CLS H1 2026 Earnings Report

CLS EPS Results

• Actual EPS: GBX 2.70
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

CLS Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

CLS Announcement Details

• Quarter: H1 2026
• Date: 8/12/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 12, 2026
• Conference Call Time: 3:30AM ET

We are a commercial property investment company with a £2.1bn portfolio listed on the Premium Main Market on the London Stock Exchange, specialising in future-focused office space in the UK, Germany and France. Through geographical diversification, local expertise and an active management approach, we transform office properties into sustainable, modern spaces that help our tenants' businesses to grow.

CLS H1 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Near-term earnings pressure intensified: H1 EPRA earnings per share fell 32.5% to £0.027, and full-year guidance was reduced to £0.046–£0.055 per share due to asset disposals, prior tenant departures and the Spring Gardens tenant not extending its lease.
• Negative Sentiment: No interim dividend will be paid; the board will instead consider a single final dividend after year-end earnings are known. Portfolio valuations declined 4.6% in local currency, pushing LTV up to 51.6%, above the company’s 35%–45% target range.
• Positive Sentiment: CLS made progress on deleveraging and refinancing, completing or exchanging approximately £75.7 million of property sales and remaining on track for its £100 million 2026 sales target. Refinancings covering 89% of 2026 maturities are completed, credit-approved or agreed, with no additional lender covenants reported.
• Positive Sentiment: Leasing activity remained steady, with £5.7 million of annual rent secured in H1 and a further £1.9 million signed in July, while vacancy held at 14.5%. Management sees potential to increase contracted rent from £100.4 million to more than £125 million through leasing vacant space and refurbishment projects, although timing depends on capital availability and market conditions.

Presentation

[Fredrik Widlund, CEO at CLS Holdings]

Good morning and welcome to CLS Holdings plc half year 2026 results presentation. I am Fredrik Widlund, Chief Executive, and next to me is our new CFO, Patrick Symons. Patrick, who has been with us for almost 10 years, was previously our group financial controller and will be a familiar face to many of you. Today, we will present to you the interim results, give you an update on the portfolio, and what we have seen in the first six months.

[Fredrik Widlund, CEO at CLS Holdings]

First, I will start with the trading update that we published last week. We are facing near-term earnings pressure, and this is driven by the following factors. The disposal program is reducing income, and we have sold properties for over GBP 200 million since 2025 and now have a smaller portfolio. While leasing activity is steady, it is still slower than what we expected earlier in the year.

[Fredrik Widlund, CEO at CLS Holdings]

The tenant at Spring Gardens is no longer seeking to extend the lease beyond September. This was initiated by them, but at a very large stage they decided to not proceed. This is reflected in the H1 results and in the revised full-year earnings guidance. Given the importance of reducing leverage and completing the disposal program, the board has concluded that it is appropriate to determine the level of distribution once the full-year earnings are known.

[Fredrik Widlund, CEO at CLS Holdings]

We will therefore not be paying an interim dividend and instead consider a single final dividend for the year, taking into account our dividend coverage policy as well our U.K. redistribution requirement for the full year. On the next slide, I would like to give you an update on our strategic priorities and how we are delivering against them. Firstly, reduce vacancy and improve earnings.

[Fredrik Widlund, CEO at CLS Holdings]

We signed GBP 5.7 million of leases during the first half of the year, with the number of new leases increasing. We had less renewals due to fewer expiries and hence less potential extension opportunities. We are seeing a good level of inquiries for our vacant space and signed a further GBP 1.9 million of leases in July. Vacancy was stable at 14.5%, with leasing activity largely offsetting expiries and disposals in the period.

[Fredrik Widlund, CEO at CLS Holdings]

As you heard on the previous page, earnings were lower from a smaller portfolio after having sold over GBP 200 million of assets since the start of 2025 and expiries from the repositioning of New Printing House Square for redevelopment and the German insolvencies in 2025. This was partly offset by cost reductions across administrative, property, and financing expenses. This work will continue in the second half of 2026.

