REG - CLS Holdings PLC - Trading Update

CLS HoldingsAnnouncement

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RNS Number : 7830J  CLS Holdings PLC  02 December 2025

CLS Holdings plc ("CLS", the "Company" or the "Group")

Trading Update for the period 1 July 2025 to 1 December 2025

 

 

Fredrik Widlund, Chief Executive of CLS, commented:

 

"Since the half-year, we have made further progress against our four strategic
priorities: improving occupancy, executing sales to reduce LTV, completing our
2025 refinancings, and investing in our portfolio.

 

"Although broader economic and political developments have slowed down leasing
activity and decision making since the summer, leasing activity continues to
hold up well, with the same value of letting transactions as last year and
rental growth continuing across our markets and we are pleased to have
recently signed several significant leases, including at the Artesian, Prescot
Street, with others well progressed.

 

"We are over halfway through our £400 million sales programme and are making
progress on further disposals which we expect to conclude in the coming
quarters. With 2025 representing a peak year for debt maturities, we have
successfully refinanced or repaid the £373 million due, further strengthening
our balance sheet and delivering a more evenly spread debt profile for the
years ahead.

 

"Demand for high-quality office space continues to be evident, and we remain
committed to delivering long-term shareholder value by investing and focusing
on well-located, flexible properties in strong locations."

 

A summary of our key operational and financial metrics is set out below:

 

Vacancy, lettings and occupancy (as at 30 September 2025)

In the first three quarters of 2025, CLS' transaction levels remained
resilient, with letting activity in-line with 2024, albeit with lower activity
than was initially targeted, from the continued economic and political
backdrop across our countries, with the UK particularly noteworthy.

 

Between 1 July and 30 September 2025, we signed 19 leasing deals securing
£2.6 million of annual rent at 3.5% above ERV. The most significant
transactions were the renewal of a lease at Rudesheimer Strasse, Munich for
22,814 sq. ft. (2,119 sqm) with TUV and at New Printing House Square, London,
where Pharmica upsized from 4,153 sq. ft. (386 sqm) to 8,395 sq. ft. (780
sqm).

 

In October, we announced an eight-year index-linked lease for 158,230 sq. ft.
(14,700 sqm) at Gotic Haus, Westfalendamm, Dortmund, with a government
department and in November, we signed leases at the Artesian, Prescot Street,
London with a serviced office provider for 13,100 sq. ft. (1,217 sqm) for 10
years and with a social media technology company for 6,221 sq. ft. (578 sqm)
for five years and at New Printing House Square, London we signed a lease for
4,172 sq. ft. (388 sqm) until 2029 with an environmental consulting company.

 

As these transactions were signed after 30 September 2025 they are excluded
from the deals and vacancy statistics in this press release, but on a proforma
basis we expect them to reduce Group vacancy by an additional 1.2%.

 

Between 1 January 2025 and 30 September 2025, we signed 71 deals securing
£10.1 million of annual rent at 0.3% above ERV. Excluding two short-term
strategic renewals at New Printing House Square, to fit with the block lease
date for development in 2029, leases were signed at 6.8% above ERV (1 January
2024 to 30 September 2024: 81 deals securing £10.1 million of annual rent at
5.5% above ERV).

 

Index-linked lease increases for the 9-months to 30 September 2025 were 2.4%
in Germany, 1.5% in France and 3.5% at Spring Gardens in the UK. Excluding the
two strategic lettings at New Printing House Square renewals were 3.8% ahead
of previously contracted rent.

 

From 30 June to 30 September 2025, our total vacancy fell marginally to 15.0%
(30 June 2025: 15.1%) as a result of new leases being signed in the UK.

·      EPRA vacancy rates (Based on 30 June 2025 ERVs):

 Group:    15.0% (30 June 2025: 15.1%)
 UK:       20.8% (30 June 2025: 21.5%)
 Germany:  9.5% (30 June 2025:   9.4%)
 France:   9.9% (30 June 2025:   8.7%)

 

Recently, two larger tenants in Germany unexpectedly filed for insolvency: one
of which has now terminated their lease, while the other has downsized after
being acquired. These letting changes took effect in November and, on a
proforma basis, will increase vacancy in Germany by over 2% and Group vacancy
by 0.9%.

