CLS Holdings Trading Update

                                                                                                            PRESS RELEASE

Release date:                8 October 2020

Embargoed until:           07:00

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

Trading Update for the period 1 July 2020 to 7 October 2020

RENT COLLECTIONS and balance sheet remain resilient

Fredrik Widlund, Chief Executive of CLS, commented:

"The strength of our tenant base, underpinned by government and major corporations, is again reflected in our high rent collection with 90% of fourth quarter rent received to date and 99% for the first three quarters.  Equally important are the benefits of our diversified country approach, focused on the UK, Germany and France, with economic and leasing activity recovering in line with the easing of lockdown measures.

"At the end of September, we were pleased to complete our first green loan together with Aviva.  The loan recognises our sustainability progress and has a margin reduction incentive dependent on the delivery of specific sustainability targets.  The additional funds raised ensures CLS is in a strong position with over £240 million of cash."

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

Q4 rent collections

The Group's rental income in the UK and France is due on a quarterly basis with the current payment due between 29 September 2020 and 1 October 2020. In Germany, rents are due monthly and the current payment was due on 5 October 2020.

By close on 7 October 2020, we had received 89% of contractual rents due or 92% taking into account those tenants we are supporting by switching to monthly rents (2019: 94% of rents had been collected by 7 October 2019).

Update on first three quarters rent collections

For the third quarter of 2020 we have now collected 98% of rents due (2019: 99%), which is an increase of 3% since our half-yearly results were announced on 12 August 2020 and 12% since our 8 July 2020 trading update.  Overall, for the first three quarters of 2020, we have received 99% of contractual rents due (2019: 98%).

Vacancy and lettings (as at 30 September 2020)

As expected, vacancy has decreased slightly from 30 June 2020 to 5.0%. This reduction is due to the completion of the sale of Albert-Einstein-Ring in Germany, which had high vacancy, somewhat offset by recent lease expiries across the portfolio.

·      Vacancy rates (Based on June 2020 ERVs):

Since 8 July 2020, the Group has agreed 41 deals securing £4.4 million of annual rent 14.8% above ERV. Notable transactions include the 6-month lease extension with Dr Hönle AG in Gräfelfing, Munich for £0.4m (€0.4m) above ERV.

Liquid resources and financing

The Group's balance sheet remains well-capitalised and robust.  As at 30 September 2020, CLS had cash of over £240 million and a Loan to Value of 35.0% based on 30 June 2020 portfolio valuation (30 June 2020: 34.7%), with a further £50 million in undrawn facilities. 

On 29 September 2020, CLS completed a £154 million loan with Aviva Investors which is secured on a portfolio of 12 UK properties. The £154 million loan, which has a loan to value of 55%, is split equally between 10-year and 12-year tranches. The average interest rate is 2.62% fixed.

The loan has been independently assured as a "green loan" in line with LMA sustainability principles with up to a 10-basis point margin reduction dependent on the delivery of specific sustainability targets.  In addition, subject to certain conditions, CLS will be able to remove or substitute properties as security for the loan.

For the remainder of 2020, the Group has only one loan, for £11.4 million, due to expire.  Discussions are well advanced to extend this, and other associated loans, for up to seven years.

Acquisitions and disposal

In the UK, the Group completed the acquisition of three office properties from Aviva Investors for £59.7 million (excluding costs).  The portfolio consists of: One Church Road, Richmond; Priory Place, Chelmsford; and Kings Court, Leatherhead.  

The portfolio is 94% let with a WAULT of 3.8 years to breaks and delivers £3.7 million net rent per annum, reflecting a net initial yield of 5.9%. There are significant opportunities to add further value through additional refurbishments, sustainability enhancements and other active asset management initiatives which will continue to drive further rental growth.

In France, the Group completed the acquisition of one additional floor at Rhône Alpes in Lyon for £0.6 million, a building the Group already part owns.  In addition, CLS has unconditionally exchanged on additional floors at Park Avenue in Lyon for £3.3m such that, upon completion, the Group will own the entire building.

In Germany, the Group completed the disposal of Albert-Einstein-Ring in Germany for £33.0 million (3.6% Net Initial Yield), 38% ahead of the December 2019 book value.

-ends-

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

Liberum Capital Limited

Richard Crawley

Jamie Richards

+44 (0)20 3100 2222

Panmure Gordon

Hugh Rich

+44 (0)20 7886 2733

Elm Square Advisers Limited

Jonathan Gray

+44 (0)20 7823 3695

Smithfield Consultants (Financial PR)
Alex Simmons

Rob Yates

+44 7970 174353

Forward-looking statements

This announcement 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 should not be relied upon as an indicator of future performance or construed as a profit forecast.