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Highlights
- CLS secured £3.7 million in leasing deals in Q3 2024, up 50% year-over-year.
- Annual rents secured through the first nine months of 2024 totaled £10.1 million.
- Progress continues in sustainable initiatives, including energy and carbon savings.
CLS Holdings (LSE:CLI), a prominent UK property investment firm, demonstrated strong leasing activity and stable rental growth in the first three quarters of 2024, despite a challenging commercial real estate market. The company’s successful leasing activity and sustainability achievements underline its resilience and commitment to sustainable growth.
Leasing Highlights and Financial Gains
From January to September 2024, CLS secured 81 leasing deals, yielding an annual rent of £10.1 million, an increase of 5.5% above estimated rental values (ERV). Although total deals were slightly fewer compared to the same period in 2023, they nonetheless show robust demand, particularly for high-quality office spaces. CLS's Q3 leasing performance alone saw 23 new deals, bringing in £3.7 million—over 50% more than Q3 2023 and at 4.8% above ERV. The company’s most notable Q3 transactions included a 10-year lease with Médecins Sans Frontières in London and a major 10-year renewal with HPH Institute in Hamburg.
Occupancy and Vacancy Rates
CLS maintained high occupancy levels in its student and hotel accommodations, with student accommodations in Vauxhall fully let for the current academic year and the hotel recording record revenues. Although the overall vacancy rate rose slightly to 13.3% due to new refurbishments, underlying vacancy decreased from 10.8% to 10.5%. A substantial portion of this vacancy is within energy-efficient properties rated EPC A or B, which positions CLS well to reduce vacancies further in the short to medium term.
Financial Resilience and Debt Management
The Group’s financial position remains strong, with £62 million in cash and an additional £50 million in undrawn credit facilities as of September 30, 2024. Refinancing has been proactive, with 12 loans set to mature in 2025 already largely addressed through early refinancing and restructuring efforts. As a result, the average cost of debt has decreased to 3.75%, with 84% of the debt portfolio now fixed or capped. By mid-November, CLS had collected 96% of Q4 rents, maintaining a solid rent collection rate in line with 2023 figures.
Sustainability Efforts and Awards
CLS made continued strides in sustainability throughout 2024, expecting a 3% reduction in energy use and scope 1 and 2 GHG emissions by year-end. The completion of EV charging and solar PV installations across the UK portfolio supports its Net Zero Carbon Pathway, along with extensive planning for eliminating fossil fuel reliance. CLS’s commitment to sustainability earned the company Gold certification from the EPRA and maintained its GRESB 4-star rating.
Development and Future Projects
In the third quarter, CLS progressed on several development fronts, including refurbishing The Brix in Essen and advancing preconditions at Bismarckstrasse and Debussy. The company continues to work with local councils and authorities, such as Lambeth Council and the GLA, to finalize plans for the anticipated Spring 2025 development at Citadel Place, with adjustments underway to optimize building heights and massing.
