Cls Holdings Plc · LSE:CLI
Cls — H1 2024 Earnings Presentation
35 slides from Cls's earnings presentation, Aug 7, 2024
Slide 1: Delivering on our strategic priorities
Delivering on our strategic priorities CLS Holdings plc Half Year Results 2024
Slide 2: Contents
Contents 03 OVERVIEW FREDRIK WIDLUND CHIEF EXECUTIVE OFFICER 09 FINANCIALS & OCCUPIERS ANDREW KIRKMAN CHIEF FINANCIAL OFFICER 18 PORTFOLIO & SUSTAINABILITY SUMMARY & OUTLOOK FREDRIK WIDLUND CHIEF EXECUTIVE OFFICER 26 APPENDICES 2 CLS HOLDINGS PLC HY 2024 RESULTS
Slide 3: Overview
Overview Fredrik Widlund Chief Executive Officer GOTIC HAUS DORTMUND, GERMANY 3 CLS HOLDINGS PLC HY 2024 RESULTS
Slide 4: Delivering on our strategic priorities
OVERVIEW Delivering on our strategic priorities EPRA NTA (p) EPRA EPS Positive letting progress with a healthy deal pipeline • Strong leasing momentum with 23% more leases by value signed generating £6.4m (HY 2023: £5.2m1) of annual rent. New leases 5.9% 345.2 350.5 329.6 253.0 227.4 4.8p (30 June 2
Slide 5: Providing tenants with high quality office space
OVERVIEW Providing tenants with high quality office space CHANGE IN EPRA VACANCY (GROUP) 58 deals (0.2%) 2.3% 0.1% 13.2% SECURED £6.4M OF ANNUAL RENT 5.9% ABOVE ERV 23% INCREASE IN LEASES BY VALUE VS 30 JUNE 2023 (30 JUN 2023: 68 DEALS SECURED £5.2M1 OF ANNUAL RENT 4.1% ABOVE ERV) LEASE EXTENSIONS L
Slide 6: Key lettings secured in 2024 with more to come
OVERVIEW Key lettings secured in 2024 with more to come UK Germany France • 13,247 sq. ft, 1st floor at Kings Court • 15,220 sq. ft, 1st floor at Office • 11,000 sq. ft, 3 floors at Cap G • 10 year lease Connect • 3/6/9 year lease • Extensively refurbished including • 6 year lease • Existing tenant
Slide 7: Valuations down 4.1% but appear to be bottoming
OVERVIEW Valuations down 4.1% but appear to be bottoming Valuation movement in local currency UK Germany France Group 0.1% • 4.1% decrease in valuations in local currency driven by yield 0.5% (UK) expansion across all markets 0.3% (Germany) • Improving picture, valuation uplift for some properties -
Slide 8: Sales of £61.0m in line with book value
OVERVIEW Sales of £61.0m in line with book value H1 Disposals H2 Disposals Westminster Tower, Hansastrasse, Dortmund London • Unconditionally • Completed in June exchanged in May and • Sales price £40.8m completed early August • Proceeds used to • Sales price €9.0m reduce LTV • Acquired for €7.5m in
Slide 9: Financials & Occupiers
Financials & Occupiers Andrew Kirkman Chief Financial Officer PARK AVENUE LYON, UK 9 CLS HOLDINGS PLC HY 2024 RESULTS
Slide 10: Summary of key metrics
FINANCIALS Summary of key metrics EPRA EPS EPRA NTA per share EPRA EPS (PENCE) 12.2 11.3 11.6 4.8p 227.4p 10.3 4.8 (30 JUN 2023: 5.2p) (31 DEC 2023: 253.0p) (-7.7%) (-10.1%) 5.2 2020 2021 2022 2023 H1 2024 PROPOSED INTERIM DIVIDEND TOTAL ACCOUNTING RETURN DIVIDEND/SHARE (PENCE) 2.6p (30 JUN 2023: 2.
