FINANCE: Rising capital values in London and the gains from the acquisition of government-tenanted Project Neo last year were the main drivers behind CLS Holdings’ H1 jump in pre-tax profits, chief financial officer John Whiteley said.
Pretax profit for the six months to 30 June was £62m, up from £22.7m during the corresponding period last year. The value of the company’s portfolio grew by £46m to £1.16bn during the period, with London driving almost all of the gain, Whiteley said.
Project Neo, a 34-strong office portfolio that CLS bought in September last year for £118.6m, has added around £15.1m to the annual rent roll. CLS is currently working on a range of lease re-gearings with government occupants of Neo properties. For example, heads of terms have been recently been agreed on a new three- to four-year lease of 21,000 sq ft of office space to the Emergency Communications Service in St Asaph, north Wales, which handles the 999 calls, he said.
“The gain from the acquisition of Neo is not a one-off, and we believe that the portfolio will continue to drive profit growth in the future as a result of lease re-gears,” said Simon Wigzell, head of group property at CLS.
CLS currently has £153.7m of cash to deploy, plus £84.9m of undrawn debt. The company will continue to bid on ‘almost exclusive office’ properties with a view to spending these funds, but will also hold on to a substantial reserve in cash in case another major portfolio opportunity comes to market.
CLS Holdings viewed an £300m pipeline of potential transactions in the first half of 2014, but did not make any purchases despite bidding on £90m of assets.
CLS Holdings’ EPRA NAV per share grew by 11.3% to 1,412 pence during the six months to 30 June.
Net cash inflow from operating activities rose 16% to £17.4m. The vacancy rate across the portfolio currently stands at 3.5%, compared with 4.4% in at the end of December.
Sophia.Furber@estatesgazette.com
