LSE-listed CLS Holdings saw its pre-tax profits increase by 91.2% to £191 mln (€213 mln) in 2017, compared to £100 mln (€112 mln) the previous year. The growth was primarily due to the sale of the Vauxhall Square site in central London to Chinese developer R&F Properties.
The pan-European office landlord completed the sale of Vauxhall Square to R&F for £144 mln (€161 mln) in April 2017. The 1.8-hectare regeneration site has planning permission for a residential-led, mixed-use scheme of about 139,000 m2.
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A FTSE 250 property investment company, CLS manages a £1.8 bn (€2 bn) portfolio, mainly consisting of office property, in the UK, Germany and France offering geographical diversification with local presence and knowledge.
The company carried out a total of £440 mln (€492 mln) of investment and sales transactions in 2017. Including Vauxhall Square, CLS finalised £170 mln (€190 mln) of disposals in the UK; £25 mln (€28 mln) in Germany and £7 mln (€7.8 mln) in France, at an average net initial yield of 3.3%.
CLS acquired properties for £188 mln (€210 mln) in Germany and £50 mln (€56 mln) in the UK at an average net initial yield of 6.5%. The largest acquisition was of 12 assets in Germany from Swiss-listed property group Züblin Immobilien. The portfolio comprised 89,521 m2 of multi-let office space, with a current occupancy rate of 89%.
The company completed the extensions of 15 leases with the UK Department for Work and Pensions, securing annual rentals of £6.6 mln (7.4 mln) and enhancing the aggregate value of the properties by £21 mln (€23 mln). A further 158 lease events secured an annual rental volume of £12.8 mln (14.3 mln).
The portfolio vacancy rate stood at of 5.8% at end-2017, compared to 2.9% the previous year. For 2017, the vacancy rate for acquisitions and disposals was 0.7% and recent refurbishments came to 1.5%. The developments at 16 Tinworth Street, London and Ateliers Victoires, Paris were competed during the year, with a further £16 mln (€18 mln) of property refurbishment expenditure.
CLS also financed or refinanced £222.1 mln (€248 mln) of debt, and repaid an amortising bond which had a coupon of 10.765.
Comment
'For CLS, 2017 was a transformational year, which saw the group realise the value that had been built up in Vauxhall Square, whilst making significant acquisitions in Germany, and introducing dividends as a means of distributing cash to shareholders,' said Henry Klotz, executive chairman of CLS. 'With this strong set of results, we are delivering on our promise to create sustainable, long-term shareholder value through owning and actively managing high-yielding office properties in key European cities.'
