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Workspace Group PLC

Delivering Value into the Future

Strategy Presentation to Equity Research Analysts

Friday 2 November 2007

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Reconfirm our strategy:

• We are a property based business

• Clear identifiable brand

• Servicing a vibrant customer base

• Proven acquisition model

• Capability to realise redevelopment potential

• Deliver superior returns

…..and introduce new members of the team

Aims for the Presentation

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Aims for the Presentation - Structure

1. Our Market Place Harry Platt

2. Acquisition Activity Patrick Marples

3. Redevelopment Opportunity Angus Boag

4. Financial Performance Graham Clemett

5. Summary Harry Platt

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“ We provide affordable, flexible space for new and small businesses in London”

• c.4,500 customers over 119 estates; 6.2 million sq .ft

• Over 10,000 enquiries a year; market leading brand in fragmented market

• A simple product offer

• Superior service from in-house management

• Customer focused

The Brand – Hotelier of Space to SMEs

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London is our Market Place

• London is THE Global city

• London drives the UK economy

• Most multicultural – home to more than 300 languages

• 42 immigrant populations of 10,000 or more

• Home to 12.5% of UK population, produces 16.5% of its output

• Highest concentration of fastest-growing, most productive business sectors

London is our Knowledge Base

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Statistics Support London Growth

• Population expected to grow from 7.5 million to 8.8 million in 2029

• Households expected to grow from 3.2 million to 3.6 million by 2021(source: ONS, Population trends 128; Summer 2007)

Source: Domestic & International Net Migration in London, 1981-2005

Source: GLA Working paper 24: An analysis of London’s employment by sector

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Source: Enterprise Directorate Analytical Unit, Business Starts & Closures: VAT Registrations & De-Registrations in 2005

Business Starts and Closures

1-416%

50 plus1%

No employees76%

10-493%5-9

4%

Source: Enterprise Directorate Analytical Unit, SME Statistics, 2005

Businesses in London by number of employees

London is Key for Business

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Workspace Customer Base

Customer base of more than 4,000 small businesses

18%

6%

1%2%

1%

12%5%

10%

45%

Manufacture

Retail

Construction

Utilities/Infrastructure

Organisations

Design & Creative

Services

Storage & Distribution

Unclassified

Classification based on DTI categories

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Typical Workspace Customer

Entrepreneurs

• Creative industries/professional services (knowledge economy)

• Employs less than 10 people (50% plus employ less than 4)

• Has been in current unit 2-3 years - traded for 5 years plus

• Describe themselves as “going for growth”

• 3 in 10 are serial entrepreneurs - 2 in 10 are portfolio entrepreneurs

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Typical Workspace Customer

• Rent under 5% of turnover

• Average rents at 31 March 2007: £11. 34 per sq. ft

• Average customer occupies 1,100 sq. ft

• Average rent per week about £240

Source: Enterprise & Entrepreneurs: Profiles of the Workspace Customer base, Kingston University, May 2005

Median% of median

turnover

Turnover 250,000 —

Overheads 90,000 36

Profits 40,000 16

Rent 12,000 5

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Workspace Group Portfolio

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Clerkenwell Workshops, EC1

Before

After

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Kennington Park, SW9

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Kennington Park, SW9

Before

After

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Patrick Marples

Acquisitions

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Acquisitions – The Fundamentals

Stock Selection

• Investment properties with an “angle”

- Undermanaged

- Underlet

- Above average rental growth prospects (areas of change)

- Added value potential (change of use or intensification)

• Vacant or Part let

- Using the BRAND to create value

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Acquisition Activity

Acquisitions

£m

2003 60

2004 60

2005 43

2006 127

2007 70

Total 360 Average 72

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Acquisition Performance

Acquisition Cost £8m £4m

Yield at acquisition 1.9% Nil

Refurbishment cost £5.5m £1.5m

Completed November 2006 June 2007

March 2007

Valuation surplus £3.7m £2m

Occupancy 81% Nil

ERV Yield

- On cost 8.8% 18.3%

- On valuation 6.9% 13.1%

ERV per sq. ft £16 £55

Lightbox (2005)

Chiswick

Greville Street (2006)