[Fredrik Widlund, CEO at CLS Holdings]

Secondly, execute sales to reduce loan-to-value to our target range of 35%-45%. Despite subdued investment markets, we were successful in selling properties for GBP 57 million in the first half of the year, with another GBP 41 million either exchanged or agreed. This follows GBP 144 million of sales in 2025, and we are making good progress to meet our GBP 100 million target for the year. The properties were sold at book value.

[Fredrik Widlund, CEO at CLS Holdings]

In March, we reported that valuations appear to be stabilizing with the rate of decline moderating and some properties increasing in value due to leasing activity. However, the last six months have seen a renewed increase in valuation declines on the back of shifting yield expectations across our markets. This meant that our LTV increased to 51.6%, despite paying down over GBP 57 million of debt during the period.

[Fredrik Widlund, CEO at CLS Holdings]

This work will also continue, excluding valuation movements due to well-known macroeconomic drivers, LTV would have reduced to below 50%. Thirdly, complete all refinancings due in the financial year. Since the start of the year, we have refinanced or repaid over GBP 113 million or 57% of what was maturing in the year, with a further 32% credit approved or agreed and due to close in August and early September.

[Fredrik Widlund, CEO at CLS Holdings]

The remaining 11% is progressing well, and we have already started working on some of the 2027 debt. Fourth, investing in our properties to unlock the value within the portfolio. We are operating a strict capital allocation policy and focusing on investment that delivers short-term benefits while also considering some of our long-term planning opportunities.

[Fredrik Widlund, CEO at CLS Holdings]

In the first half, we spent GBP 12.5 million on CapEx and tenants' fit-outs, which we believe will deliver high quality, faster-growing properties going forward. With that, I will hand you over to Patrick to take us through the financials.

[Patrick Symons, CFO at CLS Holdings]

Thank you, Fredrik, and good morning, everyone. Today, I will cover our key financial metrics, in particular, the drivers of EPRA earnings in the period, half-year property valuations by country, and our significant progress in relation to refinancing our 2026 and future debt maturities.

[Patrick Symons, CFO at CLS Holdings]

Before discussing the financials in detail, I would like to recognize the CLS team's commitment and hard work in delivering these results and say how pleased I am to be leading the team. Moving on to slide six, I'd like to start with some of our financial headlines. EPRA earnings are GBP 0.027 per share, a 32.5% decline from last year, which reflects the impact of over GBP 200 million of property sales that have been executed since the start of 2025.

[Patrick Symons, CFO at CLS Holdings]

EPRA NTA fell 11.5% to GBP 1.777 per share, primarily reflecting the 4.6% local currency valuation decline in our portfolio, and the payment of the 2025 full-year dividend. Our loan-to-value ratio was 51.6%. Despite consciously lowering our debt during the period through property sales, valuation declines more than offset the positive impact of sales.

[Patrick Symons, CFO at CLS Holdings]

Slide seven presents our EPRA income statement. The main driver of the reduction in EPRA earnings is the fall in net rental income. Rental income was impacted by the execution of our property disposal program and 2025 tenant departures, which I will discuss in more detail on the next slide. Property and administration costs are lower as a result of deliberate and significant actions taken to reduce our cost base, and from the disposal of Spring Mews Student in mid-2025.

[Patrick Symons, CFO at CLS Holdings]

Finance costs were lower as our debt reduced by GBP 80 million compared with the first half of 2025. This was as a result of loan repayments associated with the sale of properties. Through positive actions taken to offset the impact of sales, and against market headwinds, we achieved EPRA earnings of GBP 11 million, or GBP 0.027 per share for the period.

[Patrick Symons, CFO at CLS Holdings]

Slide eight outlines the movement in net rental income. Like-for-like net rental income fell 4.7% to GBP 50.8 million. This GBP 2.5 million reduction in like-for-like rental income is impacted most significantly by the block expiry of all leases at New Printing House Square, which happened in June 2025, and two tenant insolvencies in Germany that happened in the second half of 2025. Combined, these prior year tenant departures caused a GBP 2.6 million reduction in like-for-like net rental income.

