CLS HOLDINGS PLC

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

ANNOUNCES ITS HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS TO 30 JUNE 2025

 

Strong progress made with strategic priorities of lettings, sales and refinancings

 

CLS is a leading office space specialist and a supportive, progressive and sustainably focused commercial landlord, with a £1.75 billion portfolio in the UK, Germany and France, offering geographical diversification with local presence and knowledge. For the half-year ended 30 June 2025, the Group has delivered the following results:

 

	30 June 2025	31 December 2024	Change (%)
EPRA Net Tangible Assets ("NTA") per share (pence) 1	209.5	215.0	(2.6)
Statutory NAV per share (pence) 1	192.3	197.3	(2.5)
Contracted rents (£'million)	104.5	108.9	(4.0)

 

	30 June 2025	30 June 2024	Change (%)
Net rental income	53.3	58.9	(9.5)
(Loss) after tax (£'million)	(24.4)	(61.1)	Nm2
EPRA Earnings per share ("EPS") (pence) 1	4.0	4.8	(16.7)
Statutory EPS from continuing operations (pence) 1	(6.1)	(15.4)	Nm2
Dividend per share (pence)	1.30	2.60	(50.0)

¹  A reconciliation of statutory to alternative performance measures is set out in Note 4 to the condensed Group financial statements

² Nm = Not meaningful

 

Fredrik Widlund, Chief Executive Officer of CLS, commented:

"We continue to make progress reshaping the business, creating a more focused portfolio of higher-quality, faster-growing properties to drive earnings growth. Our main priorities in the first half of 2025 included increasing letting momentum, reducing leverage through asset sales, meeting refinancing targets, and investing strategically in our properties to unlock their potential.

 

"Lettings in the first half increased by 17% compared to the same period last year, underscoring the significant opportunity within our existing portfolio. Positive leasing momentum has further accelerated post-period end, a trend we expect to continue through the remainder of the year.

 

"CLS has completed or unconditionally exchanged property sales totalling £143 million, with further disposals planned in line with our stated strategy. These asset sales and refinancing efforts have begun reducing Group leverage, and we anticipate further reductions in the second half of 2025.

 

"We enter the second half with clear strategic direction and cautious optimism, supported by improving market fundamentals, a robust leasing environment and a somewhat more stable macroeconomic outlook."

OPERATIONAL HIGHLIGHTS

·      Net rental income decreased by 9.5% to £53.3 million (30 June 2024: £58.9 million) as a result of property sales and lease expiries, partly offset by higher income from new lettings and renewals, and indexation

·      In the first half of 2025, the sales of Spring Mews Student, Vauxhall and Grafelfing, Munich for £119.1 million were completed

·      By the end of August 2025 two further sales for £24.3 million in Germany and France will have completed. Marketing has commenced on a further £190 million of sales to reduce Group LTV further and invest in existing portfolio opportunities

·      Completed 52 lease events (30 June 2024: 58) securing £7.5 million (30 June 2024: £6.4 million) of annual rent 0.8% below ERV. Excluding two lease renewals at New Printing House Square, leases were signed 7.0% above ERV

·      Leasing momentum has picked up since the half-year with leases signed at The Coade, Vauxhall for two floors for 6,170 sq. ft (573 sqm) and at Office Connect, Cologne for 23,304 sq. ft (2,165 sqm). We are currently under offer for a lease renewal at Pierre Valette, Paris for 116,013 sq. ft (10,778 sqm) and two and a half floors at Artesian, London for 32,659 sq. ft (3,034 sqm), and discussions are well-advanced for further government leases for over 161,000 sq. ft (15,000 sqm) in Germany. These leases represent £6.0 million of rent and would reduce vacancy on a pro forma basis by 2.2%

·      The anticipated expiry of leases to support the repositioning of New Printing House Square for future development impacted vacancy rates which rose to 15.1% (31 December 2024: 12.7%). We have made significant progress on new leases for the building, which will provide vacant possession in 2029. By end of June 2025, over half of the tenants in New Printing House Square had renewed their leases and we expect lettings to increase further by year-end with 4,242 sq. ft (393 sqm) about to be signed

·      Engagement with potential partners to secure planning and deliver the scheme at Citadel Place have started and the discussions with Lambeth Council are advancing. Works are progressing to plan at The Brix, The Yellow and Debussy in advance of tenant occupation. Planning applications and PDR schemes for four residential conversions are being worked up in the UK

 

FINANCIAL HIGHLIGHTS

·      EPRA NTA down 2.6% primarily as a result of property valuation declines of 1.6% in local currencies with some offset from a 3.6% weakening of Sterling against the Euro

·      Portfolio valuation down 1.6% in local currencies and 0.9% down excluding Spring Gardens as values bottom out in all three countries. Yield expansion and higher vacancies resulted in valuation decreases of 2.2% in the UK, 0.5% in Germany and 3.5% in France in local currencies

·      Loss after tax of £24.4 million (30 June 2024: £61.1 million) principally due to valuation declines on investment properties of £32.3 million (30 June 2024: £82.8 million decline) partly offset by underlying results

·      EPRA EPS down 16.7% to 4.0 pence per share due to lower rental income from sales and expiries, partly offset by lower net finance expense from reduced debt levels and borrowing costs. Statutory EPS of (6.1) pence per share reflects valuation declines for the portfolio

·      Cost reduction programme implemented with targeted annual savings of over £2 million

·      Interim dividend of 1.30 pence per share (30 June 2024: 2.60 pence per share), so as to retain cash to invest in the portfolio and in line with new dividend policy announced in April 2025, to be paid on 2 October 2025

 

FINANCING

·      Weighted average cost of debt at 30 June 2025 down 2 basis points to 3.75% (31 December 2024: 3.77%) due to the repayment of higher cost debt following sales and lower interest rates on floating rate debt. Further marginal reduction in the cost of debt expected in the second half from targeted sales

