Assets up but profits slide in first half at CLS

The FTSE 250 firm reported net assets per share up 7.8% to 1,952p, and EPRA earnings per share up a sizeable 92% to 80.5p.

Profit after tax dropped significantly, however, down to £29.7m from £68.6m, which the board blamed on higher property valuation increases in the prior year.

Property valuation increases in the 2015 period were £53.9m, but just £2.4m in the first half of 2016.

Its investment property valuation rose 5.0%, or 0.4% in local currencies.

The board declared an increase in distributions to shareholders of 10%, with a proposed £7.2m tender buy-back of one in 95 at 1,650p per share.

During the period, two properties were acquired for £6.4m at a net initial yield of 6.0%, and two properties sold for £60.9m at an average net initial yield of 6.4%.

Lease transactions covered 284,000 sq ft in the period, which the board said was more than double that of last year.

CLS’s vacancy rate crept up slightly to 3.7%, from 3.1% at the beginning of the year.

“This has been a strong six months for the group, with robust earnings and NAV growth demonstrating the advantages of having a geographically diversified business, in-house management and low-cost debt finance,” said executive chairman Henry Klotz, who was appointed in March.

“With 37% of the group's business conducted in Germany and France, and with 52% of our UK income derived from central government departments, we are well positioned to address any challenges, including those which the ‘Brexit’ process may present.”