[Patrick Symons, CFO at CLS Holdings]

Other lease expiries reduced like-for-like net rental income by GBP 2.5 million, but new leases and indexation totaling GBP 2.6 million more than offset this. Turning to the right-hand side of the graph, the sale of more than GBP 200 million of properties since the start of 2025 reduced net rental income by GBP 4.6 million, the bulk of which related to the sale of Spring Mews Student.

[Patrick Symons, CFO at CLS Holdings]

In summary, the key drivers for the reduction in net rental income from GBP 53.3 million to GBP 46.3 million were sales and prior year tenant departures limited to three properties in the portfolio. Slide nine shows the movement in our cash and cash equivalents during the year. CLS utilizes several facilities which provide the business with financial flexibility. Total cash and cash equivalents and undrawn facilities are represented by the numbers above the dashed bars.

[Patrick Symons, CFO at CLS Holdings]

As at June 30, this was GBP 79.4 million. The different elements of the movement in cash and cash equivalents are as follows. Cash flow from operations is made up of two elements. The first element, cash flow from operations before tenant incentives, was GBP 25.5 million. The second element is tenant incentives of GBP 7.1 million, which reduced this inflow to GBP 18.4 million.

[Patrick Symons, CFO at CLS Holdings]

These tenant incentives predominantly represent cash outflows to fund two tenant fit outs in advance of long-term government leases in Germany. These leases were secured last year, well in excess of ERV. The fit out works will result in a significant payback over the course of the leases once the tenants are fully in occupation. Interest payments and tax resulted in an GBP 18.4 million outflow. There was an outflow of GBP 7.3 million from the 2025 full-year dividend.

[Patrick Symons, CFO at CLS Holdings]

However, this was lower than in the same period last year as a scrip alternative was offered for the final dividend. Property disposals and the repayment of debt generated net proceeds of GBP 3.9 million. Finally, we invested GBP 10.3 million of CapEx to upgrade our portfolio. Slide 10 shows the like-for-like change in valuation of our property portfolio.

[Patrick Symons, CFO at CLS Holdings]

As a whole, the portfolio fell 4.6% in local currency, the main driver of this being yield expansion of 27 basis points. Starting with our U.K. portfolio, which was valued by Colliers for the first time, who were appointed due to RICS rotational requirements. This portfolio fell by 7.2%, driven by yield expansion of 55 basis points. In Germany, valuations were down 2.5% in local currency, again from yield expansion of 10 basis points. However, our properties in Dortmund increased in value.

[Patrick Symons, CFO at CLS Holdings]

These properties benefit from long-term government leases that were secured last year. This demonstrates that valuers will reward successful lettings despite challenging market conditions. In France, it was a similar story in Paris and Lyon, with yield expansion impacting both markets, resulting in a blended yield increase of 16 basis points. In summary, yield expansion was the main driver of valuation decline in all markets.

[Patrick Symons, CFO at CLS Holdings]

Moving on to slide 11, I'd like to summarize our debt strategy before providing more detail on our financing progress on the following slide. Most of our debt is secured either on an asset-by-asset basis or against a pool of assets in a particular geography. Our leverage is higher than we would like, with an LTV ratio of 51.6%. This is above our target level of between 35% and 45%, and our sales program is focused on reducing leverage.

[Patrick Symons, CFO at CLS Holdings]

Our strategy is to maintain predominantly fixed-rate debt and diversify maturity dates to reduce concentration risk and improve manageability. Moving to slide 12, on which I will outline our refinancing progress during the year. This builds on the significant volume from last year, where over GBP 370 million of expiries were successfully managed. In the first half of 2026, we refinanced or repaid over half of our debt maturities.