EC1

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The Lightbox, Chiswick, W4

Before

After

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Acquisitions Database

Target acquisitions 400 sites

Potentials 600 sites

Adjacent/site assembly 200 sites

Estimated total value £8.5 billion

“Top 20” £600 million

Acquisitions Value No of Deals FromDatabase

Value from Database

2005 £43m 7 1 14%

2006 £127m 12 3 25%

2007 £70m 11 5 45%

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Customer focus

SME’s

Market Share

Churn

Flexibility

Service Sector

Level One:

The Brand

Workspace - Components Of Return

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Level Two:

Investment Return

Workspace - Components Of Return

Property Skills

Growing Rents

Area of Change

Gearing

Brand

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Level Three:

Land

Potential

Workspace - Components Of Return

Change of Use

Development

Intensification

Acquisitions targeted at all three types of

return

Brand

Investment Return

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Latest Deal - Neil House, E1

Neil House

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Neil House, Whitechapel Road, E1

Purchase Price £10.8 mFloor Area 43,592 sq.ftValue psf £248 per sq.ft

Current Rent £415,260 paEstimated rental value £879,000

Office Repositioning Total Area 23,260 sq.ftVacant 14,632 sq.ft (62%)

Average Passing Rent £13.79 psfERV £26.00 psf

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Angus Boag

Leveraging the Redevelopment Potential

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Workspace’s Unique Position

• The London Plan

• Employment led regeneration

• Workspace Brand

• Relationships with local authorities

• Ability to own and manage mixed-use schemes

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Redevelopment Potential

• Over 50% portfolio will be subject to

Intensification / Change of Use

over next ten years

• 20% of portfolio on a five year basis

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Progress to Date

Workspace Portfolio

18 sites identified for immediate progress:

• 3 schemes submitted for planning consent

• 4 schemes in negotiation with planners

• 6 schemes being prepared for negotiation

• 5 schemes being worked up for applications in 2009

Joint Ventures

• 1 Scheme granted consent

• 2 Schemes to Committee imminently

• 1 Scheme in planning negotiation – application 2008

‘

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Future Intensification

• 18 sites identified for planning consent, development and sale in next 5 years

• Land value £185m

• Currently providing 660,000 sq.ft. workspace

• Planning consent will provide an estimated: - 950,000 sq. ft commercial space - 900 + apartments (35% affordable) - 110,000 sq. ft other uses

• Commercial space to be retained within REIT - Apartments and

other uses generally sold

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Aberdeen Works, Islington, N5

Before66,000 sq. ft commercial (Rents £12 - £15 per sq. ft)

After

45 apartments for sale

27 affordable apartments(37%)66,000 sq. ft commercial (rents £25 per sq. ft)

Proposed scheme has 2.0 times more floorspace than the existing scheme

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Greenheath, Bethnal Green, E2

Before 46,000 sq. ft commercial (rents £8 - £10 per sq. ft)

After74,000 sq. ft commercial (rents £20 per sq.ft)

230 student housing rooms

Proposed scheme has 2.6 times more floorspace than existing

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Wandsworth, SW18

Before

Existing 86,000 sq. ft workspace (rents £15 per sq. ft)

AfterPlanning consent for:156 apartments for sale53 affordable apartments (25%)86,000 sq. ft new workspace (rents £22 per sq. ft)

Consented scheme has 2.5 times more floorspace than existing schemes

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The Pipeline

• Hopper – continue to feed the development process with new sites when conditions are correct

• Adding our name and brand to bids for larger strategic schemes (Silvertown Way, Stratford)

• Ability to acquire and manage mixed-use schemes

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Graham Clemett

Financial Performance

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Dynamics of Growth – Next 5 Years

CORE BUSINESS Strong Rental Growth

High Occupancy

Proven Track Record

Extensive Database

In-house expertise

USP vs “traditional” developers

ACQUISITIONS

REDEVELOPMENT

+

+

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Core Business Valuation

Over next2 years

Yields Stable

Yields out 75bps

Yield out 150bps

ERV up 10%

(5% p.a.)

+ £100m - £10m - £100m

ERV up 20%

(10% p.a.)

+ £200m +£70m - £25m

Reversionary Yield 6.5% 7.25% 8.0%

Rent per week

£264

£288

What if…..

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Funding Options

Core Business

Acquisitions

Regeneration

- Commercial

- Residential

REITJoint

VenturesOther

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Summary

Workspace = Robust Business

….with massive opportunities

• The Workspace Difference

- Strength of Brand

- At the Heart of London

- Ability to buy well

- Acceleration of redevelopment potential

- Scale of London market

- We can add scale to the business