Active Portfolio Management CLS Holdings plc Full Year Results - - PowerPoint PPT Presentation
Active Portfolio Management CLS Holdings plc Full Year Results 2019 Contents CLS Holdings plc Full Year Results 2019 Simon Wigzell Head of Group 25 Property 15 Appendices Overview Property Fredrik Widlund 02 CEO Andrew Fredrik
CLS Holdings plc Full Year Results 2019
CLS Holdings plc Full Year Results 2019
Overview
Fredrik Widlund CEO
Simon Wigzell Head of Group Property
Andrew Kirkman CFO
Fredrik Widlund CEO
Property Financials Markets & Summary Appendices
CLS Holdings plc Full Year Results 2019
Fredrik Widlund CEO
02
CLS Holdings plc Full Year Results 2019
Overview
▪ EPRA NAV up 6.3% to 329.2 pence per share
(31 Dec 2018: 309.8p)
▪ Valuations up 3.0% in local currency driven by
Germany increasing 8.4%
▪ Refocusing with sales of Catena, First Camp,
and Regional UK properties
▪ £257.2m of acquisitions and £187.2m of
property disposals
▪ Vacancy stable at 4.0% (31 Dec 2018: 3.8%) ▪ Net rental income increased by 3.1% to
£110.6m (31 Dec 2018: £107.3m)
▪ Profit before tax was up 9.7% to £159.0m (31
Dec 2018: £144.9m). EPRA EPS down 8.4% to 12.0p (31 Dec 2018: 13.1p)
▪ Total accounting return of 8.6% (2018: 10.8%) ▪ Proposed dividend of 7.4p per share, up 7.2%
Up 3.0% in local currency
(31 Dec 2018: £1.9bn)
Up 6.3%
(31 Dec 2018: 309.8p)
53% 14% 33% Total Portfolio EPRA NAV (p)
208.3 245.6 285.6 309.8 329.2
2015 2016 2017 2019 2018
/ UK (£1,059.8m) / Germany (£667.0m) / / France (£285.3m)
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CLS Holdings plc Full Year Results 2019
Overview
UK
▪ Total valuation down -0.3% driven
by acquisition costs (like-for-like valuations +0.3%)
▪ Rental growth with ERVs up 1.3% ▪ Yields down by 22 bps to 5.4% NIY due to portfolio
mix after disposals Germany
▪ Valuation uplift of 8.4% in local currency ▪ Strong rental growth with ERVs up 5.1% ▪ Yields down by 41 bps to 5.0% NIY
France
▪ Valuation uplift of 3.8% in local currency ▪ Rental growth with ERVs up 2.5% ▪ Yields down by 4 bps to 5.2% NIY
Valuation movement in local currency
UK Germany France Total Valuation Uplift1
8.4% 3.8% 3.0% ERV Movement2 1.3% 5.1% 2.5% 2.6% Net Initial Yield (NIY)3 5.4% 5.0% 5.2% 5.2% NIY Movement
9.3% 1.6% 4.7% 0.5%
8.2% 3.8% 6.6% 9.3% 8.4% 3.3% 4.8% 8.2% 3.8% 3.8%
2015 2016 2017 2018 2019
/ UK / Germany / France
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CLS Holdings plc Full Year Results 2019
Overview
Key Acquisitions Sales
19
* Completed Q1 2020
UK
▪ Foliot House, Plymouth ▪ Quayside, Fulham ▪ Grange, Hayes ▪ 19 Regional UK Portfolio* ▪ Heather Court, Sidcup*
Germany
▪ Markstrasse, Witten ▪ East Gate, Munich ▪ Schanzenstrasse,
Dusseldorf France
▪ Ateliers Victoires, Paris ▪ Foch, Paris*
28 Properties, £187.2m, NIY 5.4% (3.6% NIY excluding UK Regional Sale) UK
▪ Portland Building, Crawley ▪ Gresham House, Crawley ▪ Prescot Street, Aldgate ▪ Vauxhall Walk, Vauxhall ▪ Pacific House, Reading ▪ Lloyds Avenue, Aldgate ▪ Clockwork, Hammersmith ▪ College Road, Harrow* ▪ Kingston Road, Staines*
Germany
▪ Puro, Munich ▪ Office Connect, Cologne
France
▪ Les Reflets, Lille ▪ Park Avenue, Lyon
13 Acquisitions, £257.2m, NIY 5.8%
3 9
* Two UK regional assets, Sidcup and Foch completed Q1 2020
Acquisitions Disposals
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CLS Holdings plc Full Year Results 2019
▪ Our vision: To be a leading office space specialist
and a supportive, progressive and sustainably focused commercial landlord
▪ Imbedding sustainability in all that we do ▪ Employee led vision and values project to enhance
stakeholder engagement and collaboration
▪ Corporate objectives around carbon and energy
reduction, renewable energy and waste management
▪ Established a workforce advisory panel looking at