[Patrick Symons, CFO at CLS Holdings]

This included two of our more notable financings. Firstly, we replaced one of our revolving credit facilities with a new facility. This new facility provides access to lower-rate euro-denominated debt and has resulted in an increase in available funds of approximately GBP 9 million compared with the previous facility. Secondly, we secured a bridging loan over our property at Spring Gardens.

[Patrick Symons, CFO at CLS Holdings]

Despite the single-tenant lease, which expires in September, we were able to secure the loan, which will provide financial flexibility through to the expected sale of the property in 2027. Our net debt fell by GBP 44.2 million as a result of our disposal activity. Disposals also impacted on our weighted average debt maturity, which reduced to 3.2 years, with early repayment of long-term debt associated with sales.

[Patrick Symons, CFO at CLS Holdings]

As mentioned earlier, we are executing our sales program to reduce LTV, which is 51.6%, as half-year declines more than offset the impact of sales. Higher long-term interest rates meant recent refinancings increased our weighted average cost of debt marginally from 3.8% to 3.9%. Interest cover reduced from 1.9x to 1.6x as a result of lower earnings, which were covered earlier. Looking forward, the remaining financings for 2026 consist of GBP 85.7 million of typical asset-backed loans.

[Patrick Symons, CFO at CLS Holdings]

So far, GBP 63.8 million has been agreed. We are in discussions with existing lenders regarding the remaining debt due in Q4, which represents approximately 11% of 2026 maturities. Looking forward, our debt maturity profile is manageable, with no more than GBP 190 million falling due in any one single year, and we have begun engaging with lenders in relation to our 2027 maturities.

[Patrick Symons, CFO at CLS Holdings]

To summarize, earnings were impacted by over GBP 200 million of disposals since the start of 2025 and tenant departures in the same year, such that we expect 2026 full-year EPRA earnings to be in the range of GBP 0.046-GBP 0.055 per share. We have completed or exchanged on GBP 75.7 million of sales to date and expect to deliver approximately GBP 100 million of sales for the year, which will assist in reducing our leverage. Yield expansion in all markets has driven valuation drops.

[Patrick Symons, CFO at CLS Holdings]

However, we are encouraged by the positive impact our leasing activity can have on values. We have completed the majority of our 2026 refinancings and have started to focus on 2027 maturities. As mentioned earlier by Fredrik, no interim dividend will be paid, and the board intends to consider a final dividend for the entirety of 2026 based on full-year earnings. With that, I will pass you back to Fredrik.

[Fredrik Widlund, CEO at CLS Holdings]

Thank you for that, Patrick. Let us now cover our markets and what we are seeing. Starting with the U.K., political developments and interest rate expectations continue to create market uncertainty. Commercial property transactions were down in the first half compared to the same period last year. London leasing take-up was stable, with supply of new prime offices very limited, and occupiers increasingly accept that uncertainty is the new normal and get on with their plans.

[Fredrik Widlund, CEO at CLS Holdings]

In Germany, business sentiment has been improving, and there are expectations that the fiscal reforms are finally starting to create more activity. Commercial property transaction volumes increased in the period, and there are signs that momentum is building. Leasing take-up was stable here as well, with increasing signs of low new supply shifting demand to non-prime locations.

[Fredrik Widlund, CEO at CLS Holdings]

In France, the presidential election in May 2027, in combination with short-term supply imbalances, is creating a cautious market. Despite this, commercial property transaction volumes increased in Q2 from larger corporate transactions, not least led by Blackstone's acquisition of over EUR 2 billion in June. Leasing take-up was muted and declined compared to last year, but we have continued to see good demand for smaller floor plates, and our own vacancy fell in the period.

[Fredrik Widlund, CEO at CLS Holdings]

Overall, our market continued to experience modest economic growth and higher for longer interest rate environments. However, the outlook is gradually becoming more supportive with occupiers and investors accepting the situation, while the sentiment is very sensitive to external shocks, which does slow things down. Slide 16 illustrates our high quality and diversified tenant base, and I would like to draw your attention to a few key takeaways.

