CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 www.clsholdings.com
Disclaimer This document may contain certain ‘forward -looking statements’ . By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from those expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of CLS speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Except as required by its legal or statutory obligations, the Company does not undertake to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Information contained in this document relating to the Company or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance. All numbers provided are as at 31 December 2018 unless otherwise stated.
Contents Fredrik Widlund – CEO John Whiteley – CFO Simon Wigzell – Head of Group Property 01 Overview 06 Portfolio 13 Financials 16 Future 18 Summary 20 Questions
Overview CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 01
Overview CLS Holdings plc ● CLS Holdings plc is a FTSE 250 property investment PROPERTY VALUE BY GEOGRAPHY company which has been listed on the London Stock Exchange since 1994 ● At 31 December 2018 the Company had shareholders’ £1.9bn funds of £1.1bn, and a property portfolio in the UK, Germany and France valued at £1.9bn UK (£982.3m) 51% ● We specialise in owning and managing office buildings, Germany (£629.4m) 33% with a range of lease lengths, in order to achieve stable France (£308.1m) 16% cash flows ● We operate in London and the South East of the UK, and in the larger cities in Germany and France TOP 10 SHAREHOLDERS Mortstedt Family & Charity Trust 51.4% ● We aim to hold, refurbish and develop our property Fidelity Worldwide Investments 9.6% investments to obtain long-term asset growth Bengt Mortstedt 6.5% ● We have established offices in London, Hamburg and Bank of Montreal 6.1% Paris Invesco 5.0% Schroders 2.5% AXA 1.7% Janus Henderson 1.2% JP Morgan Chase 1.0% NW Brown Group 0.9% CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 02
CLS’s History Timeline: 27 years of growth 2006 2005 1992 1994 2000 to 2009 2 2008 2 Founded Listing Acquisition Germany Sales Return of Capital Mortstedt family founded Listed on the London Acquired Citadel Holdings Began to invest in Germany Sold 52% of portfolio £48m distributed to the Company Stock Exchange with 23 French properties (Properties in UK, Sweden, ahead of financial shareholders (Properties in UK & Sweden) (Properties in UK, Sweden France & Germany) crash & France) 2017 2019 2012 2016 2017 2013 CLS Today Retail Bond German Portfolio Regional UK Sweden Exit Vauxhall Square Well-established and Issued £65m retail bond on Acquired a German Acquired a regional UK Sold last asset in Sweden Sold Vauxhall Square for diversified office portfolio the London Stock Exchange portfolio for £135m portfolio for £123m (Properties in UK, Germany £144m in UK, Germany & France & France) CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 03
Strategy Create value, reinvest for the future We acquire the …we secure the …we deliver value We reward right properties… right finance… through active shareholders, management and customers and cost control employees ● In-house asset and ● Distribute half of our ● Invest in offices in UK, ● Bank loans to mainly EPRA earnings and property management SPVs, non-recourse Germany and France reinvest remaining ● Invest to improve our ● Non-prime, good ● Primarily fixed rate ● Our tenants are our assets transport links, larger ● Up to 7 year terms from customers, we European cities ● Effective cost control broad range of lenders understand their needs ● Multi-let to spread risk and high occupancy ● Reward employees for their work and loyalty CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 04
Leadership Senior Management Fredrik Widlund – Chief Executive Officer John Whiteley – Chief Financial Officer Fredrik joined in 2014. His previous experience includes John joined in 2009. He is a Chartered Accountant and senior roles in business leadership, property and finance his previous experience includes senior finance roles and prior to joining CLS he worked for GE Capital Real with Doughty Hanson Real Estate, Great Portland Estate and Shell. Estates and E&Y. Simon Wigzell – Head of Group Property Dan Howson – Head of UK Simon joined in 2010. He is a Chartered Surveyor and Dan joined in 2010. He is a Chartered Surveyor with previously worked in senior roles for Warner Estate, experience at Warner Estate and Henry Boot BAA Lynton and Cushman Wakefield. Developments following service as an officer in the British Army. Rolf Mensing – Head of Germany Philippe Alexis – Head of France Rolf joined in 2006. He is a Chartered Surveyor with Philippe joined Citadel Holdings plc in 1997. He is a experience at the Quandt Family Office and DIC Asset Chartered Surveyor. Prior to joining CLS he worked for AG, a listed property company in Germany. several banks in charge of international property finance in Europe and the US. CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 05
Portfolio CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 06
Portfolio Markets United Kingdom Germany France ● ● Well-diversified strong economy ● Political measures forecast to have Brexit uncertainty creates opportunities a positive impact on growth ● Low vacancy and limited supply ● ● Buoyant investment market across Resilient office market driving rental and capital growth both Paris and the regions ● ● Record level of investment activity Liquid and transparent ● Occupational market remains market in London ● Low supply of new build offices; strong ● Conversion of office to mainly pre-let ● Low supply of new build offices; residential restricting supply mainly pre-let CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 07
Portfolio United Kingdom VALUE OF INVESTMENT PROPERTIES £954.9m LETTABLE SPACE 2.6m sq ft PERCENTAGE OF GROUP’S PROPERTY INTERESTS 51% VACANCY RATE 4.0% GOVERNMENT AND MAJOR CORPORATES 68.3% VALUE OF INVESTMENT PROPERTIES IN LONDON £877.2m CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 08
Portfolio Germany VALUE OF INVESTMENT PROPERTIES £629.4m LETTABLE SPACE 3.2m sq ft PERCENTAGE OF GROUP’S PROPERTY INTERESTS 33% VACANCY RATE 4.2% GOVERNMENT AND MAJOR CORPORATES 40.8% CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 09
Portfolio France VALUE OF INVESTMENT PROPERTIES £308.1m LETTABLE SPACE 0.9m sq ft PERCENTAGE OF GROUP’S PROPERTY INTERESTS 16% VACANCY RATE 2.3% GOVERNMENT AND MAJOR CORPORATES 49.4% CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 10
Portfolio Resilient tenant base CONTRACTED RENT (£109.6m) AFFORDABLE RENTS (per sq ft) £23.14 689 £19.41 Tenants £11.41 Government (28% by rent) Major corporates (29%) Other (43%) UK Germany France TOP 10 TENANTS (33% of contracted rent) AVERAGE UNEXPIRED LEASE TERM (Years) 1. Secretary of State (UK) 5.4 5.4 2. National Crime Agency (UK) 5.3 4.9 4.8 3. Roehampton University (UK) 4.3 4.2 4. City of Bochum (Germany) 2.6 5. BAE Systems (UK) 6. General Mills (UK) 7. Kaufland (Germany) 8. Honda (UK) UK Germany France Group 9. Bosch (Germany) To first break To end of lease 10. COLT Telecoms (France) CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 11
Portfolio Group statistics PROPERTY USE BY REVENUE EXCESS OF NET INITIAL YIELD OVER COST OF DEBT 8% Office (89%) 6% Student (5%) 4% Hotel (4%) 2% Food retail (2%) 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Net initial yield Weighted average cost of debt OFFICE SECTORS BY REVENUE VACANCY Government (30%) Business services (23%) 5.8% IT (7%) Group KPI 5.0% Manufacturing (13%) 4.5% 4.4% 4.4% Finance (5%) 3.9% 3.8% Medical services & healthcare (3%) 3.1% 2.9% 2.8% Education & training (1%) 1.6% Media and publishing (2%) Telecomms (1%) Charitable (1%) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Other (14%) CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 12
Financials CLS Holdings plc Berenberg UK Corporate Conference 28 March 2019 | 13
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