CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 - - PowerPoint PPT Presentation

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CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 - - PowerPoint PPT Presentation

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CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 www.clsholdings.com Disclaimer This document may contain certain forward -looking statements . By their nature, forward-looking statements involve risk and uncertainty

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CLS Holdings plc

Berenberg UK Corporate Conference 28 March 2019

www.clsholdings.com

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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 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 or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they 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 2018 unless otherwise stated.

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Contents

01 Overview 06 Portfolio 13 Financials 16 Future 18 Summary 20 Questions

Fredrik Widlund – CEO John Whiteley – CFO Simon Wigzell – Head of Group Property

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Overview

CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 01

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CLS Holdings plc

Overview

  • CLS Holdings plc is a FTSE 250 property investment

company which has been listed on the London Stock Exchange since 1994

  • At 31 December 2018 the Company had shareholders’

funds of £1.1bn, and a property portfolio in the UK, Germany and France valued at £1.9bn

  • 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

CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 02

TOP 10 SHAREHOLDERS

Mortstedt Family & Charity Trust 51.4% Fidelity Worldwide Investments 9.6% Bengt Mortstedt 6.5% Bank of Montreal 6.1% Invesco 5.0% Schroders 2.5% AXA 1.7% Janus Henderson 1.2% JP Morgan Chase 1.0% NW Brown Group 0.9%

PROPERTY VALUE BY GEOGRAPHY

UK (£982.3m) 51% Germany (£629.4m) 33% France (£308.1m) 16%

£1.9bn

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CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 03 1992 2 1994 2 2009 2000 2005 Founded

Mortstedt family founded the Company (Properties in UK & Sweden)

Listing

Listed on the London Stock Exchange

Return of Capital

£48m distributed to shareholders

Acquisition

Acquired Citadel Holdings with 23 French properties (Properties in UK, Sweden & France)

Germany

Began to invest in Germany (Properties in UK, Sweden, France & Germany)

2012 2013 2016 2017 2017 Retail Bond

Issued £65m retail bond on the London Stock Exchange

Regional UK

Acquired a regional UK portfolio for £123m

Sweden Exit

Sold last asset in Sweden (Properties in UK, Germany & France)

Vauxhall Square

Sold Vauxhall Square for £144m

German Portfolio

Acquired a German portfolio for £135m

Timeline: 27 years of growth

CLS’s History

2006 to 2008 Sales

Sold 52% of portfolio ahead of financial crash

2019 CLS Today

Well-established and diversified office portfolio in UK, Germany & France

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Create value, reinvest for the future

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Strategy

We acquire the right properties… …we secure the right finance… …we deliver value through active management and cost control

We reward shareholders, customers and employees

  • Distribute half of our

EPRA earnings and reinvest remaining

  • Our tenants are our

customers, we understand their needs

  • Reward employees for

their work and loyalty

  • Invest in offices in UK,

Germany and France

  • Non-prime, good

transport links, larger European cities

  • Multi-let to spread risk
  • Bank loans to mainly

SPVs, non-recourse

  • Primarily fixed rate
  • Up to 7 year terms from

broad range of lenders

  • In-house asset and

property management

  • Invest to improve our

assets

  • Effective cost control

and high occupancy

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Senior Management

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Leadership

Fredrik Widlund – Chief Executive Officer

Fredrik joined in 2014. His previous experience includes senior roles in business leadership, property and finance and prior to joining CLS he worked for GE Capital Real Estate and Shell.

John Whiteley – Chief Financial Officer

John joined in 2009. He is a Chartered Accountant and his previous experience includes senior finance roles with Doughty Hanson Real Estate, Great Portland Estates and E&Y.

Simon Wigzell – Head of Group Property

Simon joined in 2010. He is a Chartered Surveyor and previously worked in senior roles for Warner Estate, BAA Lynton and Cushman Wakefield.

Dan Howson – Head of UK

Dan joined in 2010. He is a Chartered Surveyor with experience at Warner Estate and Henry Boot Developments following service as an officer in the British Army.

Rolf Mensing – Head of Germany

Rolf joined in 2006. He is a Chartered Surveyor with experience at the Quandt Family Office and DIC Asset AG, a listed property company in Germany.

Philippe Alexis – Head of France

Philippe joined Citadel Holdings plc in 1997. He is a Chartered Surveyor. Prior to joining CLS he worked for several banks in charge of international property finance in Europe and the US.

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Portfolio

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Markets

United Kingdom

  • Brexit uncertainty creates
  • pportunities
  • Resilient office market
  • Liquid and transparent

market in London

  • Conversion of office to

residential restricting supply

Germany

  • Well-diversified strong economy
  • Low vacancy and limited supply

driving rental and capital growth

  • Record level of investment activity
  • Low supply of new build offices;

mainly pre-let

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Portfolio

France

  • Political measures forecast to have

a positive impact on growth

  • Buoyant investment market across

both Paris and the regions

  • Occupational market remains

strong

  • Low supply of new build offices;