[Fredrik Widlund, CEO at CLS Holdings]

We have 666 tenants across our three markets, and yes, that is the right number, and this number has stayed relatively stable over the last few years. Close to 30% are government, and a further 35% are large companies and organizations. When the NCA leaves, we expect to shift this to about 19% and 39% respectively, although that is still around 60%.

[Fredrik Widlund, CEO at CLS Holdings]

The tenants continue to be well spread across different industries, giving further diversification. The top 10 now represents 33% of total contracted rent. Rent collection remains high at 98%. Moving on to the next slide, I will give an update on our leasing progress in the period. Leasing activity was stable in the first half, and we secured GBP 5.7 million of annual rent.

[Fredrik Widlund, CEO at CLS Holdings]

We had less expiries in the period and hence less opportunities for renewals, but the number of new leases increased over 20% compared to 2025. We are seeing a good level of inquiries for our vacant space and signed a further GBP 1.9 million of leases in July. As a whole, leases were signed at 8.9% below ERVs.

[Fredrik Widlund, CEO at CLS Holdings]

Excluding one lease at New Printing House Square, where a short lease was agreed ahead of the planned redevelopment in 2029 to reduce void cost of over GBP 1 million a year. The other 56 lettings were on average completed in line with ERV. We are making strategic decisions on a case-by-case basis to ensure we minimize void costs, and that might mean not always maximizing rent to ensure occupancy.

[Fredrik Widlund, CEO at CLS Holdings]

Like-for-like ERVs for the portfolio were down 1.8%, but we expect rental growth to resume as tenants will pay for the right properties in the right locations. The supply imbalance is emerging as very few new offices are delivered. On the right-hand side, you can see that our reported vacancy was stable at 14.5%, and new leases and renewals largely offset expiries and disposals in the period.

[Fredrik Widlund, CEO at CLS Holdings]

We had particularly strong leasing performance in France, with vacants reducing 4.4% to 7.7% on the back of strong demand for smaller floor plates. I will now move on to an update on our sales progress on slide 18. As highlighted earlier, we are making good progress on sales to reduce debt, but also to free up cash for investment in our portfolio.

[Fredrik Widlund, CEO at CLS Holdings]

In the period, we sold properties for GBP 57 million at book value, with the main sale being The Bricks in Essen. In July, we completed on Columbia House in Bracknell. We have also exchanged on the Clockwork building in London and are under offer for another property in Germany. This all means that we are on track to deliver on our GBP 100 million sales target for the year.

[Fredrik Widlund, CEO at CLS Holdings]

We will keep monitoring the quantum of sales depending on how valuations move and leasing progresses, which also impacts our loan to value and earning capacity. We are also investing in the portfolio, and on the next few slides, I will talk about how we believe this will drive value over time. On slide 19, we have some of the current projects we are completing, as well as near and medium-term opportunities that we are pursuing.

[Fredrik Widlund, CEO at CLS Holdings]

The two German projects on the left are pre-lets. For the Yellow, we have now handed over the space to the tenant, as well as agreed additional space. At Gothic House, we are working on the fit outs to hand over the space to the new tenant early next year. For Spring Gardens, we are working with London Square on the planning application, which was submitted at the end of February.

[Fredrik Widlund, CEO at CLS Holdings]

The application is now expected to be considered by the planning committee in September 2026, following delays due to the local elections in May, for a very exciting scheme that will improve further the attraction of Vauxhall and provide much needed housing. At Maximilian Forum, located in Martinsried outside Munich, we are now close to completing the conversion to Co-labs and ancillary space for tenants.

[Fredrik Widlund, CEO at CLS Holdings]

The new Munich underground station is also opening in 2027, and we are in discussions with several biotech companies about taking space. At New Printing House Square, we have made progress on positioning the building for redevelopment by aligning all leases for expiry in 2029. We have also progressed the plans for conversion to a residential-led scheme and have submitted the pre-application.

