TIDMCLI
RNS Number : 4524T
CLS Holdings PLC
15 November 2023
PRESS RELEASE
Release date: 15 November 2023
Embargoed until: 07:00
CLS Holdings plc ("CLS", the "Company" or the "Group")
Trading Update for the period 1 July 2023 to 14 November
2023
Fredrik Widlund, Chief Executive of CLS, commented:
"Our business is trading well, and we are making good progress
on our strategic priorities. Leasing activity has increased
substantially, with 93 deals securing GBP10.2 million of annual
rent at 9.1% above ERV signed in the 9 months to 30 September. The
Group is also benefiting from its high proportion of index-linked
leases and a strong performance in our student and hotel
operations. Underlying vacancy is stable. Consequently, the Board
remains confident that the Group will meet its earnings
expectations for the full year.
"Our 2023 refinancing activity is substantially complete and we
have made further progress with refinancing our loans maturing in
2024. The Group has over GBP120 million of cash and undrawn
facilities.
"We are seeing an improving lettings market and some early signs
that the economic headwinds impacting the office sector are
moderating. CLS is well positioned to continue to execute its
operational and asset management initiatives and deliver long term
shareholder value."
A summary of our key operational and financial metrics is set
out below:
Vacancy, lettings and occupancy (as at 30 September 2023)
CLS' deal activity in the first three quarters of 2023 is
tracking significantly higher compared with last year and we expect
this to continue throughout Q4 2023 with the UK performing
particularly strongly since the summer. Rental growth is evident in
all our markets for the right quality offices and floor plate
sizes.
Between 1 July and 30 September 2023, we signed 24 leasing deals
securing GBP2.4 million of annual rent, over 50% higher than the
same period last year, at 6.2% above ERV. The most significant
transactions were a 10-year lease with Hays Recruitment at Apex
Tower and a lease extension with the Borough of Hammersmith and
Fulham at the Clockwork Building, both in the UK.
Between 1 January 2023 and 30 September 2023, we have now signed
93 deals securing GBP10.2 million of annual rent, over 70% higher
than the same period last year, at 9.1% above ERV. The most
significant transaction was at Kruppstrasse (The Brix), in Essen
where we secured a 30-year lease with the City of Essen for EUR3.0
million annually.
The renewals for the 9-months to 30 September 2023 were 2.3%
ahead of previously contracted rent. Index-linked lease increases
for the 9-months to 30 September 2023 were 7.0% in Germany, 5.1% in
France and 11.4% at Spring Gardens in the UK. Since 30 September
2023, we have also secured a 10-year lease renewal with Honda at
Reflex, Bracknell for GBP1.1 million of annual rent, which is above
the previously contracted rent per sq. ft.
The high occupancy levels continue in our Student and Hotel
accommodation in Vauxhall with the student accommodation fully let
for the current academic year and the hotel achieving record
revenues.
Our underlying vacancy from 30 June to 30 September 2023 was
stable but total vacancy increased slightly driven mainly by the
completion of refurbishments now available to let following our
extensive capex programme in 2023 to ensure the portfolio meets
tenants' requirements and sustainability measures.
-- EPRA vacancy rates (Based on 30 June 2023 ERVs):
Group: 9.9% (30 June 2023: 9.2%)
UK: 13.2% (30 June 2023: 12.5%)
Germany: 6.8% (30 June 2023: 6.2%)
France: 7.4% (30 June 2023: 6.8%)
Disposals
The sale of Westminster Tower exchanged in the first half of
2023 and we expect it to complete for GBP40.8 million, 1.2% ahead
of valuation, to Third.i on 30 November 2023.
In addition, we have agreed heads of terms for the sale of a
further four properties for GBP51.2 million, on average 13.1% below
half-year valuation. We expect at least three of these to exchange
before year-end.
If all these five disposals complete, then pro-forma LTV at 30
June 2023, assuming no other changes, would have fallen from 45.1%
to 43.0%.
