TIDMCLI
RNS Number : 1296R
CLS Holdings PLC
03 November 2021
PRESS RELEASE
Release date: 3 November 2021
Embargoed until: 07:00
CLS Holdings plc ("CLS", the "Company" or the "Group")
Trading Update for the period 1 July 2021 to 2 November 2021
Fredrik Widlund, Chief Executive of CLS, commented:
"We are pleased to present this trading update ahead of today's
Capital Markets Day, which is being held at our London office, and
at some of our exciting developments and redevelopments in London.
The day gives CLS the opportunity to showcase our asset management
capabilities and the quality of our properties, highlighting the
potential upside for value creation within our portfolio.
"Operationally, we are seeing improving market conditions and
activity levels in all our geographies, albeit at different speeds,
with Germany bouncing back strongly, France performing well and an
encouraging recovery in the UK. We are confident that our ongoing
asset management activity will lead to a reduction in vacancy by
the year-end."
A summary of our key operational and financial metrics is set
out below:
Q4 2021 rent collections
The Group's rental income in the UK and France is due on a
quarterly basis with the current payment due between 25 September
2021 and 1 October 2021. In Germany, rents are due monthly and the
current payment was due on 5 October 2021.
By close on 2 November 2021, we had received 97% of contractual
rents due (2020: 95%).
Update on first three quarters 2021 rent collections
For the first three quarters of 2021, we have now received 99%
of contractual rents due (2020: 98%).
Vacancy, lettings and occupancy (as at 30 September 2021)
Group, UK and France vacancies are largely unchanged since 30
June 2021. Vacancy in Germany has increased, primarily due to the
expected expiry of leases at Parsevallstrasse and Hansaalle in
Dusseldorf. As a result of current lease negotiations, we are
expecting a reduction in German and Group vacancy by year-end.
-- EPRA vacancy rates (Based on June 2021 ERVs):
Group: 7.8% (30 June 2021: 7.7%)
UK: 7.0% (30 June 2021: 7.3%)
Germany: 10.2% (30 June 2021: 9.3%)
France: 4.1% (30 June 2021: 4.0%)
Since 1 July 2021, there have been 26 deals securing GBP2.9
million of annual rent at 10% above ERV. This includes the
previously announced leases with the City of Hamburg and FUTRUE
GmbH for 68,975 sq. ft (6,408 sqm). Excluding the City of Hamburg
letting, the remaining 25 deals were 4% above ERV.
Occupancy in our Student and Hotel accommodation in Vauxhall has
returned to near pre-pandemic levels at 91% and 93% respectively,
both of which are above the levels expected at the time of our
half-year results.
Disposals
We have unconditionally exchanged contracts to sell La Madeline
in Lille for GBP8.2 million and our share of Leclerc in Paris for
GBP2.8 million. The properties were sold at 5.2% above the 30 June
2021 valuation and completion is expected before the end of the
year.
Developments and refurbishments
Permitted development rights ("PDR") for residential conversions
were granted at Crosspoint House in Wallington and Kings House in
Bromley, Greater London. Both properties have been earmarked for
sale in the near future to capture this increased optionality
value.
At 92-98 Vauxhall Walk a contract was signed in August with
Galliford Try for the construction of a 10-storey office building.
The piling has been completed and the super structure will commence
in the coming months. The estimated rental value on completion in
2023 is expected to increase 10-fold to GBP1.5 million compared to
the previous buildings on the site.
In the period, the Board has approved the refurbishment of three
additional floors at Prescot Street in the City of London such that
the scope of the project now extends to the entire building. On
completion of the project in 2023, the refurbished building is
expected to achieve an estimated rental value of GBP4.9 million and
an EPC rating improvement to A from D.
In the period, we also completed on the refurbishment of 45
London Road, Reigate, with the building achieving SKA Gold and an
EPC rating improvement to B from D together with an e stimated
rental value of GBP0.6 million.
Sustainability
We have been awarded 4 green stars (2020: 3 green stars) based
on our GRESB score of 85 out of 100 (2020: 72 out of 100). This is
a significant improvement which has been driven by improved
disclosure, independent verifications and on-going investments in
the portfolio. Furthermore, we achieved EPRA Sustainability Best
Practices Recommendations ("BPR") Bronze for the first time. We
were also awarded EPRA BPR Gold for our 2020 Annual Report up from
Bronze in 2019.
Liquid resources and financing
The Group's balance sheet remains well-capitalised and robust,
providing significant flexibility. As at 30 September 2021 our
average cost of debt was 2.21% with cash of over GBP155 million and
a further GBP50 million in undrawn facilities.
In September, we completed the re-financing of Max Forum, Munich
with a new 7-year loan for EUR28.5 million at 1.10%. We are in
advanced negotiations for the remaining EUR24 million to be
re-financed in 2021.
UK Real Estate Investment Trust ("REIT") conversion
We are making good progress with our evaluation of converting
the Group's UK operations to a REIT to ensure that it benefits
shareholders and that we would satisfy all the necessary criteria.
A further update will be given before year-end.
Organisation
Due to the growth of the portfolio and the continued strategic
focus on Germany, CLS Germany opened an office in Dusseldorf in
September to support our tenants and partners in the region.
Capital Markets Event 2021
CLS will be hosting a Capital Markets presentation at its London
office today, focusing on the embedded value within its existing
portfolio and future opportunities from refurbishment and
developments.
No new material disclosures will be made during the event.
The presentation will be available via the following link:
https://www.clsholdings.com/investors/financial-reports-and-presentations/2021
-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
Elm Square Advisers Limited
Jonathan Gray
+44 (0)20 7823 3695
Smithfield Consultants (Financial PR)
Alex Simmons
Rob Yates
+44 (0)20 3047 2546
Forward-looking statements
This announcement 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 should not be relied upon as an indicator of future
performance or construed as a profit forecast.
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