[Fredrik Widlund, CEO at CLS Holdings]

In the U.K., we have also received planning approval to convert the standalone student flats that was not included in the student sale last year to serviced apartments that will be operated by our current hotel partner. We are also progressing with other alternative use projects that will add long-term value. Let us now move to the last two slides of the presentation from slide 20. The walk on this slide describes the opportunities we have to drive increased rental income in the portfolio.

[Fredrik Widlund, CEO at CLS Holdings]

The walk starts on the left-hand side of our contracted rent of GBP 100.4 million. The GBP 15.9 million represents the value of current space that is being marketed. As you can see, 30% of the vacancy is concentrated to a few properties in the U.K.: The Artesian, The Coade, and New Printing House Square, which are all in good Central London locations.

[Fredrik Widlund, CEO at CLS Holdings]

The Artesian and The Coade are grade A spaces, and we are making progress in gradually filling them up. Last time we presented this walk, we also had two properties in Lyon included in the top list, but they are now essentially let. The GBP 6.4 million of over-rented space that we now have is an effect of indexation, mainly in Germany, where nearly 75% of the portfolio is index-linked. A further 10% is subject to stepped rent uplifts, which has driven rent above ERV.

[Fredrik Widlund, CEO at CLS Holdings]

Overall, this means that we have an opportunity to drive rent to GBP 110 million, and in addition, we have a further GBP 15.6 million of ERV in potential refurbishments. Although this is subject to availability of capital and pre-lets, that takes the potential to over GBP 125 million. We have said this before, securing new leases is our largest opportunity to drive growth, but also to offset some of the impact from the sales program.

[Fredrik Widlund, CEO at CLS Holdings]

Finally, on the last slide, I would like to leave you with a few key takeaways in relation to our strategic priorities and expectations for the second half of the year. Leasing markets remain stable across our regions with the want for modern, well-located offices evident. While leasing activity was steady, it was still slower than what we expected earlier in the year.

[Fredrik Widlund, CEO at CLS Holdings]

Saying that, our leasing pipeline for the second half of the year is encouraging, and we signed a further GBP 1.9 million of leases in July and with more in the pipeline. We are executed on the sales plan and expect to meet the target of GBP 100 million of sales for 2026. How quickly we will be within our loan to value target range is dependent on future valuations.

[Fredrik Widlund, CEO at CLS Holdings]

Refinancing are progressing well with 89% completed, credit approved or agreed, and we have started work on 2027 maturities. We are investing in the portfolio but apply a strict capital allocation policy that prioritizes pre-lets and shorter paybacks, which we believe will deliver higher quality, faster-growing properties going forward.

[Fredrik Widlund, CEO at CLS Holdings]

With near-term earnings pressures from sales and expiries, we will continue to concentrate on what we can influence to deliver a more focused portfolio, make sure we have operational efficiency, and the financial flexibility that will position our business for long-term growth as market conditions improve. With that, I'd like to finish today's presentation. Thank you all for attending, and we will now open up for questions.

[Tom Musson, Analyst at Berenberg]

Thanks. Good morning. It's Tom Musson from Berenberg. Just a question on Spring Gardens. Just want to check, how secure is the expected sale of that site in the event of, say, any more planning delays or perhaps any changes that you might have to make to the planning application? Are there any sort of situations like that where the buyer isn't necessarily obligated to proceed?

[Fredrik Widlund, CEO at CLS Holdings]

Well, as in any contract, there is, of course, a long stop date. Although I'm not going to disclose when that is, but it's in the future, and we're working very closely together to achieve planning. This is a deal that both parties really want to do.

[Tom Musson, Analyst at Berenberg]

Awesome. Thanks. Just a question on refinancing. At this point, are any lenders requiring any additional covenants or margin increases? I guess, what's the marginal cost of finance right now on GBP and EUR debt?