improving workplace policies, practices and wellbeing
▪ New independent non-executive chairman ▪ Two new independent non-
executive directors chairing audit and remuneration committees
Tenant Surveys
(31 Dec 2018: 441)
GRESB ESG
(31 Dec 2018: 63)
CSR Events
Investing in our local communities and employees
Environmental, Social and Governance
06
49% 51% Gender Diversity / Male / Female
CLS Holdings plc Full Year Results 2019
Andrew Kirkman CFO
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CLS Holdings plc Full Year Results 2019
Finance
EPRA EPS (Pence)
Down 8.4%
8.5 12.3 12.6 13.1 12.0
2015 2016 2017 2019 2018
Cost of Debt
(31 Dec 2018: 2.43%)
EPRA NAV
(31 Dec 2018: 309.8p) +6.3%
EPRA EPS
(31 Dec 2018: 13.1p)
Total Accounting Return
(31 Dec 2018: 10.8%)
Interest Cover
(31 Dec 2018: 3.8x)
Total Proposed Dividend
(31 Dec 2018: 6.9p) +7.2%
Cost of Debt (%)
Record low
3.40 2.91 2.51 2.43 2.42
2015 2016 2017 2019 2018 Distributions (£m)
Up 7.2%
5.7 7.2 8.4 9.0 9.6 13.4 16.3 17.5 19.1 20.6
2015 2016 2017 2019 2018
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CLS Holdings plc Full Year Results 2019
Movement in ERPA NAV
Movement In EPRA NAV (pence per share)
309.8 329.2
(7.1) 12.0 14.1 8.8 (0.7) (7.7)
At 31 December 2018 Dividends EPRA earnings Property valuation Catena Bonds/Discontinued/Other FX At 31 December 2019
1
1 After fx09
CLS Holdings plc Full Year Results 2019
Movement in ERPA Earnings per Share
Movement In EPRA Earnings (pence per share)
13.1 12.0p (0.6) (0.3) 0.3 (1.3) 0.8
At 31 December 2018 Net rental income Expenses Finance income Tax/Finance expense FX At 31 December 2019
12.0
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CLS Holdings plc Full Year Results 2019
Movement in liquid resources
100.3 (25.5) (253.9) 75.3 165 165.0 .0 34.5 30.3
31 December 2018 From
Interest/Tax/Other Dividends Sale of properties Net drawdown of loans Property acquisitions & capex Sale of bonds Catena sale 31 December 2019
79.3 113.1 259.4 (28.7) 259.4 208.1 77.5
/ Cash / Bonds / / Catena
Movement in liquid resources (£’m)
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CLS Holdings plc Full Year Results 2019
Finance
Financed or refinanced £292.4m debt at 2.65%
▪ £238.2m in GBP at 2.97% and £54.1m in EUR at
1.25%; weighted average maturity of 5.2 years
▪ £82.7m for new acquisitions and £177.9m fixed
at 2.50% Mitigated key Spring Gardens refinancing risk
▪ 2021 maturity refinanced early, extended to 2024 ▪ Debt cost reduced from 3.49% to 2.92% fixed
Continue to fix at low interest rates
▪ Fixed debt (77%): 3.6 years at 2.32% ▪ Floating debt (23%): 3.0 years at 2.73%
Progress made with 2020 objectives
▪ Advancing with £134.0m to be refinanced in
2020
▪ Exploring wider UK financing strategy options
50 100 150 200 250 300 2020 2021 2022 2023 2024 2025 2026
UK Germany France Total
Gross debt (£m) 447.0 312.6 137.6 897.2 Number of loans 15 18 16 49 Net Gearing* 18.6% 45.2% 46.7% 31.4% Cost of debt 3.38% 1.39% 1.60% 2.42% Years to maturity 3.1 3.5 3.6 3.5
Loan Maturity (£’m)
/ / GBP / EUR
* UK gearing shown after cash of £246.9m12
CLS Holdings plc Full Year Results 2019
Finance
Interest Cover
3.2 3.4 3.9 3.8 3.4
2015 2016 2017 2019 2018
Balance Sheet LTV
(31 Dec 2018: 36.7%)
Number of lenders
(31 Dec 2018: 26)
Cost of Debt
(31 Dec 2018: 2.43%)
Interest Cover
(31 Dec 2018: 3.8x)
Unencumbered Assets
(31 Dec 2018: £283.6m)
77% 1% 22%
/ Fixed rate / Floating rate (capped) / Floating rate (unhedged)
Debt Profile 31 December 2019
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CLS Holdings plc Full Year Results 2019
Movement in property portfolio
Movement In property portfolio1 (£’m) 31 December 2018 Disposals Acquisitions Capex Valuation uplift FX 31 December 2019
