Workspace Group wins Fitch BBB- rating with stable outlook

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Workspace Group Fitch BBB- rating

Highlights

Fitch assigned Workspace Group a BBB- rating and stable outlook, citing lower occupancy to 81.6% at FYE26 but rising average rent to GBP42 per square foot.
Workspace completed or agreed GBP126 million of FY26 asset disposals with another GBP175 million–GBP200 million expected in FY27 at an average 7.2% discount to book value.
Fitch forecasts net debt/EBITDA to improve to 7.5x–8.0x by FY27–FY29 from 8.4x at FYE26 with loan-to-value at 36% and EBITDA net interest cover above 2.5x.

Rating rationale and operating strategy

As reported by Fitch Ratings, the agency also assigned Workspace a BBB- senior unsecured debt rating, citing the group’s concentration in flexible office space for small and medium-sized businesses across London. Fitch says lower occupancy in FY25 and FY26 is partly offset by higher rents, with average rent rising to about GBP42 per square foot at FYE26 from GBP32.8 at FYE23.

Fitch says Workspace’s stabilised portfolio occupancy fell to 81.6% at FYE26 from 89.1% at FYE23 after the company raised rents during a weaker office market. The agency expects new management to focus on improving occupancy in FY27 while demand for London office space continues to support rents, including in the flexible office segment.

Workspace is reconfiguring vacated space into smaller, fully serviced and furnished units, aiming to generate higher net rent per square foot through all-inclusive pricing. The strategy also includes upgraded amenities such as meeting rooms, cafes and event spaces, while charging separately for some adjacent services and collecting fees on refurbishment and design work.

Fitch highlights the arrival of new chief executive Charlie Green in February 2026 and new chief financial officer Tom Edwards-Moss as part of a broader repositioning of the business. The agency says the management changes, alongside a dividend reset, support a plan to improve assets rather than pursue a break-up sought by an activist shareholder.

Disposals, leverage and sector positioning

Workspace is continuing to sell non-core assets outside its main London footprint, including properties in south-east England, to streamline the portfolio and fund refurbishment spending. Fitch says about GBP126 million of disposals were exchanged or completed in FY26, with a further GBP175 million to GBP200 million expected in FY27, although those sales were struck on average 7.2% below book value.

The agency forecasts a stable financial profile, with net debt to EBITDA of 7.5x to 8.0x in FY27 to FY29, compared with 8.4x at FYE26. Fitch also says loan-to-value stands at 36% at FYE26 and expects EBITDA net interest cover to remain above 2.5x even as lower-cost debt matures over the period.

In its peer analysis, Fitch places Workspace below larger London office landlords such as British Land, Derwent London and Land Securities in rating strength, and says the company has lower debt capacity because of weaker asset quality. It also compares Workspace with serviced office operator International Workplace Group and Sirius Real Estate, noting that Workspace’s ownership model offers greater operational flexibility but requires a more capital-intensive balance sheet.

Our earlier coverage of Fitch’s affirmation of Catholic Health Services of Long Island’s A- ratings noted that the negative outlook was driven by very weak operating results and persistent expense pressures through fiscal 2024–2026. We highlighted that Fitch still viewed management’s turnaround plan as achievable but execution-risky, with the rating supported by the system’s strong liquidity and moderate leverage despite pressured cash flow.

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