The sheer profitability of office landlord CLS Holdings (CLI) puts the big real estate investment trusts to shame. Adjusted net asset value (NAV) rose 17.4 per cent last year to 1,154p per share, thanks mainly to 89p of underlying profits. For tax reasons, CLS returns those profits to shareholders via tender offer buybacks rather than conventional dividends, but its payout for 2012 was equivalent to 30.2p - a distribution yield of 3.6 per cent.
Property revaluations boosted NAV by 37p last year. The company's development sites near the Vauxhall transport junction in London were the star performers. Having received planning permission last May, CLS is now building a student accommodation, hotel, office and retail block just north of the train station, and in December it also received planning consent for a much larger mixed-use scheme in the Nine Elms area.
The value of its core tenanted portfolio barely shifted, meanwhile. CLS doesn't own the kind of swanky City offices that appeal to global sovereign wealth funds; instead it focuses on higher-yielding buildings in off-prime locations such as New Malden and Croydon in London, and comparable locations around Paris, Hamburg and Munich. The overall portfolio was marked up 1.7 per cent; dragged down by the weak French office market.
Broker Liberum Capital expects adjusted NAV to grow 9 per cent to roughly 1,255p by the year-end.
CLS HOLDINGS (CLI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 850p | MARKET VALUE: | £368m | |
| TOUCH: | 849-855p | 12M HIGH / LOW | 855p | 589p |
| DIVIDEND YIELD: | nil* | TRADING PROP: | nil | |
| DISCOUNT TO NAV: | 12% | |||
| INVESTMENT PROP: | £935m | NET DEBT: | 141% | |
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share* (p) |
|---|---|---|---|---|
| 2008 | 548 | -142 | -121 | nil |
| 2009 | 643 | 18.5 | 36.4 | nil |
| 2010 | 767 | 70.9 | 127 | nil |
| 2011 | 818 | 37.7 | 82.0 | nil |
| 2012 | 963 | 56.1 | 106 | nil |
| % change | +18 | +49 | +29 | - |
*CLS will distribute £13.1m for 2012 via tender offer buybacks | ||||