Liquid resources, financing and rent collection
The Group's balance sheet remains resilient and well positioned
to meet any economic headwinds with cash of over GBP72 million as
at 30 September 2023 and GBP50 million of committed undrawn
Revolving Credit Facilities ('RCFs'). In October and November, we
replaced existing, shorter term facilities with a GBP30 million
3+1+1 year RCF and a GBP20 million 2+1 year RCF respectively.
All 2023 refinancing activity has been completed but for one
remaining loan of GBP24.8 million due in December 2023 which is
currently well advanced with terms agreed. This will complete by
year end.
As at 30 June 2023, we had 10 loans totaling GBP183.7 million at
a 46% property LTV which were due to expire in 2024. We have agreed
extensions for two loans until 2025 and one loan is for Westminster
Tower, for which the sale is due to complete shortly. As a
consequence, we have GBP93.6 million across seven loans at a 42%
property LTV which require refinancing in 2024 and we are already
well advanced with those loans which are due to expire before June
2024.
As at 30 September 2023, our average cost of debt was 3.50% and
80% of total debt was fixed or subject to interest rate caps.
By close on 14 November 2023, we had received 96% of Q4
contractual rents due (2022: 97%) and f or the first three quarters
of 2023, we have now received 99% of contractual rents due (2022:
98%).
Developments and refurbishments
We are nearing the end of our programme of significant
refurbishments to improve the quality of our properties to attract
tenants and drive rental income. We expect capital expenditure to
drop from c.GBP50 million in 2023 to around GBP30 million in
2024.
The lettings of the refurbishment of Park Avenue in Lyon and the
development of The Coade in Vauxhall, which were completed earlier
in the year, are progressing well. At Park Avenue, 7 out of 10
floors are let with 1 floor completed in the period and with terms
out for a further 1 floor and at The Coade we now have one tenant
in occupation and terms out for lettings on two further floors.
"Artesian", 9 Prescot Street, London, our 98,000 sq. ft fully
refurbished and electrified art deco building in Aldgate, was
successfully launched on 1 November 2023 with over 130 agents in
attendance. Viewings and enquiries have increased since the
launch.
Sustainability
In line with our Net Zero Carbon Pathway, we expect to have
completed more than 100 carbon saving projects by the end of 2023
which will save over an estimated 1,000 tonnes of CO2 emissions per
annum making our properties fit for a net zero future. This
includes installing a further 90 kWp of solar PV panels. Our
electric vehicle charging network is now up and running in the UK
with 53 charging points across many of our UK properties to help
tenants with electric vehicle fleet transition.
Our sustainability progress was recognised with EPRA
Sustainability Best Practices Recommendations Gold in 2023, up from
Silver in 2022. We have also maintained our GRESB award of 4 green
stars.
-ends-
For further information, please contact:
CLS Holdings plc
(LEI: 213800A357TKB2TD9U78)
www.clsholdings.com
Fredrik Widlund, Chief Executive Officer
Andrew Kirkman, Chief Financial Officer
+44 (0)20 7582 7766
Liberum Capital Limited
Richard Crawley
Jamie Richards
+44 (0)20 3100 2222
Panmure Gordon
Hugh Rich
+44 (0)20 7886 2733
Berenberg
Matthew Armitt
Richard Bootle
+44 (0)20 3207 7800
Edelman Smithfield (Financial PR)
Alex Simmons
Hastings Tarrant
+44 (0)20 3047 2546
Forward-looking statements
This document may contain certain 'forward-looking statements'.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances.
Actual outcomes and results may differ materially from those
expressed or implied by such forward-looking statements. Any
forward-looking statements made by or on behalf of CLS speak only
as of the date they are made and no representation or warranty is
given in relation to them, including as to their completeness or
accuracy or the basis on which they were prepared. Except as
required by its legal or statutory obligations, the Company does
not undertake to update forward-looking statements to reflect any
changes in its expectations with regard thereto or any changes in
events, conditions or circumstances on which any such statement is
based. Information contained in this document relating to the
Company or its share price, or the yield on its shares, should not
be relied upon as an indicator of future performance.
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END
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