CLS (CLI) H2 2024 earnings summary

Executive summary

• Achieved best leasing performance in the UK and Germany since 2015, signing £16.6m of annual rent, up 7% year-over-year, with leases 6.8% above ERVs.

• Net rental income rose 0.9% to £114m, with like-for-like growth of 3.8%, driven by indexations, new lettings, and other income.

• Underlying vacancy reduced to 10.6% from 11.0% year-over-year.

• Announced £270m property sales program; 70% executed or agreed, with additional £130m identified for future sales.

• Reset dividend to 5.28p per share (50% reduction) to fund growth opportunities, with new cover range of 1.5-3x.

Financial highlights

• EPRA EPS down 10.7% to 9.2p due to higher financing costs.

• EPRA NTA per share dropped 15% to 215.0p, mainly from valuation declines and currency effects.

• Cost of debt increased to 3.77% (up 16bps); over 80% of debt fixed or capped.

• LTV increased to 50.7% due to valuation declines; pro forma LTV to reduce to below 48% after disposals.

• Cash and equivalents over £60m, with £60m of underwritten facilities.

Outlook and guidance

• Market believed to be at or near the bottom of the property cycle, with stabilizing valuations and increasing investment activity.

• Focus on reducing UK vacancy, progressing disposals, and capturing rental upside through indexation.

• Near-term upside from £46m refurbishment pipeline with estimated profit on cost above 20%.

• Medium-term development opportunities in London and Berlin, including Citadel Place and residential conversions.

• Capital expenditure to rise to £30-35m in 2025 for refurbishment and development opportunities.