This article first appeared on GuruFocus .
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EPRA Earnings:2.7p per share, a 32.5% decline from the prior year.
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EPRA Net Tangible Assets (NTA):Fell 11.5% to 177.7p per share.
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Net Rental Income:Decreased to GBP46.3 million from GBP53.3 million.
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Like-for-Like Net Rental Income:Fell 4.7% to GBP50.8 million.
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Property Valuation Decline:Portfolio fell 4.6% in local currency, driven by yield expansion.
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Loan-to-Value (LTV) Ratio:Increased to 51.6%.
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Net Debt:Reduced by GBP44.2 million.
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Weighted Average Cost of Debt:Increased marginally from 3.8% to 3.9%.
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Interest Cover:Reduced from 1.9 to 1.6 times.
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Leasing Activity:Secured GBP5.7 million of annual rent in H1, with a further GBP1.9 million signed in July.
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Vacancy Rate:Stable at 14.5%.
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Property Sales:Sold properties for GBP57 million in H1, with another GBP41 million exchanged or agreed.
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Capital Expenditure:Invested GBP12.5 million on CapEx and tenant fit-outs.
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Full Year 2026 EPRA Earnings Guidance:Expected to be in the range of 4.6p to 5.5p per share.
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Dividend:No interim dividend will be paid; a final dividend will be considered based on full year earnings.
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Release Date: August 12, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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CLS Holdings PLC ( LSE:CLI ) successfully sold properties for GBP57 million in H1 2026, with an additional GBP41 million exchanged or agreed, keeping the company on track to meet its GBP100 million sales target for the year.
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The company has made significant progress on refinancing, with 89% of 2026 debt maturities either completed, credit approved, or agreed, and has already begun engaging with lenders for 2027 maturities.
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Leasing activity remains steady, with GBP5.7 million of annual rent secured in H1 and an additional GBP1.9 million signed in July, while new leases increased by over 20% compared to 2025.
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The portfolio benefits from a diversified tenant base with 666 tenants, including close to 30% government tenants, and rent collection remains high at 98%.
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Strategic investments in properties, such as the German pre-lets and the Maximilianforum conversion, are expected to deliver high-quality, faster-growing assets and unlock long-term value.
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The company has reduced its cost base through deliberate actions, with property and administration costs lower, and finance costs reduced by GBP80 million in debt compared to H1 2025.
Negative Points
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EPRA earnings per share fell 32.5% to 2.7p, driven by the impact of over GBP200 million of property sales since the start of 2025 and tenant departures, leading to revised full-year earnings guidance of 4.6p to 5.5p per share.
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The tenant at Spring Gardens decided not to extend its lease beyond September, creating uncertainty and impacting earnings, with the sale of the property now expected in H1 2027.
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Valuation declines continued, with the portfolio falling 4.6% in local currency due to yield expansion, causing the loan-to-value ratio to increase to 51.6%, above the target range of 35% to 45%.
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No interim dividend will be paid for 2026, as the Board will determine a single final dividend based on full-year earnings, reflecting near-term earnings pressure.
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Like-for-like net rental income fell 4.7% to GBP50.8 million, impacted by the block expiry at New Printing House Square and two tenant insolvencies in Germany.
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Leasing activity was slower than expected, with leases signed at 8.9% below ERVs, and like-for-like ERVs declined 1.8%, indicating ongoing market challenges.
Q & A Highlights
Q: How secure is the expected sale of the Spring Gardens site, especially in the event of planning delays or changes to the application? Are there situations where the buyer isn't obligated to proceed? A: CEO Fredrik Widlund stated that while there is a long stop date in the contract (which he did not disclose), both parties are working closely together to achieve planning permission. He emphasized that this is a deal both parties really want to do, indicating a strong commitment to the transaction.
Q: Are lenders requiring additional covenants or margin increases for refinancing? What is the marginal cost of finance for GBP and euro debt? A: CFO Patrick Symons confirmed that no additional covenants are being required. The company is refinancing with the same lenders under similar conditions, with margins around 1% to 2%, which he described as fairly standard.
Q: Are any lenders flagging concerns over interest cover, or are all covenants LTV-based? A: CFO Patrick Symons noted that the company has a number of covenants with good headroom of 20% to 31%. He added that they have good relationships with lenders, report on covenants every six months, and are not flagging any issues. CEO Fredrik Widlund added that lending is secured on an SPV basis, so underwriting is property-specific rather than group-wide.
Q: Assuming planning is granted for Spring Gardens, are there any other conditions that need to be met before the sale goes through, and when do you expect the sale to complete? A: CEO Fredrik Widlund stated that while there are always certain conditions to fulfill in any contract, planning is the main one. He expects the sale to proceed in the first half of 2027.
Q: How much confidence do you have in the ERVs across the regions in being able to lease at or above ERV? A: CEO Fredrik Widlund expressed confidence in continued rental growth, driven by the supply and demand balance. However, he noted the company will be pragmatic and prioritize filling space, citing New Printing House Square as an example where they accepted rent below ERV due to the short lease terms available ahead of redevelopment.
Q: Do you see the German insolvencies as isolated or potentially sector-specific, and is there any other contagion across the portfolio? A: CFO Patrick Symons confirmed that the insolvencies in Germany are completely isolated. The company has good rental collection and is not seeing any further insolvencies, as they actively monitor their tenants.
Q: Would it be possible to sell out of France or Germany, or would any sale lead to a large tax bill or other significant penalty? A: CEO Fredrik Widlund stated that while the company constantly reviews its portfolio, they are currently very happy with their exposure in all three countries. He noted that while it's possible to optimize in other ways, selling out of France or Germany is not something they are currently planning to do.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
