This article is from the Australian Property Journal archive
ANOTHER step in the evolution of co-working space into a major property player will be taken with ASX-listed BlackWall set to spin off and float its WOTSO WorkSpace business.
BlackWall, director Seph Glew said WOTSO is a “highly scalable operating business”.
“Its network now has the capacity to generate over $30 million of revenue, so we feel the time is right for it to stand alone. WOTSO will be better placed to maximise its potential with a separate dedicated management team.”
The announcement follows the recent revelation that Vicinity Centres and GIC will utilise the 6,600 sqm set to be left empty by Myer in the Emporium Melbourne shopping centre as a co-working hub. Myer’s lease ends in May next year and the struggling department store has told the landlords it will not renew as it continues to cut back on costs.
WOTSO opened a 1,400 sqm location within Westfield Chermside in Queensland last year, which marked the first location of its type in Australia, and has just agreed to another deal with Scentre to open a facility at the Woden shopping centre in Canberra.
Vicinity’s new office tower at Chadstone shopping centre has a Waterman co-working facility.
Co-working space operator Victory Offices debuted on the ASX in June, and is this month opening its 20th site in August across 3,000 sqm on Melbourne’s St Kilda Road – its largest yet – followed by a 2,500 sqm offering at 100 Mount St in North Sydney.
Singapore-based Justco has recently arrived in Australia and is on the expansion path, having announced a US$177 million investment alongside Frasers Property and GIC last year to develop a co-working space platform across Asia.
Co-working office space currently accounts for over 470,000 sqm across Sydney, Melbourne and Brisbane office markets, according to Cushman & Wakefield, and research by Instant Offices showed a large increase in desk costs in Australia came with a 90% increase in demand for flexible workstations by companies looking for 25 or more desks across the Asia Pacific in 2017, while scale-ups are increasingly looking for flexible space to lower risks and increase agility.
WOTSO intends to list on the ASX in its own right following the demerger, and will expand operations through joint ventures, strategic partnerships or raising additional capital.
BlackWall launched the WOTSO brand in 2014 and has internally funded its growth to date. Today WOTSO has 17 sites covering just over 34,000 sqm. Ten of WOTSO’s operations are housed in property controlled by BlackWall.
WOTSO’s flagship operation at the Bakehouse Quarter in Sydney’s North Strathfield, Sydney, which BlackWall recently sold to Yuhu Group for $380 million with a leaseback agreement to allow the existing 5,100 sqm WOTSO location.
Over $100 million of cash from the sale was rolled into the BlackWall Property Trust, doubling its net assets and creating an avenue for BlackWall to expand its property investment activities.
BlackWall said the aim is for WOTSO to demerge such that BlackWall’s 1,200 shareholders will hold their existing BWF shares and receive new WOTSO shares on a pro rata basis.
The proposal is subject to shareholder approval and an Australian Tax Office ruling.
BlackWall chief executive officer, Stuart Brown, would move across to head up WOTSO, and BlackWall founder Glew will become BlackWall chairman. Brown, along with current chairman Richard Hill and Robin Tedder will remain on the BlackWall board as non-executive directors.
Jess Glew will join the BlackWall board, and Tim Brown and Jess Glew will be appointed as BlackWall’s joint managing directors.