·      Loan-to-value at 49.2% (31 December 2024: 50.7%) reflecting the positive impact of the sales programme with some offset from valuation declines in the first half. Gross debt of £923.0 million (31 December 2024: £999.2 million) with cash and cash equivalents of £63.9 million (31 December 2024: £60.5 million) and £50.0 million (31 December 2024: £60.0 million) of undrawn facilities. CLS has no interest cover or loan-to-value covenants at a Group level

·      In 2025, completed or had credit approved the major refinancings for 2025 accounting for over 90% of the £364.1 million of debt (excluding amortisation of £9.6 million) maturing across 12 loans. As at 30 June 2025, we had refinanced or repaid £192.3 million of debt across four loans, and by 12 August 2025 a further £118.5 million across two loans was refinanced or repaid and £25.1 million was credit approved across three loans

·      The £25.1 million which was credit approved will be completed in September and the remaining £28.2 million across three loans, which expires in Q4 2025, will be refinanced or repaid by year-end

 

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

·      To deliver our 2030 Net Zero Carbon ("NZC") Pathway, around £6 million of further investment is expected in 2025. This represents the delivery of energy efficiency and carbon reduction projects by year-end. The projects are estimated to save 1,500 tonnes CO₂e per annum, ensuring alignment with our NZC Pathway

·      85% of our managed portfolio is BREEAM In-Use "Good" or above and half of our UK portfolio is EPC A or B

·      Dr Johannes Conradi, former Chairman of alstria office REIT AG and Managing Partner at Blacklake Management, appointed as a Non-Executive Director with effect from 15 September 2025

OUTLOOK

·      The occupational market remains healthy and is showing signs of improvement with increased take-up in the UK and Germany, our two biggest markets, which bodes well for CLS to capture the significant earnings upside from reducing vacancy

·      Investment markets are showing some signs of recovery with increased activity in the UK and France. CLS' sales programme is more than 50% complete, with further sales progress expected by the year-end

 

DIVIDEND TIMETABLE

Further to this announcement, in which the Board declared an interim dividend of 1.30 pence per ordinary share, the Company confirmed its dividend timetable as follows:

 

Announcement Date	13 August 2025
Ex-Dividend Date	4 September 2025
Record Date	5 September 2025
Payment Date	2 October 2025

 

-ends-

 

Results presentation

A presentation for analysts and investors will be held in-person at Panmure Liberum and by webcast on Wednesday 13 August 2025 at 8:30am followed by Q&A. Questions can be submitted online via the webcast.

 

·      Panmure Liberum: Ropemaker Place, 25 Ropemaker Street, London EC2Y 9LY

·      Webcast: The live webcast will be available here:

https://sparklive.lseg.com/CLSHoldings/events/3a65f244-56cb-441a-b611-1f7cf4bd9077/cls-holdings-plc-half-year-results-2025

 

For further information, please contact:

 

CLS Holdings plc

(LEI: 213800A357TKB2TD9U78)

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

 

 

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.

Chief Executive's statement

 

Strong progress made with strategic priorities of lettings, sales and refinancings

 

OVERVIEW

 

We continue to make progress reshaping the business, creating a more focused portfolio of higher-quality, faster-growing properties to drive earnings growth. Our main priorities in the first half of 2025 included increasing letting momentum, reducing leverage through asset sales, meeting refinancing targets, and investing strategically in our properties to unlock their potential. We have completed or unconditionally exchanged on the sale of properties for £143 million and we are launching further sales in line with our stated disposal programme. Sales and refinancing have started to reduce Group leverage, and we will bring this down further in the second half of 2025.

 

Despite some large, expected lease expiries, our lettings in the first half were 17% ahead of the same period last year, highlighting that our greatest opportunity to unlock value is within our portfolio. Positive leasing momentum has accelerated post half-year and we expect this to carry on throughout the rest of the year.

 

The larger lease expiries in the first half resulted in an increase in vacancy to 15.1% (31 December 2024: 12.7%). This was mainly caused by the scheduled expiry of all leases at New Printing House Square in mid-June 2025. By end of June 2025, over half of the tenants had renewed their leases and we expect this rate to increase further by year-end with 4,242 sq. ft (393 sqm) about to be signed. In addition to these renewals, leasing momentum has picked up substantially since the half-year with leases signed at The Coade, Vauxhall for two floors for 6,170 sq. ft (573 sqm) and at Office Connect, Cologne for 23,304 sq. ft (2,165 sqm). We are currently under offer for a lease renewal at Pierre Valette, Paris for 116,013 sq. ft (10,778 sqm), and two and a half floors at Artesian, London for 32,659 sq. ft (3,034 sqm), and discussions are well-advanced for further government leases for over 161,000 sq. ft (15,000 sqm) in Germany. These leases represent £6.0 million of rent and would reduce vacancy on a pro forma basis by 2.2%.

 

Following the significant investments made in recent years to improve the quality of our portfolio, capital expenditure has reduced to £7.4 million for the first half.

 

Over the six months to 30 June 2025, EPRA NTA decreased by 2.6% to 209.5p per share (31 December 2024: 215.0p) mainly from a reduction in property values. Total accounting return per share for the six months was -1.3% (30 June 2024: -8.0%).

 

In the first half of 2025, the sales of Spring Mews Student, Vauxhall and Grafelfing, Munich for an aggregate of £119.1 million were completed. Spring Mews Student was sold for 8% more than 2023 book value which reduced Group LTV, cost of debt and 2025 refinancing risk, and will be marginally earnings accretive as the proceeds were used to pay off expensive debt whilst retaining lower cost debt. By the end of August 2025, two further sales for £24.3 million in Germany and France will have completed. To reduce loan-to-value further, we expect to make more disposals in the second half.

 

RESULTS AND FINANCING

 

The loss after tax for the six months to 30 June 2025 was £24.4 million (30 June 2024: £61.1 million loss), equivalent to a statutory loss per share of 6.1p (30 June 2024: 15.4p loss). The improvement was as a result of: lower revaluation losses of £32.3 million (30 June 2024: £82.8 million); lower expenses £17.5 million (30 June 2024: £18.1 million); and lower net finance expense of £19.2 million (30 June 2024: £20.8 million), partly offset by lower net rental income of £53.3 million (30 June 2024: £58.9 million) due to sales and expiries; other and tax of £2.4 million debit (30 June 2024: £3.1 million credit) and loss on disposal of £6.3 million (30 June 2024: £1.4 million loss). EPRA earnings per share were 4.0p (30 June 2024: 4.8p), 16.7% down on last year.

