Annual Results 2013 1 Contents Overview Financials Portfolio - PowerPoint PPT Presentation

Annual Results 2013 1

Contents Overview Financials Portfolio Looking forwards Summary Henry Klotz John Whiteley Simon Wigzell Executive Vice Chairman Chief Financial Officer Head of Group Property 2

About CLS Property investments by value • Top TSR performance since 2008 in UK listed property sector: 31 December 2013 324.3% (27.2% pa compound) France 21% • Specialist in high-yielding offices and opportunistically adding value Germany 18% • Cash generative: high yield (7.0%) vs low cost of debt (3.64%) Direct 5% • Rental income £85.6m Sweden Property portfolio £1.1bn Indirect 3% UK 53% • Management strong alignment of interest via shares 3

Achievements in 2013 A Good Time to be Buying Property • Healthy growth in NAV • Acquisitions: £165.3m of acquisitions at a yield of 11.6% • Disposals: £26.9m 1 , at a yield of 3.3% • Good progress on developments at Vauxhall Square, Spring Mews and Clifford’s Inn – Including conditional exchange with student operator at Vauxhall Square • Low cost of debt maintained • 1.6m shares issued at 0.5% discount to prevailing share price • Delivered Total Shareholder Return of 80.3% 1. 100% value 4

Contents Overview Financials Portfolio Looking forwards Summary 5

Financial Highlights In Good Health • EPRA NAV up 9.9% to 1,268.4p (2012: 1,154.4p) • Profit after tax up 35.3% to £63.2m (2012: £46.7m) • Interest cover 3.2x (2012: 3.5x) • Low cost of debt 3.64% (2012: 3.67%) • Issue of innovative institutional secured notes • TSR 80.3% in 2013; 324.3% in 6 years • Full year distributions up 13.5% like-for-like Proposed £10.0m buy-back at 1 in 66 at 1,495p 6

Strong NAV Growth Movement in EPRA NAV Pence 1,320 17.3 10.5 1,268.4 1,280 6.6 26.3 -17.8 -9.1 80.2 1,240 1,200 1,154.4 1,160 1,120 1,080 1,040 1,000 1 Jan 2013 Underlying Reclassify Bond / FX Revaluation Write off of BLD 31 Dec 1 Jan Underlying Reclassify Bond / FX Property Purchase BLD 31 Dec profit Catena equity sales of properties purchase impairment 2013 2013 profit Catena equity sales revaluation costs impairment 2013 costs before costs 7

Strong Income Generation Profit after Tax £m 80 2012 2013 63.2 60 46.7 40 28.8 28.5 1 16.2 20 14.9 14.1 6.3 2.1 - - 0 -0.2 -0.4 -0.4 -20 EPRA Profit Property Gain on Gain / (loss) Reclassify Other Profit after tax after tax revaluation disposals on sale of Catena bonds 1. Includes unfavourable £2.4m movement in FX 8

Very High Liquidity Movement in Liquid Resources £m 400 Cash Corporate Bonds 102.1 350 300 47.0 250 -13.7 17.6 224.9 20.4 199.2 4.0 200 -165.3 -34.6 -3.2 97.6 150 129.8 258.2 258.2 224.9 215.4 100 198.4 195.0 195.0 195.2 195.2 127.3 50 69.4 0 At 1 Jan From Tender buy- Net new Property Share Sale of Capital Other Bond At 31 Dec 2013 operations back loans acquisitions issues properties expenditure revaluation 2013 9

Cash Management via Corporate Bonds • Portfolio sold in August to finance acquisition of Neo portfolio • Reinvested into 21 bonds from 21 issuers valued at £69.4 million • ROCE since late 2008: 88.8% • Return in 2013: 10.8% • Running yield 7.8% • Income £5.4m pa 10

Debt Profile As at 31 December 2013 £m 250 Amortisation Bullet Repayments 200 2015: 4 loans 2016: 2 loans account for £105m 150 • Swedish bond • Loan on a building let until 2026 100 50 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 11

Diverse Financing Strategy to lower risk • Spread risk Hedging of Finance – 22 banks (73%) – 2 unsecured bonds (12%) – 1 secured note (10%) – 1 debenture (5%) 29% 41% 30% Fixed Capped – Ring fencing model • 70% fixed or hedged • 71% floating rate Hedged • Weighted avg. cost of debt 3.64% (2012: 3.67%) Floating • Balance sheet LTV 52.8% (2012: 52.5%) 12

Contents Overview Financials Portfolio Looking forwards Summary 13

Property Portfolio Overview Occupiers by sector • Diversified investment portfolio, primarily in major European cities: – 469 customers in 109 properties (2012: 71) Govt. Other – 544,000 sqm 1 (2012: 424,000 sqm) 50% 28% – Cost-effective rents • 60% of rents indexed • Secure income: 72% from governments & major corporates Major corporates • WAULT 7.0 years 22% (5.8 years to first break) • Cash generating investments = Core activity Developments <10% portfolio value 1. Excludes developments 14

Actively Managed Portfolio • In-house property management – +150 asset management transactions in the year – Successful integration of 129,150 sqm acquisitions • Low vacancy rate of 4.4% vs European office average of over 9.7% (2) • Rented in line with market rates with growth potential, especially in UK Rented in line with market rates (1) (£m pa) 25.0 Rent expiring Current ERV of rent expiring 20.0 15.0 10.0 5.0 0.0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Later 15 Source: 1. CLS Holdings plc 2. JLL

