Cls Holdings Plc · LSE:CLI
Cls — FY2023 Earnings Presentation
34 slides from Cls's earnings presentation, Mar 6, 2024
Slide 1: The return to the office
The return to the office CLS Holdings plc Full Year Results 2023
Slide 2: Contents
Contents 03 OVERVIEW FREDRIK WIDLUND CHIEF EXECUTIVE OFFICER 08 FINANCIALS & OCCUPIERS ANDREW KIRKMAN CHIEF FINANCIAL OFFICER 17 PORTFOLIO & SUSTAINABILITY SUMMARY & OUTLOOK FREDRIK WIDLUND CHIEF EXECUTIVE OFFICER 25 APPENDICES 2 CLS HOLDINGS PLC 2023 RESULTS
Slide 3: Overview
Overview Fredrik Widlund Chief Executive Officer PRESCOT STREET LONDON, UK 3 CLS HOLDINGS PLC 2023 RESULTS
Slide 4: Robust operational performance
OVERVIEW Robust operational performance EPRA NTA (p) EPRA EPS Operational delivery continuing • Strong leasing momentum with 89% more leases signed generating £15.5m (2022: £8.2m) of annual rent. New leases 6.9% above ERV 326.3 345.2 350.5 329.6 253.0 10.3p (2022: 11.6p) • Net rental income growth u
Slide 5: Securing income through strong leasing activity
OVERVIEW Securing income through strong leasing activity 130 deals CHANGE IN EPRA VACANCY (GROUP) 3.4% 11.0% SECURED £15.5M OF ANNUAL RENT 6.9% ABOVE ERV 89% INCREASE IN LEASES BY VALUE VS 2022 (31 DEC 2022: 106 DEALS SECURED £8.2M OF ANNUAL RENT 4.8% ABOVE ERV) LEASE EXTENSIONS LIKE-FOR-LIKE CONTRA
Slide 6: Valuations down 12.5% but outperformed the market
OVERVIEW Valuations down 12.5% but outperformed the market Group Valuation movement in local currency UK Germany France • 12.5% decrease in valuations in local currency driven by yield +1.4% 0.3% +1.6% expansion across all markets 0.3% 8.6% 3.1% -2.6% UK 0.7% -6.7% -3.5% -16.7% • 16.7% decline, ERV
Slide 7: Sales of £25.4m at 10% above pre-sale valuations
OVERVIEW Sales of £25.4m at 10% above pre-sale valuations 2023 Disposals 2024 Planned Disposals UK • Six properties for £173m • The Rose, London across our three • St Cloud Gate, countries held for sale at Maidenhead year-end including Westminster Tower Germany • Streiflacher Strasse, (which has pla
Slide 8: Financials & Occupiers
Financials & Occupiers Andrew Kirkman Chief Financial Officer SPRING MEWS LONDON, UK 8 CLS HOLDINGS PLC 2023 RESULTS
Slide 9: Summary of key metrics
FINANCIALS Summary of key metrics EPRA EPS EPRA NTA per share EPRA EPS (PENCE) 12.0 12.2 10.3p 253.0p 11.3 11.6 10.3 (31 DEC 2022: 11.6p) (31 DEC 2022: 329.6p) (11.2%) (23.2%) 2019 2020 2021 2022 2023 COST OF DEBT % OF DEBT FIXED AND CAPPED COST OF DEBT (%) 3.61 3.61% (31 DEC 2022: 2.69%) 80% (31 DE
Slide 10: 4.8% increase in net rental income; EPRA earnings down 11.2%
FINANCIALS 4.8% increase in net rental income; EPRA earnings down 11.2% due to increased finance costs MOVEMENT IN NET RENTAL INCOME (£M) MOVEMENT IN EPRA EPS (PENCE PER SHARE) 11.8 0.2 11.6 Pro-forma impact of 2022 share buyback 10 CLS HOLDINGS PLC 2023 RESULTS
Slide 11: NTA impacted by property valuation decline
FINANCIALS NTA impacted by property valuation decline MOVEMENT IN EPRA NTA (PENCE PER SHARE) UK Germany France 11 CLS HOLDINGS PLC 2023 RESULTS
Slide 12: Strong liquidity position whilst investing in our portfolio
FINANCIALS Strong liquidity position whilst investing in our portfolio MOVEMENT IN LIQUID RESOURCES (£M) 83.2 163.9 (37.3) 15.2 . 120.6 113.9 (31.6) . (47.2) 70.6 (24.6) (1.0) £50m of undrawn facilities (2023: £50m committed, 2022: £30m committed and £20m uncommitted) 12 CLS HOLDINGS PLC 2023 RESULT
