Strong rental earnings and a rise in property values triggered an 8 per cent half-year increase in adjusted net asset value at CLS (CLI) to 1,914p a share. With the real estate group's Spring Mews student and hotel development on board for the first time, rental income grew 22 per cent to £50m.
Spending £42m on buildings in London and Munich helped bring CLS's portfolio value up to £1.4bn. As value becomes harder to find in the UK capital, boss Fredrik Widlund has been staking out areas in the home counties such as Bracknell, where the Reflex building cost £19m, with an initial yield of 8 per cent. According to Mr Widlund, Germany offers even more value, thanks to falling vacancies and attractive financing packages. But while the UK and Germany remain key growth areas, at local currencies the underlying value of the property portfolios in Sweden and France crept up, too.
Strong cash flows have been supported by management's efforts to refinance borrowings at ever lower interest rates. At 6.1 per cent, the rental yield is well in excess of CLS's weighted cost of debt of about 3.5 per cent. Instead of a conventional dividend to distribute these flows, there's a tender offer buyback of one share for every 162 held at 2,190p a share, equating to a return of 13.52p a share and implying a dividend yield of 2.2 per cent.
Broker Liberum has upgraded its forecast for year-end book value to 2,028p a share.
| CLS HOLDINGS (CLI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,904p | MARKET VALUE: | £807m | |
| TOUCH: | 1,900-1,905p | 12-MONTH HIGH: | 2,023p | LOW: 1,270p |
| DIVIDEND YIELD: | nil* | TRADING PROPERTIES: | nil | |
| PREMIUM TO NAV: | 15% | NET DEBT: | 85% | |
| INVESTMENT PROPERTIES: | £1.33bn | |||
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share* (p) |
|---|---|---|---|---|
| 2014 | 1227 | 72.6 | 142 | nil |
| 2015 | 1658 | 80.2 | 161 | nil |
| % change | +35 | +10 | +13 | - |
*Excludes distributions made by way of tender offer buybacks | ||||