Property Acquisitions 2013 Good Time to be Buying • £165m invested in 42 properties • Highly cash generative – blended NIY 11.6%; 4.0% avg cost of debt • Low average rent: £148 psm • Low average capital value: £1,277 psm • Looking for more purchases Price Capital WAULT WAULT No of Area Rent Rent N.I.Y. (£m inc Value to expiry to break Properties (sqm) (£m) (£psm) (%) costs) (£psm) (years) (years) Neo 34 106,762 15.1 141.9 123.7 12.2 1,161 7.2 4.8 London 7 15,251 3.0 188.7 29.5 9.9 1,907 6.2 4.2 UK 41 122,013 18.1 147.7 153.2 11.8 1,254 7.0 4.7 Germany 1 7,135 1.0 148.1 12.1 8.9 1,668 1.8 1.8 Total 42 129,148 19.1 147.8 165.3 11.6 1,277 6.8 4.6 16

Neo Portfolio • Receivership sale of 34 properties across the UK • Purchase price including costs: £123.7 million Scotland • NIY: 12.23% Aberdeen (x2), Dundee (x2), Edinburgh, Paisley • Rent: £15.1 million, 66% index-linked • 99% Government occupied Yorkshire & North East • 14 Government departments in occupation Billingham, Redcar, Bradford (x2), Rotherham • Asset management opportunities encouraging Midlands Birmingham, Norwich, Peterborough, Expiry Profile North Wales & North West Bedford, Northampton, Wolverhampton As at end Dec 2013 Manchester (x2), Birkenhead, Chester, St Helens, St Asaph (Clwyd) 5-6 years 6% 3-4 years South Wales & South West 13% South East Cardiff (x2), Plymouth, Bridgewater, Chippenham, Swansea, Acton, Basildon, Bromley, Hayes, Southampton 0-2 years Financed December 2013: 13% • £80 million @ 4.17% >6 years • 9 years (partially amortising) 68% 17

Investment Property Portfolio EPRA Contracted Revaluation Net Initial Vacancy Capital At 31 Rent Valuation in local Yield by rent WAULT Rent Value 1 December 2013 £m £m currency 2 % % (Years) £ psm £ psm London ñ ñ 3.1% 29.9 497.9 5.8 3.2 8.0 216 3,119 Neo 15.2 119.9 ò 3.2% 11.9 0.9 7.9 146 1,124 Total UK 45.1 617.8 ñ 1.9% ñ 7.1 2.4 8.0 186 2,266 France ò 3.6% 18.0 240.6 6.6 10.6 4.8 206 2,495 Germany ò 0.2% 16.2 214.4 6.9 3.5 8.3 110 1,408 Sweden 6.3 60.1 ò 2.3% 8.4 1.7 3.4 144 1,325 Total ñ 0.1% ñ 85.6 1,132.9 7.0 4.4 7.0 165 1,988 portfolio 1 Excludes development sites: Spring Mews and Clifford’s Inn 18 2 £7.9m purchase costs written off for 2013 purchases, average 5%

Movement in Rental Income £m 90 85.6 85 80 76.0 1.9 1.2 75 7.5 -0.6 -0.1 70 66.1 65 60 Rental Acquisitions Disposals Indexation Lettings & FX Rental Contracted Income 2012 Expiries Income 2013 Rent Dec 2013 19

Movement in Investment Properties Portfolio Value £m 1,150 10.4 9.3 1,132.9 24.4 0.3 -11.3 165.3 1,100 1,050 1,000 950 934.5 900 1 Jan Additions Development Refurbish Disposals Revaluation FX 31 Dec 2013 2013 20

Vauxhall & Nine Elms Central London’s largest regeneration Spring Mews Vauxhall Square 21

Vauxhall Regeneration Intense Activity Wanda Berkeley Group US Embassy 5 star hotel & residential 2 schemes Dutch Embassy Spring Mews Possible Chinese Embassy TfL Station upgrade Barratt / Sainsbury St Modwen BT Vauxhall Square 22

Adding Value Vauxhall Square, SW8 - First deal agreed Gross internal area 143,000 sqm • Section 106 signed, full consent in place • 520 apartments – 410 private in 2 x 50 storey towers, 110 affordable homes • 22,732 sqm offices; 3,119 sqm of retail; 3,777 sqm multi-screen cinema • 278 bedroom hotel, 123 bedroom suite hotel – Four-star hoteliers short-listed • 359 student bedrooms – Exchanged (conditional) with student operator to build and manage – Attractive terms, no Group cash involved; commence 2015 • Development cost c.£500m 23

Adding Value Spring Mews, SE11 - On site Gross internal area 20,800 sqm • 378 student rooms; 22 later phase – Heads of Terms agreed with university: 210 rooms, 10 year deal • 93 bedroom suite hotel – IHG management deal signed, Staybridge brand • 245 sqm retail space; 1,000 sqm offices • Started on site Q4 2012 • Completion late 2014 • Development cost c.£55m ex. land • Estimated rental value £5.5m 24