 

Disposals

We completed the sales of Les Reflets in Lille and Jarrestrasse in Hamburg in
August and September respectively, for a combined sales price of £24.3
million. The sale of Les Reflets marks our exit from Lille such that that our
French portfolio is now focused in France's two largest property markets,
Paris and Lyon. At 30 September 2025, due to these sales, LTV had fallen
further to 48.8%.

 

Only £190 million of our £400 million sales programme is left to execute.
The remaining properties have been marketed with several bids received. These
bids have either been accepted or are in active negotiations.

 

We are targeting to exchange before the end of the year for some of these
sales with completion in early 2026. Depending on progress with year-end LTV
reduction, further sales may also be explored.

 

Liquid resources, financing and rent collection

2025 was a peak year for refinancing activity with £373.7 million of debt
maturing spread across 12 loans. All 2025 refinancing activity is on track
with all maturing debt either refinanced, credit approved or repaid. For 2026
onwards, refinancing activity is more evenly spread with less than £200
million expiring in any one year.

 

As at 30 September 2025, our average cost of debt decreased slightly to 3.67%
(30 June 2025: 3.75%) as a result of refinancings and the reduced cost of
floating debt from lower central bank rates. 76% of total debt was fixed or
subject to interest rate caps.

 

The Group's balance sheet remains resilient with cash and cash equivalents of
over £53 million as at 30 September 2025 and £43 million of undrawn
facilities.

 

By close on 1 December 2025, we had received 97% of Q4 contractual rents due
(12 November 2024: 96%) and for the first three quarters of 2025, we have now
received 99% of contractual rents due (2024: 99%). The above German
insolvencies did not significantly impact rent collection.

 

Refurbishments and developments

All office refurbishment works at The Brix in Essen have completed with the
final phase to be handed over to the City of Essen in January. At Debussy in
Paris, all necessary permits and approvals have been obtained such that works
can commence for the conversion of the property into serviced apartments,
pre-let to Edgar Suites under a 12-year lease. Good progress has been made
towards an all-residential scheme at Citadel Place (Spring Gardens), Vauxhall
to coincide with the NCA's departure from this site in September 2026. The
planning application is expected to be submitted early 2026 and, given the
size of the scheme, we are progressing discussions with residential developers
to ensure the successful execution and delivery of the scheme.

 

Sustainability

In line with our 2030 Net Zero Carbon Pathway, we are on track to have reduced
our landlord energy use and scope 1 & 2 GHG emissions by more than 2%
(like-for-like) by the end of 2025. These savings will be supported by several
key net zero carbon and energy efficiency projects across the portfolio,
including the replacement of the gas-powered heating system with a heat pump
solution at Radius House in Watford, completed earlier this year. Design work
is ongoing to deliver further heating decarbonisation projects in 2026. Other
areas of focus include the completion of the roll out of smart water meters
and leak detection systems in both Germany and the UK whilst we continue to
deliver our biodiversity net-gain plan.

 

Our sustainability performance was recognised again, achieving EPRA
Sustainability Best Practices Recommendations Gold award whilst we maintained
our GRESB award of 4 stars.

 

Governance

As announced in October, Harry Stokes has been appointed as our new Chief
Financial Officer with effect from 5 January 2026. We look forward to
welcoming Harry in the new year when a handover will be facilitated with
Andrew Kirkman. Johannes Conradi joined the Board in September as an
independent Non-Executive Director to strengthen the Board's German real
estate market experience given that Elizabeth Edwards, having served her term
of office, will step down at the end of 2025. We wish Andrew and Elizabeth all
the best with their future endeavors and thank them for the excellent
contribution to CLS during their time with the company.

 

 

 

-ends-

 

 

For further information, please contact:

CLS Holdings plc

(LEI: 213800A357TKB2TD9U78)

www.clsholdings.com (http://www.clsholdings.com/)

Fredrik Widlund, Chief Executive Officer

Andrew Kirkman, Chief Financial Officer

+44 (0)20 7582 7766

 

Panmure Liberum

Jamie Richards

David Watkins

+44 (0)20 3100 2000

 

Berenberg

Carl Gough

Harry Nicholas

+44 (0)20 3207 7800

 

Edelman Smithfield (Financial PR)

Alex Simmons +44 7970 174 353

Hastings Tarrant +44 7813 407 665

cls@edelmansmithfield.com (mailto:cls@edelmansmithfield.com)

 

 

Forward-looking statements

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.

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