CLS Holdings (CLI) delivered a sector-leading performance in 2016. For while many real estate companies suffered a decline in net asset value, CLS's adjusted NAV grew by 18 per cent to 2,456p. And even taking out the effect of sterling's weakness - CLS has property in France and Germany - net assets grew by 12 per cent, according to management's numbers.
Headline numbers were affected by the smaller valuation uplift, but, crucially, net rental income rose by 8 per cent to £107m. The revenue stream is also high quality; two-thirds of the tenants are government bodies or major corporations, while half of rents are index-linked. In addition, the overall vacancy rate fell from 3.1 per cent to a record low of just 2.9 per cent.
CLS continued to make a useful return through recycling capital. During the year, four properties were sold at an average net initial yield of 5.6 per cent, while the four acquisitions came with an higher initial yield of 6.9 per cent.
Group finances have also been improved. Last year a total of £177m was financed through 14 new loans at a weighted average of just 1.9 per cent, taking the overall cost of debt down from 49 basis points to 2.91 per cent, the lowest ever.
Analysts at Liberum are forecasting adjusted net asset value at the December 2017 year-end of 2,495p.
| CLS HOLDINGS (CLI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,795p | MARKET VALUE: | £731m | |
| TOUCH: | 1,770-1,825p | 12-MONTH HIGH: | 1,795p | LOW: 1,125p |
| DIVIDEND YIELD: | 2.2% | TRADING PROPERTIES: | nil | |
| DISCOUNT TO NAV: | 17% | |||
| INVESTMENT PROP: | £1.54bn | NET DEBT: | 81% | |
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 963 | 56 | 106 | nil |
| 2013 | 1,094 | 71 | 147 | nil |
| 2014 | 1,521 | 237 | 449 | nil |
| 2015 | 1,810 | 151 | 306 | nil |
| 2016 | 2,151 | 100 | 236 | 40 |
| % change | +19 | -34 | -23 | - |
Ex-div: 16 Mar Payment: 28 Apr | ||||
