TIDMCLI
RNS Number : 3360G
CLS Holdings PLC
11 May 2011
CLS Holdings plc
("CLS", the "Company" or the "Group")
Interim Management Statement for the period 1 January 2011 to 10
May 2011
The Company today announces its Interim Management Statement for
the period 1 January 2011 to 10 May 2011.
HIGHLIGHTS
-- Occupational demand continues to improve; vacancy level
remains low at 4.1%
-- New leases, lease renewals and extensions completed on 8,470
sq m
-- New pre-let development in Germany for an extra 2,000 sq m on
a long lease
-- Launch of proposals for 110,000 sq m mixed-use scheme at
Vauxhall Square, London
-- Further significant progress at Catena AB
-- Successful launch of SEK 300 million five year unsecured
corporate bond
-- Refinancing of over GBP55 million completed
-- Over GBP165 million of liquid resources for investment
OVERVIEW - Since 1 January, the Group's occupational markets
have continued to improve, progress has been made on development
opportunities and financing activity has been positive. The Group
has maintained a low vacancy rate of 4.1% on its investment
portfolio and we continue to be cautiously encouraged by a steady
level of demand and new enquiries from occupiers. 66% of the
Group's rental income is subject to indexation, and 41% is derived
from government occupiers. In February, we announced major
proposals for a 110,000 sq m mixed-use scheme at Vauxhall Square,
London, and in April secured a further pre-let of 2,000 sq m of
offices to EON on a 17 year lease at Landshut, Germany. During the
period, the Group has raised a SEK 300 million five year unsecured
corporate bond, signed a five year refinancing for EUR28.8 million
on our Adlershofer property in Berlin, and refinanced a GBP30
million short-term facility.
LONDON - Based on GDP figures, the UK economy appears to have
been growing slowly since the start of the year. The prime property
investment market has continued to be attractive to international,
non-debt based buyers, whilst the banks are increasingly acting to
reduce their loan books. This has presented more opportunities for
us and we have been bidding on a number of properties.
The letting markets have appeared to us to be healthy for our
style of high-yielding property. We have reduced our London vacancy
to 4.1% (31 December 2010: 4.7%) with new lettings totalling 4,620
sq m, including 1,191 sq m at Great West House, Brentford, 953 sq m
at Cambridge House, W6, and 217 sq m at Quayside, SW6, as well as
1,951 sq m in Ipswich. Lease renewals and extensions totalled 3,956
sq m and tenants vacated from 1,408 sq m. The refurbishment
programme at Westminster Tower, SE1 has been completed and good
interest is being expressed in the vacant space.
The proposals for a major new 110,000 sq m mixed-use scheme,
Vauxhall Square, which we announced in February, are being
progressed through the design stage, taking into account early
comments received from a variety of stakeholders. A detailed
planning submission is expected to be made by the end of 2011, with
consent targeted in the second half of 2012.
FRANCE - Whilst French GDP is forecast to grow in 2011 at a
steady 1.7%, the real estate investment market has continued to be
strong, across both prime and secondary markets, with greater
availability of bank debt than in London. We continue to seek new
acquisitions but the supply of suitable product for us has been
limited. Occupational markets have been steady, reflecting our
perception of the broader economy. There appears to be very little
new construction of offices, which should reduce availability and
thus be good for rental levels in Paris and Lyon.
During the period, leases totalling 1,194 sq m expired, of which
688 sq m were renewed together with a further 432 sq m being let.
This resulted in a similar vacancy to that at the year end of 3.5%.
Properties at la Garenne-Colombes and Rue des Petits Hotels in
Paris are being upgraded in 2011, which should lead to higher rents
on new lettings.
GERMANY - The German economy is growing robustly with GDP growth
forecast at 2.7% for 2011. Both the investment and letting markets
have appeared solid, with a number of occupiers discussing
long-term investment plans and requirements.
