Release date: 22 April 2021
Embargoed until: 07:00
CLS Holdings plc ("CLS", the "Company" or the "Group")
CLS, a leading FTSE250 office space specialist with a c.£2.3 billion portfolio in the UK, Germany and France, today announces a trading update for the period 14 January to 21 April 2021. The announcement is being issued prior to the Company's Annual General Meeting, which is being held later today.
Fredrik Widlund, Chief Executive of CLS, commented:
"It has been a busy and active start to the year in terms of acquisitions and financing activity. The five German acquisitions for £147.8 million and one in the UK for £16.9 million, which exchanged in December 2020 and January 2021, have all now completed and will help drive rental income growth going forward. The associated acquisition financing of £81.3 million for the German acquisitions has also been completed.
"Rent collection at 95% for the second quarter remains consistently strong. However, in terms of letting activity, the markets display a mixed picture across the countries. Vacancy rates have understandably increased as viewings are harder to conduct during lockdowns. However, we are starting to see increased lease enquiries as vaccination programmes are rolled out and economic activity picks up, which makes us cautiously optimistic for the remainder of the year."
A summary of our key operational and financial metrics is set out below:
Q2 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 March 2021 and 1 April 2021. In Germany, rents are due monthly and the current payment was due on 10 April 2021.
By close on 21 April 2021, we had received 93% of contractual rents due or 95% taking into account those tenants we are supporting by switching to monthly rents (2020: 91% and 93%).
Update on Q1 2021 rent collections
For the first quarter of 2021 we have now collected 98% of rents due (2020: 99%), which is an increase of 8% since our 14 January 2021 trading update.
The one acquisition in the UK and five acquisitions in Germany completed on the following dates:
· Radius House, Watford - 15 January 2021, £16.9 million;
· FleXion (formerly known as Goldstuck), Berlin - 1 April 2021, £37.0 million;
· The Brix, Essen - 8 April, £33.1 million; and
· Hansaallee 299, Düsseldorf; Storkower Strasse 132, Berlin; and Wendenstrasse 408, Hamburg - 16 April 2021, £77.7 million
The previously exchanged disposals in the UK of Atholl House, Aberdeen and Quest House, Hounslow have now completed realising cash proceeds of £5.9 million for the Group. We have also exchanged on the sales of Falcon House, Hounslow for £6.1 million, Frohbösestraße, Hamburg for £4.1 million and Gennevilliers, Paris for £6.0 million at sales prices 21.8%, 5.3% and 6.3% respectively above the 31 December 2020 valuations. All are due to complete by mid July 2021.
Liquid resources and financing
The Group's balance sheet remains well-capitalised and robust. As at 31 March 2021, CLS had cash of over £185 million with a further £50 million in undrawn facilities.
Financing of £81.3 million has been secured at a blended rate of 1.10% against the German acquisitions and we are looking at options for the financing of the Watford acquisition together with other UK properties.
Vacancy and lettings (as at 31 March 2021)
As expected, given the ongoing limitations of Covid-19 restrictions, vacancy has increased from 31 December 2020. This increase is primarily due to recent lease expiries across the portfolio. Vacancy will continue to increase short-term following the completion of the recent German acquisitions which were deliberately bought with vacancy as they provide excellent asset management opportunities.
· EPRA vacancy rates (Based on December 2020 ERVs):
6.2% (31 December 2020: 5.1%)
7.4% (31 December 2020: 5.9%)
4.5% (31 December 2020: 3.6%)
5.2% (31 December 2020: 5.1%)
Since 14 January 2021, there have been 29 deals securing £2.9 million of annual rent at 6% below ERV. The most significant transaction was a lease renewal at Inside, Paris to Veolia for at least 4.5 years. Veolia has taken additional space under the renewal and now occupies over half of the property, which has resulted in the building being fully let. Excluding the Veolia letting, the remaining 28 deals were 2% above ERV.
Subject to approval at this AGM, a final dividend of 5.20 pence per share will be paid on 29 April 2021.
For further information, please contact:
CLS Holdings plc
Fredrik Widlund, Chief Executive Officer
Andrew Kirkman, Chief Financial Officer
+44 (0)20 7582 7766
Liberum Capital Limited
+44 (0)20 3100 2222
+44 (0)20 7886 2733
Elm Square Advisers Limited
+44 (0)20 7823 3695
Smithfield Consultants (Financial PR)
+44 (0)20 3047 2546
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.