60 60.82 (58 58.4) 16 16.6 23 232.9 2.9
2,01 2,012.1 1,92 1,923.3
(16 163.1) 1,923.3 2,012.1
1 Comprises investment property, PPE and properties held for sale 2 Includes rent free debtor of £3.7m14
CLS Holdings plc Full Year Results 2019
Simon Wigzell Head of Group Property
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CLS Holdings plc Full Year Results 2019
Property
Average rents (per sq ft) Contracted rent (£109.3m) 23% 25% 52%
Government
As at 31 December 2019
1. National Crime Agency (UK) 2. Secretary of State (UK) 3. University of Roehampton (UK) 4. City of Bochum (Germany) 5. BAE Systems (UK) 6. Barts Health NHS Trust (UK) 7. Hammersmith & Fulham Council (UK) 8. General Mills (UK) 9. Bosch (Germany) 10. Materna (Germany) 11. Colt (France) 12. Honda (UK) 13. Kaufland (Germany) 14. Dr Hönle (Germany) 15. Volksbank (Germany)
Tenants / Office (89%) / Student (5%) / Hotel (4%) / Food Retail (2%)
Property use by rent 31 December 2019 Top 15 Tenants (32% of contracted rent)
Properties Major corporations Other
14.96 15.96 16.19 17.00 17.97 2015 2016 2017 2018 2019
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CLS Holdings plc Full Year Results 2019
Property
Vacancy
4.0% 4.2% 2.3% 3.8%
4.1% 4.3% 3.1% 4.0%
UK Germany France Group
158 deals secured £14.7m of annual rent
(2018: 176 deals, secured £16.2m of annual rent, 2.2% above ERV)
Deals Done 109.3 120.1 (4.5) 4.6 10.7
Contracted Rent Vacancy Over Rented Reversionary ERV
Estimated Rental Value (“ERV”) (£’m)
WAULT
(31 Dec 2018: 5.26)
Like-for-Like ERV
(31 Dec 2018: 1.2%)
/ 2018 / 2019
Vacancy
(31 Dec 2018: 3.8%)
Lease Extensions
New Leases
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CLS Holdings plc Full Year Results 2019
Sustainability
UK Portfolio EPC Ratings
Renewable Electricity Purchased
(31 Dec 2018: 96%)
Renewable & Low Carbon Generation (kWh)
(31 Dec 2018: 546,000 kWh)
UK Recycling
(31 Dec 2018: 71%)
Like-for-like Carbon Reduction in 2019
(tC02e)
Year-on-year Carbon Reduction (tC02e)
409 1,124 1,569 2,999 3,213
2015 2016 2017 2019 2018
Water Intensity (m3/m2/year)
(31 Dec 2018: 0.371)
Solar PV Capacity (kWp)
(31 Dec 2018: 327)
18
0% 0% 42% 29% 25% 4% F E D C B A
CLS Holdings plc Full Year Results 2019
Capital expenditure programme
Mittler Pfad 2-4, Stuttgart
▪ Investing £2m ▪ 19,000 sq. ft of redundant storage
converted to offices
▪ Modern lobbies with digital
information displays
▪ Refurbishment of the façade
including a modern lighting system
▪ Creation of modern outside
communal area and landscaping
▪ New branding and signage
Apex Tower, New Malden
▪ Investing £10m ▪ New enlarged reception with 'drop
in' work zone
▪
Office floor
▪ Meeting rooms and communal
kitchen floor
▪ Showers and changing facilities ▪ EV car charging points ▪ EPC improvement D to B
Base Offices, Brentford
▪ Investing £1m ▪ Rebranding as
Offices
▪ 5 Suites available on flexible terms ▪ Plug & Play - Furnished and
prewired with fibre
▪ Shared meeting rooms and kitchen ▪ Biophilic design to improve working
environment
▪ Bracknell and New Malden to
follow
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CLS Holdings plc Full Year Results 2019
Capital expenditure programme
Park Avenue, Lyon
▪ Investing £5m capex 2020-2022 ▪ Thermally efficient façade will
enhance energy performance and re-position the building to capture higher rents
▪ Refurbishing 42,000 sq. ft of office
space
▪ Introducing roof terraces and new
landscaping to promote wellbeing
▪ EV charging, showers, lockers and
bike storage 9 Prescot Street, London
▪ Investing £20m capex 2021-2022 ▪ Thermally improve facade, efficient
plant, PVs and target EPC improvement from D to B rating
▪ Refurbish 4 floors capturing higher
ERV
▪ Enlarged roof terrace, cycle,
shower and locker facilities