Slide 13: Financing – Delivery in 2023
FINANCIALS Financing – Delivery in 2023 Strategy All 2023 debt refinanced • CLS uses secured, non-recourse SPV financing with many different • In 2023, 11 loans for £330m refinanced, of which £152m at lenders 4.64% for 2023 debt maturities • In addition, over £100m of cash and undrawn facilities, an
Slide 14: Financing – Focus for 2024
FINANCIALS Financing – Focus for 2024 Further progress made already with 2024 debt Profile of 2025 debt • Over 70% of 2024 debt now refinanced with two loans for £83m • £399m debt expiring in 2025 (UK £291m, Germany £71m and extended in February France £37m) across 12 loans and 10 banks • In additio
Slide 15: High-quality and diversified tenant base
OCCUPIERS High-quality and diversified tenant base RENT COLLECTION TOP 15 TENANTS (32% OF CONTRACTED RENT) TENANT DIVERSITY % 99% 1 (31 DEC 2022: 99%) 2 3 8 9 10 11 12 1 TOTAL TENANTS TENANT SIZE1 6 744 2 22% 4 GOVERNMENT 5 6 7 5 4 3 40% 1 Government 21.5% 7 8 9 2 Commercial & Professional Services
Slide 16: Over 55% of income index-linked
OCCUPIERS Over 55% of income index-linked United Kingdom Germany France PERCENTAGE OF RENTAL PERCENTAGE OF RENTAL PERCENTAGE OF RENTAL INCOME INDEX-LINKED INCOME INDEX-LINKED INCOME INDEX-LINKED 33% 66% 100% • Leases are not generally index-linked • Majority of leases linked to German CPI • All leas
Slide 17: Portfolio & Sustainability
Portfolio & Sustainability Fredrik Widlund Chief Executive Officer FLEXION BERLIN, GERMANY 17 CLS HOLDINGS PLC 2023 RESULTS
Slide 18: Larger completed projects
PORTFOLIO Larger completed projects The Coade, London Park Avenue, Lyon Artesian, Prescot Street, London • 27,700 sq. ft development • 5,000 sqm refurbishment and • 96,000 sq. ft refurbishment addition of 215 sqm • Nine floor office development • First phase (basement to 3rd floor) completed in Q2 2
Slide 19: Driving value through quality refurbishments
PORTFOLIO Driving value through quality refurbishments FleXion, Berlin Fleethaus, Hamburg Apex Tower, New Malden • Building acquired in early 2021 with • Renovation of 5,500 sqm building • Refurbishment of 27,000 sq. ft to CAT 29% occupancy including listed brick façade, interior A standard with a f
Slide 20: Progress in 2023: energy & carbon
SUSTAINABILITY Progress in 2023: energy & carbon LIKE-FOR-LIKE DECREASE IN SOLAR PV INSTALLED IN 2023 • Recognised with a Gold award in the EPRA LANDLORD ENERGY CONSUMPTION Sustainability Best Practices Recommendations, up • from Silver in 2022 Good progress on NZC Pathway implementation, 8% 111 kWp
Slide 21: Summary & Outlook
Summary & Outlook Fredrik Widlund Chief Executive Officer COLUMBIA, BRACKNELL, UK 21 CLS HOLDINGS PLC 2023 RESULTS
Slide 22: CLS view – leasing markets performing well
SUMMARY & OUTLOOK CLS view – leasing markets performing well • Leasing markets performing well, • Lettings to Government and • Stable letting market for small to especially from H2 2023 Mittelstand companies performing medium size floorplates well • High quality, smaller floorplates • State support
Slide 23: Significant growth opportunities
