Half Year 2026 CLS Holdings PLC Earnings Call Transcript
Key Points
- CLS Holdings PLC (LSE:CLI) successfully sold properties for GBP57 million in H1 2026, with an additional GBP41 million exchanged or agreed, keeping the company on track to meet its GBP100 million sales target for the year.
- The company has made significant progress on refinancing, with 89% of 2026 debt maturities either completed, credit approved, or agreed, and has already begun engaging with lenders for 2027 maturities.
- Leasing activity remains steady, with GBP5.7 million of annual rent secured in H1 and an additional GBP1.9 million signed in July, while new leases increased by over 20% compared to 2025.
- The portfolio benefits from a diversified tenant base with 666 tenants, including close to 30% government tenants, and rent collection remains high at 98%.
- Strategic investments in properties, such as the German pre-lets and the Maximilianforum conversion, are expected to deliver high-quality, faster-growing assets and unlock long-term value.
- The company has reduced its cost base through deliberate actions, with property and administration costs lower, and finance costs reduced by GBP80 million in debt compared to H1 2025.
- EPRA earnings per share fell 32.5% to 2.7p, driven by the impact of over GBP200 million of property sales since the start of 2025 and tenant departures, leading to revised full-year earnings guidance of 4.6p to 5.5p per share.
- The tenant at Spring Gardens decided not to extend its lease beyond September, creating uncertainty and impacting earnings, with the sale of the property now expected in H1 2027.
- Valuation declines continued, with the portfolio falling 4.6% in local currency due to yield expansion, causing the loan-to-value ratio to increase to 51.6%, above the target range of 35% to 45%.
- No interim dividend will be paid for 2026, as the Board will determine a single final dividend based on full-year earnings, reflecting near-term earnings pressure.
- Like-for-like net rental income fell 4.7% to GBP50.8 million, impacted by the block expiry at New Printing House Square and two tenant insolvencies in Germany.
- Leasing activity was slower than expected, with leases signed at 8.9% below ERVs, and like-for-like ERVs declined 1.8%, indicating ongoing market challenges.
Good morning, and welcome to CLS Holdings PLC half year 2026 results presentation. I am Fredrik Widlund, Chief Executive, and next to me is our new CFO, Patrick Symons. Patrick, who has been with us for almost 10 years, was previously our Group Financial Controller and will be a familiar face to many of you. Today, we will present you the interim results, give you an update on the portfolio and what we have seen in the first six months.
But first, I will start with the trading update that we published last week. We are facing near-term earnings pressure, and this is driven by the following factors. The disposal program is reducing income, and we have sold properties for over GBP200 million since 2025 and now have a smaller portfolio. While leasing activity is steady, it is still slower than what we expected earlier in the year.
The tenant at Spring Gardens is no longer seeking to extend their lease beyond September. This was initiated by them, but at a very late stage, they decided not to proceed. And
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