Slide 11: 5.9% increase in net rental income; EPRA earnings down 7.7%
FINANCIALS 5.9% increase in net rental income; EPRA earnings down 7.7% due to increased finance costs MOVEMENT IN NET RENTAL INCOME (£M) MOVEMENT IN EPRA EPS (PENCE PER SHARE) 5.2 11 CLS HOLDINGS PLC HY 2024 RESULTS
Slide 12: NTA impacted by property valuation decline
FINANCIALS NTA impacted by property valuation decline MOVEMENT IN EPRA NTA (PENCE PER SHARE) 12 CLS HOLDINGS PLC HY 2024 RESULTS
Slide 13: Consistent cash generation with disposal proceeds to reduce leverage
FINANCIALS Consistent cash generation with disposal proceeds to reduce leverage MOVEMENT IN LIQUID RESOURCES (£M) 40.8 30.9 120.6 118.5 (20.9) (9.4) 7.3 (20.3) (30.5) 70.6 68.5 £50m of undrawn facilities (2024: £50m committed, 2023: £50m committed) 13 CLS HOLDINGS PLC HY 2024 RESULTS
Slide 14: Financing – strategy and overview
FINANCIALS Financing – strategy and overview Resilient financing strategy Key debt metrics • CLS uses secured, non-recourse SPV financing and UK Germany France Group benefits from many different lending relationships • Maintain over £100m of cash and undrawn facilities, Drawn debt (£m) 491.0 439.7 1
Slide 15: Financing – delivery in H1 and focus for H2
FINANCIALS Financing – delivery in H1 and focus for H2 2024 debt – refinancings delivered on schedule 2025 refinancing – progressing as expected • At start of 2024, £195.4m of maturing debt and • £377m debt expiring in 2025 across 12 loans and 9 amortisation due in 2024 lenders • By March, this had
Slide 16: 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 2023: 99%) 2 3 8 9 10 11 1 TOTAL TENANTS TENANT SIZE1 7 735 2 22% 4 GOVERNMENT 5 6 6 5 4 3 44% 1 Government 22.2% 7 8 9 2 Information Technology 13.9% LARGE 3 C
Slide 17: Over 50% of income index-linked
OCCUPIERS Over 50% 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% 57% 100% • Leases are not generally index-linked • Majority of leases linked to German CPI • All leas
Slide 18: Portfolio & Sustainability
Portfolio & Sustainability Fredrik Widlund Chief Executive Officer ADLERSHOF TOR BERLIN, GERMANY 18 CLS HOLDINGS PLC HY 2024 RESULTS
Slide 19: Generating returns through selective refurbishment
PORTFOLIO Generating returns through selective refurbishment Bismarckstrasse, Berlin The Brix, Essen Debussy, Paris • Building purchased in 2006 with rent at • Building acquired in April 2021 with 28% • CLS will convert existing office building €12 psqm; current ERV over €30 psqm vacancy and now ful
Slide 20: Citadel Place/Spring Gardens, Vauxhall
PORTFOLIO Citadel Place/Spring Gardens, Vauxhall • The property is one of the largest in the CLS portfolio and represents an exciting opportunity to further regenerate the area and create a vibrant community hub while also delivering long-term shareholder returns • The existing lease with the NCA ex
Slide 21: Progress in 2024: energy & carbon
SUSTAINABILITY Progress in 2024: energy & carbon LIKE-FOR-LIKE DECREASE IN ENERGY • Net Zero Carbon Pathway total programme spend to CONSUMPTION AT HY 2024 end of 2024 expected to be £17m • 13 carbon reduction and energy efficiency projects 4.3% completed in 2024 thus far, with a further 57 projects
Slide 22: Summary & Outlook
Summary & Outlook Fredrik Widlund Chief Executive Officer FLEXION BERLIN, GERMANY 22 CLS HOLDINGS PLC HY 2024 RESULTS
Slide 23: CLS view – UK recovery further ahead than Europe