▪ Co work hub initiative ▪ Re-branding
Technisches Rathaus, Bochum
▪ Investing £5m 2020-2021 ▪ Awaiting planning approval spring
2020
▪ 20,000 sq. ft roof top extension ▪ Open plan pilot project ▪ Lease extension 2039 to 2049 ▪ Light weight Cross Laminated
Timber frame under consideration
▪ Naturally ventilated & PVs on roof
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CLS Holdings plc Full Year Results 2019
Medium-term office Developments
▪ Awaiting planning permission for
29,000 sq. ft office development
▪ New scheme ERV £1.4m per annum
(existing £130k per annum)
▪ Indicative build cost £12m ▪ Café, roof terraces, showers ▪ Target EPC A & BREEAM Excellent ▪ Incubator floor for local businesses ▪ PVs, Electrification and EV charging ▪ Potential delivery 2022 ▪ Planning application progressing for
reduced height providing 43,000 sq. ft
▪ Potential ERV £1.7m per annum
(existing ERV £130k per annum)
▪ Indicative build cost £18m ▪ Café, roof terraces, showers, lockers
and co work zone
▪ Target EPC A & BREEAM Excellent ▪ PVs, Electrification and EV charging ▪ Potential delivery 2023 ▪ Awaiting planning permission for
141,000 sq. ft office development
▪ New scheme ERV £2.5m per annum
(existing £1m per annum)
▪ Indicative build cost £30m ▪ Café, roof terraces, showers, lockers
and co work zone
▪ PVs, Electrification and EV charging ▪ Target Gold DGNB ▪ Potential delivery 2022
Vauxhall Walk, SE11 London St Cloud Gate, Maidenhead Vor Dem Lauch 14, Stuttgart
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CLS Holdings plc Full Year Results 2019
Fredrik Widlund CEO
22
CLS Holdings plc Full Year Results 2019
Markets
United Kingdom
▪ UK macro indicators relatively strong,
Brexit negotiations remain a risk
▪ Market sentiment and
▪ Portfolio now well positioned in the
Greater London area to benefit from any uptick in the economy
▪ Rental growth in London, ERVs up
1.3% in 2019, vacancy trending down
▪ Domestic political situation stabilised
with more acquisition opportunities available France
▪ Economy resilient with improving
domestic demand; protests and strike action remain a risk to growth
▪ Strong investment markets in larger
cities, transaction volumes increasing
▪ Signs that falling vacancy in CBD is
starting to cascade to non-prime
▪ Rental growth in Paris and Lyon,
ERVs up 2.5% in 2019
▪ Maximising value from existing
properties and selective acquisitions Germany
▪ Economy slowing but well
diversified with low unemployment
▪ Fundamentals for property
investments remains favourable
▪ Attractive net yields over cost of
debt; +350 bps on average
▪ Strong rental growth, ERVs up
5.1% in 2019, low office vacancies in all major cities
▪ We continue to see value in non-
prime offices with vacancy and/or repositioning opportunities
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CLS Holdings plc Full Year Results 2019
Summary
▪ EPRA NAV up 6.3% to 329.2 pence per share,
consistently growing
▪ Refocusing completed with sales of Catena and
Regional UK properties
▪ Active year with £257.2m of acquisitions and
£187.2m of disposals
▪ Healthy net initial yield vs. cost of debt ▪ Total accounting return of 8.6% and proposed
dividend of 7.4p per share, up 7.2%
▪ Robust ESG framework and actions ▪ Well positioned, resilient and focussed portfolio
in London and the South East and in major cities in Germany and France
Excess Net Initial Yield over Cost of Debt
1.5% 2.5% 3.5% 4.5% 5.5% 6.5% 7.5% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Liquid Resources (£’m) / Net Initial Yield / Cost of Debt
24
100.3 259.4 30.3 77.5 31 Dec 2018 31 Dec 2019
208.1
/ Cash
/ / Bonds
/ Catena
259.4
CLS Holdings plc Full Year Results 2019
25
CLS Holdings plc Full Year Results 2019
Appendices
▪ CLS Holdings plc is a FTSE 250 property
