The Investment Column: Workspace has risen high enough for now

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The Independent Online

Harry Platt, ebullient chief executive of the business property group Workspace, has every right to be optimistic about the future. The business has performed superbly over the years thanks to its strategy of renting out low-cost office space on flexible terms to small- and medium-sized businesses, mainly in London. The group also stands to benefit when the Olympic Games come to London in 2012, and last week received a takeover approach from a mystery bidder.

Workspace, which developed out of the old Greater London Council's industrial property portfolio, is London's largest small-business landlord. The group provides nearly 6 million sq ft of office space to 4,000 of the capital's 330,000 small businesses, and charges an average rent of just £9.47 per square foot. It is particularly popular with the creative sector, such as advertising, music and television companies. Yesterday, Workspace unveiled a 9.6 per cent rise to 194p in the net asset value, a key performance gauge for property companies, for the six months to 30 September.

With £95m of acquisitions under its belt, including Kennington Park in south London, the business is on track to double in size over the next few years. Its holdings in Stratford and east London near the Olympic site also make it the main beneficiary of the Olympics in its sector.

Any takeover bid for the company would have to priced at a substantial premium - 350p to 400p has been mooted - to be successful as shareholders made clear last week that they have no desire to sell out cheaply. That is in contrast to other takeovers in the commercial property sector, which came at net asset value or a discount to that. The shares have risen to 318p, meaning that they now trade at a big premium to NAV, whereas the sector trades at a 7 per cent discount. At those levels, and because a takeover bid is by no means a certainty, the stock is a hold.

Drug trial results make Futura worth buying

Viagra's days of dominance in the drugs market for male impotence may soon be over. Yesterday, Futura Medical, a small UK company listed on the Alternative Investment Market, moved one step closer to launching the first over-the-counter treatment for men who have trouble getting and maintaining an erection. Publishing a second set of successful trial results for a new cream which tackles the problem, Futura is now on target to begin the crucial Phase III trials on the drug early next year.

Although the firm, which floated two-and-a-half years ago, has still not turned a profit, prospects for all three of its key products are now looking increasingly strong. Before the end of the month, the company expects to submit an application to the European Union to authorise the marketing of a new advanced type of condom - which contains a gel to stop it slipping off and to help maintain an erection. With distribution agreements for this and another product - a female lubrication device - already in the bag, the company finally looks on the verge of a breakthrough.

Although fears of a flop have ensured that Futura's share price has been depressed since we last tipped it more than two years ago, it now appears closer than ever to finally generating some revenue. Buy.

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