 

Shareholders' funds decreased in the six months to 30 June 2025 by 2.4% to £765.4 million reflecting property valuation declines.

 

As at 30 June 2025, the Group had cash and cash equivalents of £63.9 million and £50.0 million of undrawn facilities, and our loan book remains substantially at fixed rates with 78% fixed/capped (31 December 2024: 84%). Our weighted average cost of debt decreased to 3.75% (31 December 2024: 3.77%) due to the repayment of higher cost debt following sales and lower interest rates on floating rate debt. Further marginal reduction in the cost of debt is expected in the second half from targeted sales which will be used to pay down higher cost debt. Good progress has been made in relation to 2025 debt maturities such that of the £364.1 million (excluding amortisation of £9.6 million) of debt expiring, only three loans totalling £28.2 million are yet to be refinanced or credit approved. Net debt excluding leasehold liabilities was down by £79.6 million to £859.1 million (31 December 2024: £938.7 million) with loan-to-value lower at 49.2% (31 December 2024: 50.7%) as a result of using disposal proceeds to reduce debt. Interest cover remained high at 1.9 times (30 June 2024: 2.0 times) demonstrating the Group's operating strength and ongoing ability to generate cash.

 

PROPERTY PORTFOLIO

 

At 30 June 2025, the value of the property portfolio, including properties held for sale, was £1,746.2 million, £104.0 million lower than six months earlier. This decrease was as a result of: valuation decreases of £27.6 million excluding tenant incentives; and disposals of £121.6 million, partly offset by investment in the portfolio through capital expenditure of £7.4 million less depreciation of £0.1 million; and foreign exchange gains of £37.9 million.

 

In the first half of 2025, we completed the disposals of Spring Mews Student, Vauxhall and Grafelfing, Munich, and unconditionally exchanged on Les Reflets, Lille which completed in July and Jarrestrasse, Hamburg with completion expected later in August. The sale of Les Reflets marks our exit from Lille such that our French portfolio is focused in France's two largest cities, Paris and Lyon. In aggregate, the four properties had a net initial yield of 5.1% and sold for a total of £143.4 million, 3.5% below 31 December 2024 valuations.

 

As previously announced, to reduce our loan-to-value, we are targeting further disposals of up to £190 million, in addition to the disposals already completed or about to complete.

 

In the six months to 30 June 2025, the valuation of the property portfolio fell by 1.6% in local currency. There were local currency valuation decreases of 2.2% in the UK (0.4% excluding Spring Gardens), 0.5% in Germany and 3.5% in France. In Sterling, valuations increased 0.6% reflecting the weakening of Sterling in the period. Across the Group, like-for-like ERVs were up 0.4% with ERVs slightly up or flat on average per country. At 30 June 2025, the EPRA 'topped up' net initial yield of the portfolio was 5.4% (31 December 2024: 5.6%). The reduction in 'topped up' net initial yield from year-end was driven by lease expiries at New Printing House Square, London. Excluding New Printing House Square, the 'topped up' net initial yield was 5.7%. The EPRA 'topped up' net initial yield is at a 166 basis point margin over the Group's average cost of debt and demonstrates the Group's continuing ability to generate cash.

 

DIVIDENDS

 

In October 2025, the Group will pay an interim dividend for the current financial year of 1.30 pence per share, a 50% reduction on the 2024 interim dividend, and in line with the revised dividend policy announced in April 2025 of 1.5x to 3.0x EPRA earnings dividend cover so as to retain cash to invest in the portfolio. The PID part of the dividend is 1.25 pence per share.

 

ENVIRONMENT, SOCIAL AND GOVERNANCE

 

We have continued the implementation of technical and cost-effective Net Zero Carbon ("NZC") projects across all regions. In 2025, we expect to complete energy efficiency and carbon reduction projects, at a cost of around £6 million. In total, these projects will save an estimated 1,500 tonnes CO₂e ("tCO₂e") (per annum), keeping us on track to achieve our 2030 NZC targets. One of our largest projects at Radius House in Watford, which involves the replacement of a gas boiler with a heat pump solution, with tenants in-situ, is expected to achieve savings of c.28,000 tCO₂e over the course of its estimated 15-year life span. Other projects include LED lighting and BMS upgrades across all three regions, window and façade refurbishments in France and Germany as well as a solar PV array installation in Germany. Furthermore, we have continued the roll out of our smart water meter programme in the UK, following the successful implementation in Germany. On completion later this year, both portfolios will be fully equipped with smart water meters including leak detection functionality.

 

We remain on track to meet future regulatory requirements, such as expected higher minimum EPC standards in the UK, and Décret Tertiaire targets in France. 85% of our managed portfolio is rated BREEAM In-Use "Good" or above and half of our UK portfolio is already EPC A or B, whilst 75% of our portfolio in France is already compliant with the 2030 Décret Tertiaire energy efficiency targets. Our focus on major decarbonisation projects will ensure we comply with evolving future regulation, minimising our exposure to climate-related transition risks, including the increasing demand from tenants for "net zero carbon ready" spaces.

 

As part of our biodiversity net-gain strategy, we have continued the roll out of re-wilding plans across the UK portfolio. Furthermore, as part of being a responsible and long-term investor in our local communities, we have maintained our support for local and industry-related charities and community organisations. Finally, CLS has maintained its Living Wage Employer accreditation, covering both UK employees and regular contractors.

 

 

OUTLOOK

 

There are signs of improvement in the real estate investment market as the trend towards tenant downsizing appears to have peaked with occupiers now looking to expand their footprint and/or commit to new leases. Take up in Germany and the UK, our two largest markets, is up compared with the same period last year, and was reflected already in increased letting activity in Q2. This is encouraging as our biggest opportunities to drive rents are in the UK and Germany where we have higher vacancy due to recently refurbished space.