investment company which has been listed on the London Stock Exchange since 1994
▪ We specialise in owning and managing office
buildings, with a range of lease lengths, in order to achieve stable cash flows
▪ We operate in London and the South East of
the UK, and in the larger cities in Germany and France
▪ We aim to hold, refurbish and develop our
property investments to obtain long-term asset growth
▪ We have established offices in London,
Hamburg and Paris
Up 3.0% in local currency
(31 Dec 2018: £1.9bn)
53% 14% 33% Total Portfolio
/ UK (£1,059.8m) / Germany (667.0m) /France (£285.3m)
Top 10 Shareholders As at 31 December 2019
Mortstedt Family & Charity Trust 51.4% Fidelity Worldwide Investments 9.9% Bengt Mortstedt 6.4% Invesco 4.9% Bank of Montreal 4.7% Schroders 2.5% AXA 1.6% Janus Henderson 1.4% Blackrock 1.0% JP Morgan Chase 0.9% 26
CLS Holdings plc Full Year Results 2019
Appendices
Distributions (£m) Total Shareholder Return Portfolio Value (£bn) EPRA NAV (pence)
/ CLS / FTSE 350 / FTSE RE SS 0.9 0.9 0.9 1.1 1.3 1.5 1.6 1.8 1.9 2.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
95.3 98.3 115.4 126.8 177.4 208.3 245.6 285.6 309.8 329.2
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
100 200 300 400 500 600 700 800 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
11.2 12.3 13.2 15.0 15.9 19.1 23.5 25.9 28.1 30.2
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
27
CLS Holdings plc Full Year Results 2019
Appendices
Our Values
▪ Our tenants, our focus ▪ Agility unlocks opportunity ▪ Openness creates
closeness
▪ Collaboration gets the job
done
Our Purpose
▪ Our purpose is to transform
sustainable, modern spaces that help businesses to grow
Our Vision
▪ To be a leading office space
specialist and a supportive, progressive and sustainably focused commercial landlord
28
CLS Holdings plc Full Year Results 2019
Appendices
Lettable Space
Value of Properties
Vacancy
Percentage of Group’s Property Interest
Contracted Rent
Government and Major Corporations
UK Properties London 33 South East 8 Birmingham 1 Aberdeen 1 Salford Quays 1 Norwich 1 45*
* Norwich, Sidcup and Salford Quays sold Q1 2020
Number of Tenants
Number of Properties
29
CLS Holdings plc Full Year Results 2019
Appendices
German Properties Hamburg 10 Munich 7 Stuttgart 3 Berlin 2 Dusseldorf 2 Dortmund 2 Cologne 1 Freiburg 1 Wiesbaden 1 Bochum 1 30
Lettable Space
Value of Properties
Vacancy
Percentage of Group’s Property Interest
Contracted Rent
Government and Major Corporations
Number of Tenants
Number of Properties
30
CLS Holdings plc Full Year Results 2019
Appendices
French Properties Paris 14 Lyon 5 Lille 3 22*
* Foch (Paris) sold Q1 2020
Lettable Space
Value of Properties
Vacancy
Percentage of Group’s Property Interest
Contracted Rent
Government and Major Corporations
Number of Tenants
Number of Properties
31
CLS Holdings plc Full Year Results 2019
Appendices
1. Valuations performed by Cushman and Wakefield 2. Excludes developments; calculations based on passing rents 3. Excludes developments; calculations based on contracted rents At 31 December 2019 Valuation1 (£m) Valuation in local currency (%) EPRA NIY2 (%) EPRA topped-up NIY3 (%) Vacancy by rent (%) Weighted average unexpired lease term (years) ERV of lettable Space (£m) Contracted rent (£m) Contracted rent (£/sq ft) UK 1,059.8
5.12% 5.35% 4.1% 4.8 64.8 59.3 28.48 Germany 667.0 + 8.4% 4.78% 5.00% 4.3% 4.6 38.7 34.2 11.02 France 285.3 + 3.8% 4.66% 5.21% 3.1% 5.0 16.6 15.8 17.68 Total portfolio 2,012.1 + 3.0% 4.93% 5.21% 4.0% 4.8 120.1 109.3 17.97
32
CLS Holdings plc Full Year Results 2019
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
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. All numbers provided are as at 31 December 2019 unless otherwise stated.