SUMMARY & OUTLOOK CLS view – UK recovery further ahead than Europe • Political stability providing positive • Lettings to Government and • Political uncertainty after election backdrop Mittelstand continuing to perform well offsetting positive Olympics effect • Economic recovery and sentiment • Germ
Slide 24: Significant growth opportunities
SUMMARY & OUTLOOK Significant growth opportunities • Focus on reducing current vacancy; leases signed at Artesian and the Coade • Indexation also driving rental growth, over 50% of portfolio index-linked which captures higher rents • Significant near-term upside from letting completed refurbishments
Slide 25: Delivering on our strategic priorities
SUMMARY & OUTLOOK Delivering on our strategic priorities Net initial yield vs. cost of debt • Maintaining strong leasing momentum and Equivalent yield Net initial yield Cost of debt driving occupancy 6.5% 6.0% 6.0% 5.5% 5.7% 5.0% • Disciplined execution of property sales to 4.5% 4.0% reduce LTV 3.5%
Slide 26: Appendices
Appendices MALAKOFF PARIS, FRANCE 26 CLS HOLDINGS PLC HY 2024 RESULTS
Slide 27: 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 735 TENANTS • We are a supportive, progressive and sustainably focused commercial landlord that specialises in owning and 83
Slide 28: Long-term growth
APPENDICES Long-term growth TOTAL SHAREHOLDER RETURN PROPERTY VALUATION (£BN) 4000 3500 3000 2.3 2.4 2500 2.2 2.1 1.9 2.0 1.9 2000 1.8 1500 1.5 1.6 CAGR 9.1% 1000 500 0 CLS FTSE 350 FTSE RE SS 2015 2016 2017 2018 2019 2020 2021 2022 2023 H1 2024 EPRA NTA (PENCE)1 DISTRIBUTIONS (PENCE PER SHARE) 345.
Slide 29: Ambition to develop leading green credentials
APPENDICES Ambition to develop leading green credentials • Awarded Gold in the EPRA Sustainability Best Practices • UK EPC ratings continue to improve; over half of our UK Recommendations office buildings are already EPC B or higher and we have reduced our EPC D rated buildings by nearly 20% • Maint
Slide 30: Actively disposing of assets to reduce LTV
APPENDICES Actively disposing of assets to reduce LTV MOVEMENT IN PROPERTY PORTFOLIO1 (£M) ¹ Comprises investment property, PPE and properties held for sale 30 CLS HOLDINGS PLC HY 2024 RESULTS
Slide 31: United Kingdom
APPENDICES United Kingdom VALUE OF PROPERTY PORTFOLIO £839.7m LONDON & SOUTH EAST PERCENTAGE OF GROUP’S PROPERTY INTERESTS 44% NUMBER OF PROPERTIES Watford Chelmsford 35 2 LETTABLE SPACE Harrow Uxbridge 2 Acton 4 City and Midtown 1.6m sq. ft Hammersmith NUMBER OF TENANTS 7 Central London 217 Reading
Slide 32: Germany
APPENDICES Germany VALUE OF PROPERTY PORTFOLIO £839.0m PERCENTAGE OF GROUP’S PROPERTY INTERESTS HAMBURG MUNICH 44% NUMBER OF PROPERTIES 32 LETTABLE SPACE 2 3.5m sq. ft 3 NUMBER OF TENANTS 370 VACANCY RATE 7.2% BERLIN DUSSELDORF WEIGHTED AVERAGE LEASE LENGTH TO END GERMANY PROPERTIES 4.7 years LEASES
Slide 33: France
APPENDICES France VALUE OF PROPERTY PORTFOLIO La Garenne-Colombes £231.7m 2 PERCENTAGE OF GROUP’S PROPERTY INTERESTS PARIS La Défense 2 Courbevoie 12% Rueil-Malmaison 10th Arr. NUMBER OF PROPERTIES Paris 16 Boulogne-Billancourt LETTABLE SPACE 0.7m sq. ft 2 1 Malakoff NUMBER OF TENANTS LYON 148 VACAN
Slide 34: 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 30 June 2024 (£m) currency) NIY2 NIY3 yield4 Vacancy term (years) space (£m) (£m) (£/€/sq. ft)) UK 839.7 (4.4%) 5
Slide 35: 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