 

The investment market in the UK and France improved in the first half of the year compared with the same period last year. Conversely investment in Germany fell compared with the same period, however we have seen positive signs that the German economy has started to recover. The improvement in investment in our locations bodes well with buyers returning to the market. Our sales programme is more than 50% complete, with further sales progress is expected by the year-end.

 

We have successfully refinanced, repaid or had credit approved over 90% of the £364.1 million (excluding amortisation of £9.6 million) of debt expiring in 2025. Our debt maturity profile is now well spread with no more than £170 million of debt expiring in any given year.

 

There are considerable opportunities in the existing portfolio to drive long-term shareholder value and in the medium-term our focus is on: completing the works at The Brix in Essen and handing over the remaining space to the City of Essen by the end of October 2025; continuing works at The Yellow in Dortmund, which are also on track to be handed over the City of Dortmund in early 2026; converting Debussy, Paris into serviced apartments to be operated by Edgar Suites on a 12 year lease; progressing planning applications and PDR schemes for four residential conversions in the UK and moving forward with our residential development of Citadel Place in Vauxhall through a strategic partnership.

 

We enter the second half with clear strategic direction and cautious optimism, supported by improving market fundamentals, a robust leasing environment and a somewhat more stable macroeconomic outlook.

Business review

 

United Kingdom

 

Lettings progress at Artesian and the Coade and future interest rate cut support expected

 

	30 June 2025	31 December 2024
Value of properties	£692.7m	£807.0
Percentage of Group's property interests	40%	44%
Number of properties	33	34
Number of tenants	194	210
EPRA vacancy rate	21.5%	18.5%
Lettable space	1.6m sq. ft	1.8m sq. ft
Government and large companies	73.3%	75.2%
Weighted average lease length to end	3.9 years	3.5 years
Leases subject to indexation	34.7%	34.7%

 

The value of the UK portfolio decreased by £114.3 million as a result of: the disposal of Spring Mews Student, Vauxhall for £101.1 million; valuation decreases of £15.8 million or 2.2%; offset by capex additions of £2.6 million. As expected, the largest valuation decrease was at Spring Gardens, Vauxhall (also known as Citadel Place) due to the shortening lease with the NCA.

 

In the first half of the year, 15 lease extensions and 13 new leases were signed, adding a total of £5.3 million of rent, at slightly below 31 December 2024 ERVs. Whilst the occupational markets in London and the South East remain active, political and economic uncertainty has led many tenants to seek re-gears with existing landlords rather than relocate, which has slowed our attempts to reduce vacancy. However, we have also had some benefit from this trend, with over 100,000 sq. ft (9,290 sqm) of space at New Printing House Square re-let to existing tenants. Our most significant leasing transaction in 2025 was a renewal, as the London Borough of Hammersmith and Fulham extended their lease for 11,700 sq. ft (1,087 sqm) at the Clockwork Building in Hammersmith.

 

Interest in The Coade, our 27,723 sq. ft (2,575 sqm) new office development at Vauxhall Walk, London, has picked up with a further two floors now signed taking the occupancy to 50%. At Artesian, Prescot Street, we also now have a further two and a half floors under offer, which are expected to complete in the second half of the year.

 

EPRA vacancy increased from 18.5% at 31 December 2024 to 21.5% due to the scheduled expiry of all leases at New Printing House Square in mid-June 2025. We expect this to decrease by year-end as we complete leases at The Coade and Artesian, and let more space at New Printing House Square.

 

With respect to disposals, we completed the sale of Spring Mews Student, Vauxhall for £101.1 million. Having fully executed our business plan for the property and achieved record occupancy and profits, it was the right time to sell to reduce LTV and debt costs whilst reducing refinancing risk as well as being earnings accretive.

 

Progress also continues on Citadel Place, our 2.5 acre site in Vauxhall, where an all-residential scheme is being pursued. To support this strategy, we extended the leases on the site with the NCA for an additional seven months to September 2026, thus securing an additional £7 million of income during the planning process. We now aim to submit a planning application later in 2025 to accommodate potential development partners in the delivery of the site. Discussions have started and are progressing well. 

 

In terms of the UK property market, commercial investment volumes were c.£24 billion in the first half of 2025 an increase of 17% on same period in 2024 (c.£21 billion).

 

Leasing take-up in London in the first half of 2025 was 3.2 million sq. ft, which is a notable increase compared to the same period last year while take-up across the South East office market reached 1.9 million sq. ft, which was also an increase compared to the same period last year. Vacancy in the London market is now 9.2% and 12.5% in the South East office market.

 

Germany

 

Government spending expected to boost business confidence and economic recovery

 

	30 June 2025	31 December 2024
Value of properties	£823.6m	£815.7m
Percentage of Group's property interests	47%	44%
Number of properties	30	31
Number of tenants	356	360
EPRA vacancy rate	9.4%	6.7%
Lettable space	3.6m sq. ft	3.6m sq. ft
Government and large companies	60.0%	56.1%
Weighted average lease length to end	7.0 years	5.6 years
Leases subject to indexation	76.2%	62.3%

 

The value of the German portfolio increased by £7.9 million as a result of: a foreign exchange gain of £29.5 million; and capex of £2.7 million, partially offset by a valuation decrease of £3.8 million or 0.5% in local currency; and disposals of £20.5 million. The valuation loss was due to yield expansion as like-for-like ERVs remained stable.

 

Vacancy increased to 9.4%, compared with 6.7% at 31 December 2024, due to lease expiries during the year. 15 leases were signed adding £1.5 million of rent at an average of 10.0% above December 2024 ERVs. The most significant transaction in the first half was at The Yellow, Dortmund with the City of Dortmund for 41,300 sq. ft (3,930 sqm). This follows the 103,700 sq. ft (9,634 sqm) lease signed in December 2024, as the City will now occupy additional space that will be vacated by a current tenant in 2027. Vacancy in the second half of the year is expected to decrease as we are in advanced discussions with potential new tenants.

