Why Flexible Offices Connect Property Stocks Servcorp (ASX:SRV) and WOTSO (ASX:WOT) Beyond the S&P/ASX 200

What is a desk worth? Servcorp (ASX:SRV) and WOTSO (ASX:WOT) both rent out flexible workspace by the desk, office or month, but the market prices them very differently: one well above its net tangible assets, the other well below.

The gap reflects different ways of running the same product. Servcorp mainly leases floors in major cities and earns an Operating Margin on them, while WOTSO pairs suburban coworking with a portfolio of buildings it owns. Neither is in the S&P/ASX 200, according to Market Index, which lists both in the real estate sector.

Two versions of flexible office space

Servcorp provides serviced offices, virtual offices and coworking. Its FY26 results presentation, released on 20 August 2026, lists 137 floors across 38 cities in 19 countries, including Japan, Saudi Arabia and France. The company largely leases those floors, reporting Lease liabilities of A$337.4 million.

WOTSO is a stapled group, meaning shares in Ostow Limited and Planloc Limited trade together with units in WOTSO Property Trust. According to its FY26 market update, released on 25 August 2026, it runs 40 flexible workspace locations across Australia and New Zealand and owns a $283 million portfolio of 20 properties. Its Market Index profile describes this as a "dual engine model", combining the flexspace operating Business with an aligned property portfolio.

Servcorp's record year

Servcorp's Appendix 4E for the year to 30 June 2026 shows Revenue and other income up 4 per cent to $367.5 million, profit before tax up 29 per cent to $80.9 million and net profit after tax of $65.6 million. Underlying net profit before interest and tax (NPBIT), a measure the company uses to strip out one-off items, rose 24 per cent to $87.0 million.

Dividends totalled 32.0 cents per share, including a 16.0 cent final payable on 7 October 2026, franked at 1.6 cents. Net tangible Assets (NTA, Book Value excluding intangibles) rose to $2.38 per share, and unencumbered cash was $152.4 million.

The results announcement guided to FY27 underlying NPBIT of $85.0 million to $90.0 million, underlying free cash of at least $105.0 million and dividends of at least 34.0 cents. Servcorp also bought 333 Sussex Street in Sydney late in FY26 and is renovating it as a flagship, a step towards owning some of its space.

The announcement said Servcorp has more than 50,000 rent-paying clients and described FY26's payout as its 56th consecutive dividend. Planned openings include three locations in Saudi Arabia, two in Brisbane, two in Japan and two in the United States.

WOTSO's ramp-up story

WOTSO reported FY26 revenue of $48.75 million, up 4 per cent, underlying Earnings before interest, tax, Depreciation and Amortisation (EBITDA) of $10.12 million and a statutory loss before tax of $865,000, narrower than the prior year's $4.4 million. Flexspace sales rose 11 per cent to $35.3 million.

Its investor presentation put statutory NTA at $1.37 per security, net gearing (debt less cash relative to assets) at 27.8 per cent and borrowings at $94.3 million. Distributions totalled 2.80 cents, and 19 of the 40 locations sit inside group-owned buildings. It refinanced $67.3 million of Debt during FY26, trimming its effective margin to 1.86 per cent from 1.96 per cent.

Capital recycling has been active. WOTSO settled the $27 million sale of an industrial property at Yandina, Queensland, in February, releasing $16.5 million after debt repayment, and bought a 20 per cent stake in the Alerik building at North Strathfield. Chief executive Jessie Glew said the scale of the business "creates opportunities that simply did not exist at a smaller network size".

The Q4 FY26 business update showed flexspace occupancy of 79 per cent across 8,417 desks, below the 83 per cent peak in FY23, as newer sites ramp up. Revenue per available desk (RevPAD), a monthly measure, averaged $371 in the quarter, and new sites at Dandenong and Norwest are scheduled to open in September and October 2026. A NZ$2.3 million building at 271 Willis Street, Wellington, is expected to open with 150 desks in the third quarter of FY27.

Where the market's valuation diverges

Servcorp's results announcement illustrated its valuation at a $6.50 share price. By our calculation, that is about 2.7 times its $2.38 NTA. WOTSO repurchased 2.52 million securities at an average of $0.62, which by our calculation is about 45 per cent of its $1.37 statutory NTA.

The gap is consistent with how each earns. Servcorp's underlying NPBIT equals about 24 per cent of revenue ($87.0 million ÷ $367.5 million), a margin achieved without owning most of its buildings. WOTSO's underlying EBITDA equals about 21 per cent of revenue, but its value rests more on property assets, which carry debt.

These margins are not strictly comparable, and Servcorp's revenue is about 7.5 times WOTSO's. NPBIT deducts depreciation while EBITDA does not, and lease accounting under AASB 16 treats Servcorp's rent commitments as liabilities rather than operating costs.

Different exposures to the same trend

Servcorp's earnings lean heavily offshore. Europe and the Middle East produced $163.0 million of segment revenue and $50.0 million of segment profit in FY26, by our calculation almost 59 per cent of the four regional segments' combined $85.2 million profit. North Asia contributed $15.7 million and ANZ and South-East Asia $15.2 million.

WOTSO's exposure is local and suburban, with flexspace income supported by rent from external tenants in its buildings, which reported 97 per cent occupancy. Its risk is funding: expansion and property ownership rely on borrowings, and occupancy that falls short of past peaks limits cash returns.

What to track from here

For Servcorp, the signals are whether FY27 underlying NPBIT lands within guidance, conditions in its Middle Eastern markets, and the cost of converting 333 Sussex Street. The final Dividend payment date of 7 October 2026 is already confirmed.

For WOTSO, flexspace occupancy and RevPAD at new sites are the key operating indicators, alongside progress on the seven FY27 pipeline locations, two with executed leases and five under heads of agreement, and any further Buybacks below NTA.