[Patrick Symons, CFO at CLS Holdings]

No, we are not seeing any additional covenants. We are refinancing our loans very much with the same lenders. Similar conditions in terms of the margins. We are seeing around 1%- 2% margins for the loans.

[Tom Musson, Analyst at Berenberg]

Okay, thanks.

[Patrick Symons, CFO at CLS Holdings]

Fairly standard.

[Tom Musson, Analyst at Berenberg]

Thank you. Maybe last one. Are there any lenders flagging any concern over interest cover? Or are all the covenants LTV based?

[Patrick Symons, CFO at CLS Holdings]

We have a number of covenants. We have good headroom on those of 20%-31%, as we have outlined in the financials. We have good relationships with our lenders. We report on covenants every six months, and we are not flagging any issues in terms of that.

[Tom Musson, Analyst at Berenberg]

Thank you.

[Fredrik Widlund, CEO at CLS Holdings]

It might be worth saying as well, we do secure lending on an SPV basis, so the underwriting would be for each individual property. It would not be for the group. So it is totally dependent on how that individual property is delivering.

[James Carswell, Analyst at Peel Hunt]

Morning. It is James from Peel Hunt. Following off Tom's question on Spring Gardens, just in terms of the timing, assuming planning is granted, are there any other conditions that need to be met before the sale then goes through? When do you expect that sale to complete, potentially?

[Fredrik Widlund, CEO at CLS Holdings]

As in any contract, there will always be certain things that need to be fulfilled, but the planning is the main one. We would expect to proceed with that one in the first half of 2027.

[James Carswell, Analyst at Peel Hunt]

Thanks.

[Bjorn Zietsman, Analyst at Panmure Liberum]

Thanks. Bjorn Zietsman from Panmure Liberum. Just two questions, please. Firstly, on ERVs. How much confidence do you have in the ERVs across the regions in being able to lease at or above ERV? The second question I have is just on the German insolvencies. Do you see that as isolated, or do you think that's potentially sector specific? If so, is there any other contagion across the portfolio?

[Fredrik Widlund, CEO at CLS Holdings]

We start with the ERV question. As I said earlier on, we are pretty confident that we will be seeing a continued rental growth. As I also mentioned, we will be pragmatic, and we would rather fill up the space. So on some properties, like New Printing House Square, yes, we will accept a rent that will be below ERV. But that is a little bit more of a one-off, given that we can only offer very short leases for that property. But overall, for the portfolio, we do expect rental growth to resume, and that's very much driven by the supply and demand balance. David, do you want to take the second one?

[David Fuller, COO at CLS Holdings]

Yeah. In terms of the insolvencies in Germany, that is very much isolated. We've got good rental collection, and we're not seeing any further insolvencies. We monitor our tenants and that's completely isolated.

[Bjorn Zietsman, Analyst at Panmure Liberum]

Thank you.

[Company Representative at CLS Holdings]

There was one question on the line about Spring Gardens, but I think that was answered. There was a similar question to James's there, and then we have another one. Would it be possible to sell out of France or Germany, or would any sale lead to a large tax bill or other significant penalty?

[Fredrik Widlund, CEO at CLS Holdings]

Well, we constantly review our portfolio, but at the moment, we are very happy with the exposure we have in our three countries. As I said, we constantly look at other ways of optimizing. Yes, it is possible you could do that, but at the moment, it is not something that we are planning to do.

[Company Representative at CLS Holdings]

If there are no more questions in the room.

[Fredrik Widlund, CEO at CLS Holdings]

All right. In that case, thank you all again for attending and wish you all a good day. Thank you.

[Patrick Symons, CFO at CLS Holdings]

Thank you.

Participants

Executives

• Fredrik Widlund, CEO
• Patrick Symons, CFO
• David Fuller, COO
• Company Representative

Analysts

• Tom Musson, Analyst at Berenberg
• James Carswell, Analyst at Peel Hunt
• Bjorn Zietsman, Analyst at Panmure Liberum