 

In June, we completed the €20.9 million sale of Gräfelfing, Lochamer Schlag 1, a 42,900 sq. ft (3,986 sqm) office and light industrial building. We also unconditionally exchanged on the €20.4 million sale of Jarrestrasse 8-19, Hamburg, a 59,100 sq. ft (5,487 sqm) office building, with completion in late August. These disposals are in line with our previously announced strategy to reduce leverage and provide funds to invest in the portfolio. 

 

In terms of ongoing development projects, we expect to complete our €20 million refurbishment at The Brix, Essen, in October 2025. Progress to date has been on track and 80% of the space has been handed over to the tenant. We also continue work at The Yellow, in association with our 20 year lease with the City of Dortmund, with 103,700 sq. ft (9,634 sqm) to be handed over in early 2026.

 

The outlook for the second half of the year is expected to be positively influenced by the approval of the German government's €500 billion infrastructure spending package, which should boost economic recovery. Additionally, if there were to be any resulting increase in inflation, this would enhance the performance of CLS' inflation-indexed rented portfolio. Whilst larger companies are cautious to commit to new space, due to geopolitical uncertainty and tariff increases, government and medium-sized businesses remain active.

 

The German commercial property investment market has been relatively stable over the last two years but softened in the first half of 2025 with c.€10 billion trading, which was around 18% lower than the previous year. Other real estate asset classes, such as retail and logistics, have gained market share; nevertheless, office investment has also grown its share by over 20% compared to the same period in 2024.

 

The German office market in the Top 7 cities recorded take-up of 1.4 million sqm in the first half of 2025, 9% above 2024 levels. The market is showing signs of recovery across the board with market momentum for small floorplates now increasingly being supplemented by leasing in the important medium-sized segment. The average market vacancy rate in the Top 7 office markets is now 7.6%, ranging from 4.6% in Cologne to 10.9% in Dusseldorf.

France

 

High quality, sustainable offices remain attractive despite increased supply

 

	30 June 2025	31 December 2024
Value of properties	£229.9m	£227.5m
Percentage of Group's property interests	13%	12%
Number of properties	16	16
Number of tenants	144	149
EPRA vacancy rate	8.7%	8.3%
Lettable space	0.7m sq. ft	0.8m sq. ft
Government and major corporates	56.2%	62.7%
Weighted average lease length to end	5.3 years	5.7 years
Leases subject to indexation	100.0%	100.0%

 

The value of the French portfolio increased by £2.4 million as a result of: a foreign exchange gain of £8.4 million; and capex of £2.1 million, partly offset by a valuation decrease of £8.1 million or 3.5% in local currency. The valuation loss was due to vacancy.

 

Vacancy increased marginally to 8.7% from 8.3% as at 30 June 2025, as recent lease expiries are taking slightly longer than expected to re-let. Since 1 January 2025, 9 lease extensions and new leases have been signed adding £0.7 million of rent, at 3.3% below December 2024 ERVs. The largest transaction was a new lease with the IT company, Open Group, for 9,200 sq. ft (855 sqm) in Park Avenue, Lyon. Leasing momentum has increased in Q3, and we are currently under offer for a lease renewal for 116,000 sq. ft (10,777 sqm) on a 9/12 year extension at Pierre Valette, Paris. However, we are expecting increased vacancy at our property Inside in Paris as the tenant has served notice.

 

In July, we completed the sale of Les Reflets, Lille. The sale marks our exit from Lille such that that our French portfolio is focused in France's two largest cities, Paris and Lyon.

 

In the first quarter of the year, we completed the redevelopment of Petits Hotels, a 22,400 sq. ft (2,081 sqm) building in central Paris. This was a comprehensive refurbishment of one of the buildings and it is now fully let at ERV to tour operator Intermèdes. We are also progressing a €1.3 million refurbishment project at Bellevue, Paris, upgrading five floors, 14,000 sq. ft (1,301 sqm), to a high standard, including sustainability and modernisation enhancements. Completion is targeted for October 2025. Finally, works continue on the Debussy serviced apartment conversion, pre-let to Edgar Suites under a 12-year lease. Building permission was granted by the City of La Garenne-Colombes in February 2025 and we are in the process of finalising all the necessary associated permits. We aim to commence works by September, with completion due in early 2027.

 

On sustainability, we are making excellent progress towards the Décret Tertiaire 2030 target. 12 of our 16 properties are already compliant, pending final approval by the French authorities.

 

French economic growth in the second half of the year is expected to be modest, and is forecast to be approximately 0.6%. Growth is projected to be driven by household consumption but constrained by cuts to public spending to address the rising budget deficit.

 

Investment volume in commercial real estate over the first half of the year reached €5.8 billion, up 30% compared to last year. However, this growth mainly occurred in the first quarter, with growth of 8% in Q2. Investment volume is still expected to reach €14 billion by the end of 2025 (10% above 2024). Encouragingly, office is playing a larger role in commercial real estate in Paris accounting for 74% of market share, compared to 50% in H1 2024.

 

Office take-up in the first half of 2025 in the Greater Paris region reached 768,000 sqm, down 12% compared with the same period last year. Immediate office supply in the Greater Paris region was estimated to be 5.9 million sqm, resulting in a 10.8% vacancy rate at 30 June 2025. In the longer term, whilst the occupier market continues to adjust, Paris remains one of Europe's leading office rental markets.

