CLS portfolio up, profits down by a third

CLS Holdings described itself as being in a strong position on Tuesday, as it revealed a drop in profit but a robust portfolio in its final results for 2015.

The FTSE 250 property investment firm saw EPRA net assets per share rise 17.4% during the calendar year to 2,083.2p, from 1,774.1p. Net assets per share were up 19% to 1,810.1p.

CLS reported EPRA earnings per share as rising 9.5% to 84.7p, from 77.4p.

Profit after tax fell 32.2% to £132.1m, from £194.8m, which the firm blamed on higher property valuation increases in the prior year. Valuation increases totalled £98m in 2015, compared to £154.3m in 2014.

"This has been a successful year for the group with low borrowing costs and vacancy levels, solid tenant demand and continued revaluation uplifts to produce record EPRA earnings per share and net asset value," said CLS Holdings executive chairman Sten Morstedt.

"The strength of the portfolio and the management team give me great comfort that now is the right time to hand over the chairmanship and I will continue to play my part in the future success of CLS as an executive director and major shareholder," he added.

As previously announced, Henry Klotz was becoming chairman of the company with effect on Tuesday. Sten Morstedt was remaining as an executive director, and Anna Seeley was appointed non-executive vice chairman.

Operationally, the company's vacancy rate remained low at 3.1% in 2015, compared with 3.0% in 2014. It acquired six properties for £57.8m at an average net yield of 7.3%, and sold eight properties for £34.8m at an average net yield of 2.8%.

It also obtained enhanced planning consent for Westminster Tower and Spring Mews, progressed strategic plans for Vauxhall Square and began work on site at four significant refurbishments.

Financially, the company's weighted average cost of debt was lowered a further 24 basis points to 3.40% by year-end, with its interest cover described as 'comfortable', at 3.2x.

It completed ten new loans or refinancings during 2015 with a value of £295.7m, at an average all-in annual rate of 2.53%. CLS also repositioned its loan portfolio to 51% fixed-rate.

Since year-end, CLS said it had acquired two properties for £6.1m and sold three for £68m.

The board increased its distributions to shareholders by 20% during 2015, to £19.1m. It proposed a £13.4m tender buy-back of one in 57 at 1,810p per share.