In This Article:
Release Date: April 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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CLS Holdings PLC (STU:838) achieved strong leasing momentum in the UK and Germany, marking the best performance since 2015.
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Net rental income increased by 0.9% overall and 3.8% on a like-for-like basis, driven by indexations, new lettings, and other income.
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The company completed all 2024 refinancings and made significant progress on 2025 refinancings, with 42 million completed in Q1.
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CLS Holdings PLC (STU:838) has a diversified tenant base with over 50% of rent being index-linked, providing resilience in income.
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The company is actively reducing vacancy rates, with significant leasing activities and refurbishments underway to enhance property value.
Negative Points
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Valuations for the full year were down 5.8%, with significant declines in the UK market.
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The dividend was halved to 5.28p per share to retain funds for future opportunities, reflecting increased financing costs.
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The overall vacancy rate increased to 12.7% due to completed refurbishments, despite underlying vacancy falling to 10.6%.
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CLS Holdings PLC (STU:838) faces higher financing costs, which have impacted EPRA earnings, down 10.7% year-on-year.
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The UK market still has high vacancy rates, particularly in key properties like Prescott Street and The Code in Vauxhall.
Q & A Highlights
Q: Can you explain the refinancing strategy, particularly regarding the Springview student disposal and its impact on debt costs? A: Andrew Kirkman, CFO, explained that the Springview student disposal was a strategic move that allowed CLS Holdings to restructure financing, reducing LTV by 2.8% to 47.9% and decreasing debt costs by 20 basis points. This was achieved while maintaining book value, making it a beneficial deal for the company. The refinancing strategy has helped stabilize financing costs, which are expected to decrease further over the next couple of years.
Q: Could you provide more details on the dividend cut and the timing of capital deployment opportunities? A: Andrew Kirkman, CFO, stated that the dividend cut is intended to fund new opportunities, including three pre-let projects already underway. Frederick Vidland, CEO, added that the company is actively working on these projects, with some already on site, and expects to deploy cash immediately. The Citadella project in the UK is also progressing, with planning applications expected soon.
Q: Is the leasing at Prescott Street slower than expected, and how does it compare to the broader market? A: Frederick Vidland, CEO, acknowledged that UK vacancy is higher than in other regions, but emphasized that Prescott Street only completed in Q1 2024. The building is of high quality, and leasing is expected to progress soon. The market for smaller tenants, which Prescott Street targets, may differ from larger pre-leasing deals seen in the city.