mainly pre-let

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United Kingdom

VALUE OF INVESTMENT PROPERTIES

£954.9m

LETTABLE SPACE

2.6m sq ft

PERCENTAGE OF GROUP’S PROPERTY INTERESTS

51%

VACANCY RATE

4.0%

GOVERNMENT AND MAJOR CORPORATES

68.3%

VALUE OF INVESTMENT PROPERTIES IN LONDON

£877.2m

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Portfolio

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Germany

VALUE OF INVESTMENT PROPERTIES

£629.4m

LETTABLE SPACE

3.2m sq ft

PERCENTAGE OF GROUP’S PROPERTY INTERESTS

33%

VACANCY RATE

4.2%

GOVERNMENT AND MAJOR CORPORATES

40.8%

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Portfolio

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France

VALUE OF INVESTMENT PROPERTIES

£308.1m

LETTABLE SPACE

0.9m sq ft

PERCENTAGE OF GROUP’S PROPERTY INTERESTS

16%

VACANCY RATE

2.3%

GOVERNMENT AND MAJOR CORPORATES

49.4%

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Portfolio

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Portfolio

TOP 10 TENANTS (33% of contracted rent) CONTRACTED RENT (£109.6m)

Resilient tenant base

Government (28% by rent) Major corporates (29%) Other (43%)

1. Secretary of State (UK) 2. National Crime Agency (UK) 3. Roehampton University (UK) 4. City of Bochum (Germany) 5. BAE Systems (UK) 6. General Mills (UK) 7. Kaufland (Germany) 8. Honda (UK) 9. Bosch (Germany) 10. COLT Telecoms (France)

689

Tenants

4.3 4.8 2.6 4.2 5.4 4.9 5.4 5.3 UK Germany France Group To first break To end of lease

AVERAGE UNEXPIRED LEASE TERM (Years)

£23.14 £11.41 £19.41 UK Germany France

AFFORDABLE RENTS (per sq ft)

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Portfolio

Group statistics

Government (30%) Business services (23%) IT (7%) Manufacturing (13%) Finance (5%) Medical services & healthcare (3%) Education & training (1%) Media and publishing (2%) Telecomms (1%) Charitable (1%) Other (14%)

OFFICE SECTORS BY REVENUE PROPERTY USE BY REVENUE

Office (89%) Student (5%) Hotel (4%) Food retail (2%) 4.5% 4.4% 3.9% 2.8% 4.4% 1.6% 3.1% 2.9% 5.8% 3.8% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Group KPI 5.0%

VACANCY

0% 2% 4% 6% 8% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Net initial yield Weighted average cost of debt

EXCESS OF NET INITIAL YIELD OVER COST OF DEBT

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Financials

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Consistent & strong returns

Financials

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2.8 4.3 6.5 6.5 6.6 7.7 8.5 12.3 12.6 13.1 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

EPRA EPS (pence)

83 95 98 115 127 177 208 246 286 310 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

EPRA NAV (pence)

6.0 11.2 12.3 13.2 15.0 15.9 19.1 23.5 25.9 28.1 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

DISTRIBUTIONS (£m) TOTAL SHAREHOLDER RETURN

  • 100

200 300 400 500 600 700 800 900 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CLS FTSE 350 FTSE Real Estate Super Sector 0.81 0.88 0.90 0.93 1.13 1.31 1.46 1.57 1.80 1.92 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

PORTFOLIO VALUE (£bn)

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Weighted Average Cost of Debt

2.43%

(31 Dec 2017: 2.51%) Interest Cover

3.8x

(2017: 3.9x) Fixed Rate Debt

79%

(31 Dec 2017: 74%) Balance Sheet LTV

36.7%

(31 Dec 2017: 36.9%) Unencumbered Properties

£284m

(31 Dec 2017: £247m)

Low cost, well-spread debt

Financials

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DEBT PROFILE

Fixed rate (79%) Floating rate - Capped (3%) Floating rate - Unhedged (18%)

5.80 4.00 4.27 4.06 3.64 3.64 3.40 2.91 2.51 2.43 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

COST OF DEBT (%)

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Future

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Create value, reinvest for the future

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Future Asset Management

Maintain occupancy levels below 5% Capture rental growth Rolling refurbishment programme Sustainability initiatives

Disposals

Assets with low yield and limited potential If risk/reward ratio is unfavourable Properties that are too small to have a meaningful impact Identified circa £150m sales in the medium term

Acquisitions

Disciplined and

  • pportunistic approach

High yielding, multi-let, non-prime office with good transportation links and asset management

  • pportunities

Return on equity above 12% at average 50% LTV Target to be a net acquirer in the medium term

Developments

Assets with significant

  • pportunities for rental

and capital growth Target 20% profit on cost Obtain planning and capture upside through sales Vauxhall, Maidenhead and Stuttgart properties planned to be developed 2020 - 2022

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Summary

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Robust and disciplined growth

  • Benefiting from geographical, portfolio and tenant diversification
  • Robust operational cash flow supports a progressive dividend
  • Vacancies down in all countries in 2018; strong letting pipeline
  • Repositioning portfolio through acquisitions and disposals
  • Existing portfolio offers good value-adding opportunities
  • Strong balance sheet and substantial liquid resources allow us to take advantage of opportunities
  • Well positioned in the three largest economies in Europe to continue to deliver long-term shareholder value

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Summary

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Questions

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