Key data

 

Valuation Data

 

		H1 Valuation Movement
	Market Value of Property (£m)	Underlying (£m)	Foreign Exchange (£m)	EPRA Net Initial Yield	EPRA Topped-up Net Initial Yield	Reversion	Over-rented	Equivalent Yield
UK	655.3	(15.8)	-	5.1%	6.1%	4.8%	9.3%	7.4%
Germany	822.0	(3.9)	29.5	4.5%	4.8%	4.3%	11.8%	5.3%
France	228.3	(8.2)	8.3	5.4%	5.8%	3.4%	5.9%	6.1%
Total Portfolio	1,705.6	(27.9)	37.8	4.9%	5.4%	4.4%	9.9%	6.0%

 

Rental Data

 

	Rental Income for the Period (£m)	Net Rental Income for the Period (£m)	Lettable Space (sqm)	Contracted Rent at 30 June 2025 (£m)	ERV at 30 June 2025 (£m)	Contracted Rent Subject to Indexation (%)	EPRA Vacancy rate at 30 June 2025
UK	22.7	26.7	150,270	45.8	55.7	34.6	21.5%
Germany	19.1	17.8	332,207	44.9	45.8	76.2	9.4%
France	6.3	6.0	68,294	13.8	14.7	100.0	8.7%
Total Portfolio	48.1	50.5	550,771	104.5	116.2	61.1	15.1%

 

Lease Data

 

	Average Lease Length		Contracted Rent of Lease Expiring In:				ERV of Lease Expiring In:
	To Break (Years)	To Expiry (Years)	Year 1 (£m)	Year 2 (£m)	Years 3 - 5 (£m)	After 5 Years (£m)	Year 1 (£m)	Year 2 (£m)	Years 3 - 5 (£m)	After 5 Years (£m)
UK	2.8	3.9	4.5	15.7	16.9	8.7	4.6	13.4	17.5	8.2
Germany	7.0	7.0	5.3	8.4	15.6	15.7	5.6	7.8	14.2	13.9
France	2.3	5.3	0.9	0.6	4.7	7.5	0.9	0.6	4.8	7.1
Total Portfolio	4.6	5.4	10.7	24.7	37.2	31.9	11.1	21.8	36.5	29.2

Note: The above tables comprise data for our offices in investment property and properties held for sale. They exclude owner-occupied, student accommodation and hotel.

 

 

Tenant Industries by Contracted Rent   Government 26.5% Commercial and Professional 13.2% Information Technology 9.6% Consumer Discretionary 9.4% Communication Services 8.5% Health Care 7.7% Financials 6.1% Other 5.7% Industrials 5.5% Consumer Staples 4.6% Real Estate 3.2%

Property use by revenue Office Space 81.5% Hospitality 6.2% Light Industrial 4.0% Education 2.7% Retail 2.1% Laboratory 2.0% Health Care 1.3% Residential 0.2%

 

 

Our investor proposition

 

Strong and consistent long-term shareholder returns

 

Set out below are the key tenets of our investment proposition. A fuller description can be found on the inside front cover and page 1 of CLS' 2024 Annual Report and Accounts:

 

A clear strategy	Active management
·      Diversified approach ·      Focus on multi-let offices ·      Selected development schemes	·      Experienced in-house capabilities ·      Secure rents and high occupancy ·      Interest rate management

 

Strong 30-year track record	A focus on sustainability
·      Disciplined approach to investment ·      Cash-backed progressive dividend ·      Financing headroom	·      Responsible profit ·      Strong ESG performance ·      Climate risk mitigation

 

DIVIDEND POLICY

 

The Company expects to generate sufficient cash flow to be able to meet the growth requirements of the business, maintain an appropriate level of debt and provide cash returns to shareholders via a dividend.

 

As announced with our 2024 Full-year results in April 2025, we updated our dividend policy. The Company will maintain a progressive dividend policy, with a dividend cover of 1.5 to 3.0 times EPRA earnings (previously 1.2 to 1.6 times). Approximately one-third of the annual dividend is paid as an interim in October, with the balance paid as a final dividend in May.

 

ANALYST COVERAGE

 

We are covered by three brokers which publish regular analyst research: Panmure Liberum; Berenberg and Peel Hunt. Contact details can be found on our website www.clsholdings.com.

 

2025 INVESTOR ENGAGEMENT

 

Events which have taken place	Events which are due to take place
April 2025 Annual Results presentation Annual Results investor calls and meetings   May 2025 Annual General Meeting	August 2025 Half-Year Results presentation   August/September 2025 Half-Year Results investor calls and meetings   November 2025 Trading Update

 

 

Financial review

 

RESULTS FOR THE PERIOD

 

HEADLINES

 

The loss after tax of £24.4 million (30 June 2024: £61.1 million) generated a basic statutory loss per share of 6.1 pence (30 June 2024: 15.4 pence loss). EPRA earnings per share, which exclude valuation movements, were 4.0 pence (30 June 2024: 4.8 pence), down 16.7% year on year. This was due to: lower net rental income from disposals and expiries; and higher other income in 2024 from the forfeited deposit on the failed completion of the sale of Westminster Tower, which was partially offset by lower finance expenses as net debt and our weighted average cost of debt reduced. There was also a positive benefit from lower expenses as a cost reduction programme was implemented in the first half from which we expect over £2 million per annum of savings. Gross property assets at 30 June 2025, including those in property, plant and equipment and those held for sale, decreased to £1,746.2 million (31 December 2024: £1,850.2 million) as a result of: disposals of £121.6 million; and net valuation decreases of £27.7 million, partly offset by foreign exchange gains of £37.9 million; and investment in the portfolio through capital expenditure of £7.5 million less depreciation of £0.1 million. Net assets per share fell by 2.5% to 192.3 pence (31 December 2024: 197.3 pence) and EPRA NTA per share fell by 2.6% to 209.5 pence (31 December 2024: 215.0 pence). Total accounting return per share including dividends paid in the period was -1.3% (30 June 2024: -8.0%).

 

CLS uses a number of Alternative Performance Measures ("APMs") alongside statutory figures. We believe that these assist in providing stakeholders with additional useful information on the underlying trends, performance and position of the Group. Note 4 to these condensed set of Financial Statements gives a full description and reconciliation of our APMs, and sets out the full suite of EPRA measures.

 

STATEMENT OF COMPREHENSIVE INCOME

 

Net rental income for the six months to 30 June 2025 of £53.3 million (30 June 2024: £58.9 million) was lower than last year by 9.5% as a result of disposals and expiries, partly offset by new lettings and renewals, and indexation. Rent collection remained at the same, consistently high levels with 99% of first half rent collected and 97% of third quarter contracted rent due collected to date.

 

The operating loss of £3.8 million (30 June 2024: £43.9 million loss) was due primarily to the 1.6% revaluation decline in local currency which was lower than the same period last year and equivalent to a loss of £32.3 million (30 June 2024: £82.8 million) largely offset by underlying results. Operating profit before revaluation and disposals of £34.5 million (30 June 2024: £40.8 million) was lower due to less net rental income.