We announced an additional pre-let to EON in Landshut, near
Munich, for 2,000 sq m on a 17 year lease. Upon completion of the
building in 2012, this will result in an additional rent receivable
of EUR249,000, thus totalling EUR659,000 with the previously
announced 3,400 sq m pre-let. Planning consent for this property,
and also for the 1,642 sq m extension at Grafelfing, Munich, are
both expected in the summer.
Leases totalling 2,730 sq m were signed, with a further 3,710 sq
m renewed or extended. The vacancy rate increased to 5.8% due to
the bankruptcy of the sole tenant in a 1,993 sq m property in
Hamburg; however, we are already in active discussion with a
potential new tenant for the whole building.
SWEDEN - The main activity in Sweden has been the progress at
our 29.9% associate, Catena AB. Following the completion of the
sale of its SEK 1.5 billion portfolio in January, it paid a total
dividend to shareholders of SEK 59 per share in April, of which the
Group received GBP20.3 million. Positive progress has been made on
the 150,000 sq m mixed-use development proposals for Catena's
remaining property. Following the dividend, the Catena share price
of SEK 120 at 10 May, means the current market value of our
interest exceeds book value by GBP27.8 million, which would add 61
pence per share to CLS's net asset value.
The void rate at Va nerparken, the Group's only directly held
property in Sweden, is 2.0%.
FINANCE - In April, when CLS issued a SEK 300 million five year
unsecured corporate bond in Stockholm, it was the first overseas
property company to do so in Sweden. The bond, which carries a
floating rate coupon of 3.75% above three months' STIBOR, is
expected to be listed on the NASDAQ OMX Stockholm Stock Exchange
later this year. At Adlershofer Tor in Berlin, in March we
refinanced a EUR28.8 million five year facility, and we have also
extended a GBP30 million short-term corporate facility. In addition
to the proceeds from the SEK 300 million bond, the Group received
the GBP20.3 million dividend from Catena. In April, the Group paid
a distribution to shareholders of GBP7.1 million through a tender
offer buy-back. Consequently, at the end of April 2011, borrowings
were GBP620.7 million (31 December 2010: GBP589.3 million), of
which 84% was at fixed rates or hedged and the Group had a weighted
average total cost of debt of 4.6%. Cash and undrawn facilities
stood at GBP81.2 million (31 December 2010: GBP48.3 million), and
the Group held corporate bonds with a value of GBP84.4 million (31
December 2010: GBP78.1 million).
At 29 April 2011 the Group had 55 loans from 20 lenders, in
addition to its unsecured corporate bond; none of the loan
covenants was in breach, none of the debt was securitised, and the
Group had no exposure to the CMBS market.
Underlying profit continued to be resilient, with stable net
rental income, high debt collection rates, and tightly controlled
costs.
Executive Chairman of CLS, Sten Mortstedt, commented:
"I am very pleased with the financial performance of the Group
since the beginning of the year. We continue to be encouraged by
our operational performance, healthy tenant demand and our success
in maintaining a low vacancy rate through active asset management
of the existing portfolio. This has underpinned our progress in the
year to date and provides the platform for the rest of the year.
Our focus remains on cash-on-cash returns from high net initial
yields and a low cost of debt, whilst advancing a number of short
and medium-term development opportunities.
"In addition, we are delighted to have successfully issued the
first public CLS bond, raising SEK 300 million (GBP29.4 million),
which underlines the strength of our balance sheet and credibility
in the capital markets. This, together with our other substantial
cash and liquid resources, ensure the Company's ability to take
advantage of attractive opportunities as they arise."
-ends-
For further information, please contact:
CLS Holdings plc +44 (0)20 7582 7766
www.clsholdings.com
Sten Mortstedt, Executive Chairman
Henry Klotz, Executive Vice Chairman
Richard Tice, Chief Executive Officer
Kinmont Limited +44 (0)20 7087 9100
Jonathan Gray
Smithfield Consultants +44 (0)20 7360 4900
Alex Simmons
This information is provided by RNS
The company news service from the London Stock Exchange
END
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