regular review of performance of joint ventures throughout term.
Regulatory Risk
Failure to meet regulatory requirements leading to fines or tax penalties or the introduction of new requirements that inhibit activity.
  • REIT conditions monitored and tested on a regular basis and reported to the Board.
  • Close working relationship maintained with HMRC and all relevant issues openly disclosed.
Business Interruption Risk
Major events mean that Workspace is unable to carry out its business for a sustained period.
  • Business Continuity plans in place and tested.
  • Back-up systems at remote locations and remote working capabilities.
London
Changes in the political, infrastructure and environmental dynamics of London lead to reduced demand from SMEs.
  • Regular monitoring of the London economy, research reports and the commissioning of research.
  • Regular meetings with the Greater London Authority.
Reputational Risk
Failure to meet customer and external stakeholder expectations.
  • Customer surveys undertaken and results acted upon.
  • Training and mystery shopper initiatives undertaken.
  • Regular communication with stakeholders.
Energy Risk
Reductions in energy usage are not achieved resulting in excessive costs under the carbon reduction commitment.
  • Initiatives to encourage tenants to reduce energy consumption.
  • Installation of energy meters to review and monitor energy consumption and ongoing upgrading of lighting and heating.
  • Full compliance with CRC regulations.