 

Net interest expense of £20.7 million (30 June 2024: £21.5 million), which improved £0.8 million, comprises three elements: interest costs of £19.9 million (30 June 2024: £21.3 million) were down year-on-year as a result of lower net debt and a reduction in our weighted average cost of debt; the movement in the fair value of derivatives was £1.5 million negative (30 June 2024: £0.7 million negative) as these are closer to expiry; and interest income was marginally higher at £0.7 million (30 June 2024: £0.5 million).

 

The tax charge of £0.1 million (30 June 2024: tax credit £4.6 million) represented an effective rate of 0.4% (30 June 2024: 7.7%). Despite the loss before taxation, the charge was principally driven by the effect of the UK REIT regime and non-recognition of tax losses in France and Germany, reducing the tax credit on revaluation losses.

 

EPRA NET TANGIBLE ASSETS PER SHARE

 

EPRA NTA per share fell from 215.0p to 209.5p in the six months to 30 June 2025, a decrease of 5.5p per share or 2.6%. On a per share basis, the decrease comprised: the decrease in property values of 8.0p; loss on sale of investment property of 1.9p; the final 2024 dividend of 2.68p; and other negative movements of 1.6p, partly offset by foreign exchange gains of 4.7p; and EPRA earnings of 4.0p.

 

CASH FLOW, NET DEBT AND FINANCING

 

In the six months to 30 June 2025, gross borrowings decreased by £76.2 million to £923.0 million (31 December 2024: £999.2 million), principally due to the repayment of higher interest rate debt by utilising the proceeds from the disposal of Spring Mews Student, Vauxhall.

 

As at 30 June 2025, the Group had cash and cash equivalents of £63.9 million (31 December 2024: £60.5 million) and £50.0 million (31 December 2024: £60.0 million) of undrawn facilities. The cash balance increased by £3.4 million from 31 December 2024 given property sales. During the period, we invested £11.2 million of capital expenditure in our properties which was funded by net receipts from disposals of £114.6 million, as was the net repayment of loans of £96.7 million. Net cash flow from operating activities was £6.0 million (30 June 2024: £19.9 million) with the decline being mostly due to tenant incentives for new leases in Germany. Cash used to pay the 2024 final dividend was £9.7 million (net of withholding tax which was paid in July).

 

Net debt excluding leasehold liabilities was down by £79.6 million to £859.1 million (31 December 2024: £938.7 million) with loan-to-value lower at 49.2% (31 December 2024: 50.7%) as a result of using disposal proceeds to reduce debt. We are seeking to reduce LTV to within our target range of 35% to 45% at year-end from further sales. CLS has no loan-to-value or interest cover covenants at a Group level.

 

The weighted average cost of debt decreased to 3.75% (31 December 2024: 3.77%) as we used sale proceeds to repay higher cost debt. Based on the current swap rate and expected refinancings and sales, we would expect the rate to slightly decrease in the second half of 2025. Weighted average debt maturity was 3.3 years (31 December 2024: 3.4 years).

 

The proportions of fixed, capped and unhedged debt were 74%, 4% and 22% (31 December 2024: 80%, 4%, 16%) respectively. The proportion of fixed rate debt has decreased in the first half of the year due to refinancing Spring Gardens on floating rate debt and the sale of properties. The 4% of total debt subject to interest rate caps are all for French and German loans which are at a range of 0.5% to 1.5%, being on average 113 basis points below the average 3-month EURIBOR of 2.33%.

 

CLS has 42 different loans secured by individual, or small portfolios of, properties. The loans vary in terms of the number of covenants with the three main covenants being ratios relating to loan-to-value, interest cover and debt service cover. However, some loans only have one or two of these covenants, some have other covenants and some have none. The loans also vary in terms of the level of these covenants and the headroom to these covenants.

 

On average across the 42 loans, CLS has between 22% and 36% headroom for these three main covenants. In the event of an actual or forecast covenant breach, all of the loans have equity cure mechanisms to repair the breach which allow CLS to either repay part of the loan or deposit cash for the period the loan is in breach, after which the cash can be released.

 

In the first half of 2025, or shortly thereafter, CLS completed or had credit approved the major refinancings for 2025 accounting for over 90% of the £364.1 million of debt (excluding amortisation of £9.6 million) maturing across 12 loans. As at 30 June 2025, we had refinanced or repaid £192.3 million of debt across four loans, and by 12 August 2025 a further £118.5 million across two loans was refinanced or repaid and £25.1 million was credit approved across three loans. The £25.1 million which was credit approved will be completed in September and the remaining £28.2 million across three loans, which expires in Q4 2025, will be refinanced or repaid by year-end. As a result of these actions, we have no more than £170 million of debt expiring in any given year.

 

 

PRINCIPAL RISKS AND UNCERTAINTIES

A detailed explanation of the principal risks and uncertainties affecting the Group, and the steps it takes to mitigate these risks, can be found on pages 56 to 62 of the annual report and financial statements for the year ended 31 December 2024, which is available at www.clsholdings.com/investors.

 

The Group's principal risks and uncertainties are grouped into six categories: property; sustainability; business interruption; financing; political and economic; and people. These risks and uncertainties are expected to remain relevant for the remaining six months of the financial year, and these are discussed further below.

 

The Board has reviewed the risk status of each of the six risk categories, particularly with regard to the ongoing economic and geopolitical risks including: higher but reducing interest rates given moderating inflation; global political uncertainty; changing trade relations; and conflicts in Ukraine and the Middle East. The overall risk landscape remains heightened but with an increased likelihood of risk levels moderating in future although not yet sufficient to alter any of the risk ratings.  Both property and financing risks remain as high risks and we continue to monitor vigilantly the risks focused around; vacancy; disposals and loan to value; and refinancings, as well as the accompanying mitigations.

 

Work continues on refining our approach to testing material controls in advance of the Board's declaration of the effectiveness of these as at 31 December 2026 as prescribed by the Corporate Governance Code.

