TIDMCLI
RNS Number : 5249G
CLS Holdings PLC
16 November 2022
PRESS RELEASE
Release date: 16 November 2022
Embargoed until: 07:00
CLS Holdings plc ("CLS", the "Company" or the "Group")
Trading Update for the period 1 July 2022 to 16 November
2022
Fredrik Widlund, Chief Executive of CLS, commented:
"CLS remains on course with its plans for the year with earnings
tracking in-line with market expectations [1] . Our office upgrade
strategy remains a priority and we are seeing the benefits in good
letting activity with leases signed above ERV and previous passing
rent. We have substantially completed our 2022 financing activity,
are making good progress with refinancing our loans due to mature
in 2023 and have around GBP150 million of cash and undrawn
facilities.
"With our strong balance sheet, a high-quality portfolio, a
majority of index-linked leases and our active in-house asset
management, we believe we are well positioned to weather the
current challenging economic conditions."
A summary of our key operational and financial metrics is set
out below:
Vacancy, lettings and occupancy (as at 30 September 2022)
Since 30 June 2022, we completed the refurbishment of 405
Kennington Road, London with an ERV of GBP0.7 million, representing
0.6% of the Group's ERV at 30 June 2022. This new scheme is being
marketed to prospective tenants and we are encouraged by the
interest we are seeing. As a result, UK vacancy has increased
whilst France maintained its very low level of vacancy. In Germany,
vacancy reduced slightly as we are successfully progressing our
letting strategy.
-- EPRA vacancy rates (Based on 30 June 2022 ERVs):
Group: 7.4% (30 June 2022: 6.9%)
UK: 8.9% (30 June 2022: 7.6%)
Germany: 7.3% (30 June 2022: 7.5%)
France: 2.4% (30 June 2022: 2.3%)
Between 1 July 2022 and 30 September 2022, 24 deals were signed
securing GBP1.5 million of annual rent at 5.9% above ERV. The most
significant of these was a lease extension with Rockwell Automation
at Connect in Dusseldorf securing EUR0.4m of rent at 11.1% above
ERV.
Renewals for the period 1 July 2022 to 30 September 2022 were
12.4% ahead of previously contracted rent (3.8% ahead of previously
contracted rent 1 January 2022 to 30 September 2022). Index-linked
lease increases during the period 1 July 2022 to 30 September 2022
were 6.7% in Germany (6.4% 1 January 2022 to 30 September 2022),
2.5% in France (2.6% 1 January 2022 to 30 September 2022) and 11.8%
at Spring Gardens in the UK (10.5% 1 January 2022 to 30 September
2022).
As announced on 8 November 2022, we have recently signed three
leases in Germany at "Flexion", Kaiser-Augusta-Allee, Berlin and
Office Connect, Cologne for 3,566sqm (38,384 sq. ft) with combined
rent of EUR1 million, 4.9% above ERV.
Very high occupancy levels continue in our Student and Hotel
accommodation in Vauxhall with the student accommodation fully let
for the new academic year and hotel occupancy at 90% for the third
quarter.
Liquid resources and financing
The Group's balance sheet remains well-capitalised and robust,
providing significant flexibility. As at 30 September 2022, our
average cost of debt was 2.4% with cash of over GBP96 million and a
further GBP50 million in undrawn facilities. We have substantially
completed transactions for all debt expiring in 2022 and are making
good progress with refinancing debt due to mature in 2023.
Since 1 July 2022, in Germany we have financed or refinanced
three loans for an aggregated loan amount of GBP62.7 million at a
weighted average all-in cost of 3.01% and a weighted maturity of
5.7 years. In October 2022, in the UK we signed a new loan
agreement to combine a loan portfolio of GBP44.4m (for 6 properties
and expiring in December 2022) into an existing floating loan
portfolio expiring in 2024, releasing a net amount of GBP15 million
after fees.
We are also well advanced in progressing the two loans for
c.GBP40 million expiring before April 2023 (out of c.GBP75 million
expiring in H1 2023) to release a further c.GBP20 million of cash.
Both are due to complete in the early part of next year.
Rent collections
The Group's rental income in the UK and France is due on a
quarterly basis with the current Q4 payment due between 25
September 2022 and 1 October 2022. In Germany, rents are due
monthly and the current payment was due on 6 October 2022.
By close on 15 November 2022, we had received 97% of Q4
contractual rents due (2021: 95%) and f or the first three quarters
of 2022, we have now received 98% of contractual rents due (2021:
98%).
Disposals and Acquisition
In the period, we completed the sales of: 62 London Road,
Staines; Great West House, Brentford; Sentinel House, Coulsdon; and
Rue Nationale, Lille for a combined GBP45.7 million equating to a
3.2% profit on sale compared with the 2021 year-end valuation.
In the period, we completed the acquisition of The Yellow,
Dortmund at the start of July 2022 for GBP56.0 million which had a
WAULT of 5.2 years, an initial yield of 5.1% and a reversionary
yield of 5.6%.
Tender buyback
Our share buyback tender offer on 16 September 2022 was fully
subscribed. A total of 10,184,894 Ordinary Shares (1 in 40) were
purchased for 250 pence per Ordinary Share, all of which were
transferred to Treasury.
Developments and refurbishments
The development of the "Coade", Vauxhall is progressing well,
with the topping-out of the structure completed in June; this
10-storey EPC A, BREEAM Excellent rated office building is on track
to complete in Q1 2023. Similarly, our major refurbishment of
"Artesian", 9 Prescot Street, London is on track to complete in Q2
2023 with the marketing campaign launched earlier this month.
In France, our major refurbishment at Park Avenue is entering
the final stages. Existing tenants are expected to move back in Q1
2023, having been temporarily relocated during the project.
Existing and future tenants will benefit from the improved
sustainability credentials of the building and the renovation of
common areas including the creation of additional terraces.
Sustainability
We completed the installation of a solar PV array at Thameslink
House, Richmond in October. The panels are estimated to generate
over 81,000 kWh of renewable energy per annum, saving 19 tonnes of
CO2 emissions per year. We expect to have completed over 100 carbon
saving projects by the end of 2022, which will save an estimated
1,300 tonnes of CO2 emissions per annum.
Our sustainability progress was recognised with an increase to a
Silver award in the EPRA Sustainability Best Practices
Recommendations, up from Bronze in 2021. We have maintained our
GRESB score of 85 out of 100 (2021: 85 out of 100) and, as a
result, were awarded 4 green stars (2021: 4 green stars).
Governance
The Board confirms that Chris Jarvis will retire from the Board
at the conclusion of the 2023 Annual General Meeting. Chris has
served on the Board for nearly 14 years and we thank him for his
invaluable contribution during his tenure.
-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.
[1] As published on 9 November 2022, the Company compiled
consensus expectation for full year 2022 EPRA Earnings Per Share is
11.5p.
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END
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