SUMMARY & OUTLOOK Significant growth opportunities • Focus on reducing current vacancy to drive increased rental income in coming year • Indexation also driving rental growth, over 55% of portfolio index-linked which captures higher rents • Significant near-term upside from letting completed refurbi
Slide 24: Positioned for recovery
SUMMARY & OUTLOOK Positioned for recovery Net initial yield vs. cost of debt • Strong leasing momentum with net rental income Equivalent yield Net initial yield Cost of debt growth up 4.8% to £113m. New leases 6.9% above ERV 6.5% 6.0% 5.7% 5.5% • Full year dividend maintained at 7.95p 5.0% 5.4% 4.5%
Slide 25: Appendices
Appendices THE COADE, LONDON, UK 25 CLS HOLDINGS PLC 2023 RESULTS
Slide 26: Overview
APPENDICES Overview • CLS Holdings plc is a property investment company which TOTAL PORTFOLIO VALUE (%) has been listed on the London Stock Exchange since 1994 12% 3 COUNTRIES 744 TENANTS • We are a supportive, progressive and sustainably focused commercial landlord that specialises in owning and 86
Slide 27: Long-term growth
APPENDICES Long-term growth TOTAL SHAREHOLDER RETURN PROPERTY VALUATION (£BN) 240 220 200 2.3 2.4 180 2.2 2.1 1.9 2.0 160 1.8 140 1.5 1.6 120 1.3 CAGR -0.1% 100 80 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 CLS FTSE 350 FTSE RE SS 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 EPRA NTA (PE
Slide 28: Ambition to develop leading green credentials
APPENDICES Ambition to develop leading green credentials • Obtained a Gold award in the EPRA Sustainability Best • Maintained our GRESB award of 4 green stars (2022: 4 Practices Recommendations, up from Silver in 2022 green stars) • Maintained over 99% Group electricity being carbon- • Fully complia
Slide 29: Capex investment to capture higher income
APPENDIX Capex investment to capture higher income MOVEMENT IN PROPERTY PORTFOLIO1 (£M) ¹ Comprises investment property, PPE and properties held for sale 29 CLS HOLDINGS PLC 2023 RESULTS
Slide 30: United Kingdom
APPENDICES United Kingdom VALUE OF PROPERTY PORTFOLIO £919.9m LONDON & SOUTH EAST PERCENTAGE OF GROUP’S PROPERTY INTERESTS 45% NUMBER OF PROPERTIES Watford Chelmsford 37 2 LETTABLE SPACE Harrow Uxbridge 2 Acton 4 City and Midtown 1.9m sq. ft Hammersmith NUMBER OF TENANTS 8 Central London 221 Reading
Slide 31: Germany
APPENDICES Germany VALUE OF PROPERTY PORTFOLIO £885.5m PERCENTAGE OF GROUP’S PROPERTY INTERESTS HAMBURG MUNICH 43% NUMBER OF PROPERTIES 32 LETTABLE SPACE 2 3.8m sq. ft 3 NUMBER OF TENANTS 368 VACANCY RATE 6.8% BERLIN DUSSELDORF WEIGHTED AVERAGE LEASE LENGTH TO END GERMANY PROPERTIES 4.9 years LEASES
Slide 32: France
APPENDICES France VALUE OF PROPERTY PORTFOLIO La Garenne-Colombes £257.5m 2 PERCENTAGE OF GROUP’S PROPERTY INTERESTS PARIS La Défense 2 Courbevoie 12% Rueil-Malmaison 10th Arr. NUMBER OF PROPERTIES Paris 17 Boulogne-Billancourt LETTABLE SPACE 0.8m sq. ft 2 2 Malakoff Montrouge NUMBER OF TENANTS LYON
Slide 33: Group statistics
APPENDICES Group statistics Valuation Weighted average Valuation1 movement (local EPRA EPRA ‘topped up’ Equivalent EPRA unexpired lease ERV of lettable Contracted rent Contracted rent At 31 Dec 2023 (£m) currency) NIY2 NIY3 yield4 Vacancy term (years) space (£m) (£m) (£/€/sq. ft)) UK 919.9 (16.7%) 5
Slide 34: Disclaimer
Disclaimer 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 forwar