 

Principal risk	Status at year-end	Change since year-end	Commentary
Property	High	No change	The office market remains bifurcated in two ways. The occupational market remains healthy with tenants seeking out, and paying more for, higher quality offices. CLS is responding by investing in its properties to provide the best offices in our locations as well as divesting properties that no longer align with our long-term strategy. However, the investment market remains sluggish given higher interest rates, valuation uncertainty and lingering concerns about future office demand. In addition, we continue to monitor changes in the regulatory environment, particularly in relation to the Building Safety Act 2022 which may impact the permitted uses and viability of future schemes.
Sustainability	Medium	No change	CLS believes that providing sustainable buildings not only accords with regulatory demands but also meets changing office trends. We remain committed to our Sustainability (and wider ESG) Strategy but keep under review the proposed timing and targets for our Net Zero Carbon Pathway.
Business interruption	Low	No change	We prioritise investing in our IT and other equipment to give our employees the tools to perform their roles effectively. We have enhanced our resilience to the threat of cyber attacks with the aid of our Email Gateway and have identified staff education gaps through surveys specifically relating to cyber security. We have maintained our Cyber Essential Plus standard certification.
Financing	High	No change	Financing risk remains high despite inflation and interest rates reducing. This is reflected in higher interest costs with some increases in bank margins and lower LTV ratios. Through ongoing selected disposals CLS has reduced Group LTV. CLS also maintains banking relationships, monitors covenants and engages early with upcoming refinancings. CLS has made significant progress in relation to debt expiring in 2025 with £335.9 million of the £364.1 million (excluding amortisation of £9.6 million) either refinanced, credit approved or repaid as planned. Furthermore, our weighted average cost of debt has reduced by 2 basis points since 2024 year-end. CLS also continues to monitor and ensure its compliance with the UK REIT rules.
Political and economic	Medium	No change	As noted, economic conditions remain challenging with higher interest costs and property valuation declines, and slower growth. These have been mitigated through CLS' high levels of inflation-indexed rent and higher replacement values for existing buildings. Geopolitical risks are heightened but CLS' diversified business model in Europe's three largest economies provides mitigation.
People	Low	No change	To reduce duplication and achieve process efficiencies, an organisational restructure was implemented during the first half of the year resulting in a number of targeted redundancies. As a result, two internal promotions were made within affected teams to develop and therefore retain key talent. A review of UK employee benefits was undertaken and a benefits promotion campaign will be completed to ensure we remain an attractive employer for current and future employees. Voluntary turnover remains low.

 

GOING CONCERN

 

The Directors' assessment of going concern uses the same methodology as for the preparation and validation of the year-end going concern (and viability) statement(s) (see pages 63 to 65 of the 2024 Annual Report and Accounts). This assessment uses forecasts that have been adjusted for the impacts of the current economic, property and financing markets. A more detailed description of the approach is set out in note 2 to these condensed Group financial statements.

 

The Group is reliant in the Base case and Severe but plausible case upon its ability to both refinance the debt maturing and to complete a number of investment property disposals in the going concern period in more challenging market conditions.

 

Whilst the Directors remain confident that a combination of sufficient refinancings and property disposals will be achieved, the timing and value of both the planned refinancing of facilities falling due within the going concern review period, and planned property disposals, is outside of management's control and consequently a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern.

 

Notwithstanding this material uncertainty on the going concern assumption, given our track-record and reputation, and the progress made since 31 December 2024 in terms of refinancing, the Directors are confident that the debt falling due for repayment in the going concern period will be refinanced or settled in line with their plans for the reasons set out above, rather than requiring repayment on maturity, or will be extinguished as part of property disposals in the period. Therefore, the Directors continue to adopt the going concern basis in preparing these Group financial statements.

 

The financial statements do not contain the adjustments that would result if the Group were unable to continue as a going concern.

 

RESPONSIBILITY STATEMENT

 

We confirm that to the best of our knowledge:

a)   the condensed set of financial statements, which has been prepared in accordance with IAS 34 'Interim Financial Reporting' as contained in UK adopted financial standards, gives a true and fair view of the assets, liabilities, financial position and profit of the Group, as required by DTR 4.2.4R;

b)   the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the financial year); and

c)   the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

 

On behalf of the Board

 

 

 

Fredrik Widlund                       Andrew Kirkman

Chief Executive Officer              Chief Financial Officer

12 August 2025

 

 

 

Financial statements

 

Condensed Group income statement

 for the six months ended 30 June 2025

 

		Six months ended	Six months ended	Year ended
		30 June 2025	30 June 2024	31 December 2024
		£m	£m	£m
Notes		(unaudited)	(unaudited)	(audited)
Revenue	3	71.9	77.8	151.9
Service charges and similar expenses	3	(18.6)	(18.9)	(37.9)
Net rental income		53.3	58.9	114.0
Administration expenses		(8.7)	(9.0)	(17.7)
Other property expenses		(8.8)	(9.1)	(18.1)
Non-recurring items¹		(1.3)	-	-
Operating profit before revaluation and disposals		34.5	40.8	78.2
Net revaluation movements on investment property	9, 11	(32.3)	(82.8)	(127.7)
Net revaluation movements on equity investments		0.3	(0.4)	(0.6)
Loss on sale of investment property		(6.3)	(1.4)	(2.3)
Loss on sale of equity investments		-	(0.1)	(0.1)
Operating loss		(3.8)	(43.9)	(52.5)
Finance income	5	0.7	0.5	1.4
Finance costs	6	(21.4)	(22.0)	(45.7)
Foreign exchange gain / (loss)		0.2	(0.3)	(0.6)
Loss before tax		(24.3)	(65.7)	(97.4)
Taxation	7	(0.1)	4.6	3.8
Loss for the period attributable to equity shareholders		(24.4)	(61.1)	(93.6)
Basic and diluted earnings per share	14	(6.1)p	(15.4)p	(23.6)p

 

¹ During the first half of the year, we conducted a review of staffing and financial structuring. This resulted in non-recurring costs including redundancy costs being incurred. This was substantially complete by the half-year and we do not expect further significant costs to be incurred in the second half of 2025.