Trading Statement

RNS Number : 8826P

CLS Holdings PLC

23 November 2016

 

CLS Holdings plc

("CLS", the "Company" or the "Group")

Trading Update for the period 1 July 2016 to 22 November 2016

Chief Executive of CLS, Fredrik Widlund, commented:

"Since 1 July, we have continued to rebalance our portfolio, with the disposals of non-core assets in France and London and the acquisition of higher yielding properties in Germany. I am pleased to report that occupier markets in London have remained resilient to the uncertainty created by Brexit, whilst vacancy rates have fallen in Germany and, in particular, in France.  Our geographical diversification and the relative strength of our non-sterling assets continue to positively contribute to the net assets and profits of the Group.

"With the cost of debt at an historical low, a strong balance sheet and low vacancy levels, we remain well positioned to take advantage of future opportunities and to continue delivering value and cash for shareholders."

Portfolio changes since 1 July 2016

·      Acquisition of Parsevalstrasse 11, Dusseldorf for €43.6 million, at a net initial yield of 7.1%

·      Acquisition of Harburger Ring 35, Hamburg for €5.9 million, at a net initial yield of 6.4%

·      Disposal of Chancel House, Neasden Lane, NW10 for £18.7 million, 39% above its value at 31 December 2015 and representing a net initial yield of 3.3%

·      Disposal of Chorus, 2203 Chemin de St Claude, Antibes for €9.4 million, marginally above its value at 31 December 2015, and at a net initial yield of 7.6%

Operational metrics

·      286,384 sq ft (26,606 sqm) vacated or expired since 1 July 2016, and 5,952 sq ft (553 sqm) of vacant space was acquired at Parsevalstrasse 11

·      295,760 sq ft (27,477 sqm) of new leases, lease renewals and extensions completed at an average of 4.5% above ervs of 31 December 2015

·      Included in the above:

o  the early renegotiation of a new 12 year extension to the lease with Colt Telecom at erv on 105,895 sq ft (9,838 sqm) in 23/27 Rue Pierre Valette, Paris

o  Linde AG extended its lease by 10 years on 35,798 sq ft (3,326 sqm) at Fandiekstrasse 75, Hamburg at 9.6% above erv

·      Overall Group vacancy rate: 3.4% (30 June 2016: 3.7%):

o  London:             4.9% (30 June 2016: 4.6%)

o  Rest of UK:       0.9% (30 June 2016: 0.9%)

o  Germany:          1.9% (30 June 2016: 2.1%)

o  France:             3.5% (30 June 2016: 5.0%)

·      Closure of our Lyon office effective at the end of 2016, consolidating the entire French operation into a new Paris office, and reducing administration costs

Developments and refurbishments

·      At Vauxhall Square, SW8:

o  demolition of Wendle Court is close to completion

o  on the main site, the largest occupier, Cap Gemini, vacates on 31 December and plans are well advanced to begin the refurbishment early next year of the office it occupied at 95 Wandsworth Road

o  JLL has been appointed to seek a development partner for Vauxhall Square

·      In July, the development commenced of phase 2 of Spring Mews, SE11, an £8.6 million, 7-storey development of 9,181 sq ft (853 sqm) of office and student accommodation which is expected to reach practical completion in late 2017

·      At Ateliers Victoires, 48 Rue Croix des Petits Champs, Paris, the £8.2 million redevelopment remains on track to complete in 2017, and marketing of the 21,500 sq ft (2,000 sqm) of space will begin early in the new year

Financing

·      Seven new bank loans completed since 1 July 2016 for £91.7 million in aggregate at an average rate of 1.68%, mostly at fixed rates, and for an average of over 5.4 years

·      Weighted average cost of debt reduced to 3.08% (30 June 2016: 3.27%), a record low for the Group

·      Weighted average loan to value of property loans comfortable at 50.5% (30 June 2016: 50.6%)

·      Liquid resources of over £170 million, comprising £72 million of cash, £55 million of corporate bonds, and undrawn facilities in excess of £45 million

·      In the latest tender offer, all of the ordinary shares available were cancelled by the Company on 22 September, resulting in a distribution of £7.2 million to shareholders and leaving 40,739,576 ordinary shares in circulation

Portfolio statistics

·      Portfolio split by region at 30 September 2016:

o  London              54%

o  Rest of UK        6%

o  Germany           23%

o  France              17%

·      52% of portfolio is subject to indexation

·      35% of rent roll is derived from government tenants and 30% from major corporations

-ends-

For further information, please contact:

CLS Holdings plc                                                         [phone]

www.clsholdings.com   

Fredrik Widlund, Chief Executive Officer

John Whiteley, Chief Financial Officer

Liberum Capital Limited                                              [phone]

Richard Crawley

Panmure Gordon (UK) Limited                                   [phone]

Dominic Morley 

Andrew Potts

Elm Square Advisers Limited                                      [phone]

Jonathan Gray

Smithfield Consultants (Financial PR)                        [phone]

Alex Simmons

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.

 

END

 

 

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