CLS Holdings Regulatory News (CLI)

PRESS RELEASE

Release date: 8 July 2020

Embargoed until: 07:00

CLS Holdings plc ("CLS", the "Company" or the "Group")

Trading Update for the period 1 January 2020 to 7 July 2020

HIGH RENT COLLECTIONS CONTINUE

Fredrik Widlund, Chief Executive of CLS, commented:

"As the lockdown measures are eased, we remain focused on the welfare of our staff and other stakeholders while also recognising that we need to do what we can to help the economy get back to normality. All of our offices across the UK, Germany and France are open and we have made the necessary modifications to make the buildings compliant with Covid-19 safety measures to ensure we continue to support our tenants.

"Our tenant base has a strong underpinning of government and major corporations, with limited exposure to those sectors that have been most impacted by Covid-19, such as retail, hospitality and leisure. We are continuing to work closely with our tenants and this can be seen in our rent collections, which have continued to perform well, demonstrating the resilience of our business and strategy."

A summary of our key operational and financial metrics is set out below:

Q3 rent collections

The Group's rental income in the UK and France is due on a quarterly basis with the current payment due between 24 June and 1 July. In Germany, rents are due monthly and the current payment was due on 3 July. As at 30 June 2020, the Group's contractual rents are split 52% in the UK, 33% in Germany and 15% in France.

By close on 7 July 2020, we had received 86% of contractual rents due or 93% taking into account those tenants we are supporting by switching to monthly rents (2019: 96% of rents had been collected by 7 July 2019).

Update on first half 2020 rent collections

In the first quarter we collected 99% of rents due and in the second quarter we have, by 7 July 2020, collected 96% of the rent due.

Overall, for the first half of 2020 we had received 98% of contractual rents due by 7 July 2020 (2019: 97% of rents had been collected by 7 July 2019).

 Vacancy and lettings (as at 30 June 2020)

As expected, vacancy has increased from 31 December 2019. This increase is due to completed refurbishments, now available to let, and acquired vacancy in the UK, and some recent lease expiries across the portfolio.

· Vacancy rates (Based on December 2019 ERVs):

The vacancy numbers based on 30 June 2020 ERVs will be published as part of our half-yearly results on 12 August 2020.

Since 8 April, there have been 25 deals securing £3.2 million of annual rent 3.7% above ERV. Notable transactions include a lease renewal at Front de Parc in Lyon for 14,381 sq. ft (1,336 sqm) on a 3/6/9 year lease with BNP Paribas, as well as a lease renewal to LOCON Logistik & Consulting at Adlershofer Tor in Berlin for 9,020 sq. ft (838 sqm) for a further 7 years.

Liquid resources and financing

The Group's balance sheet remains well-capitalised and robust. As at 30 June 2020, CLS had cash of over £190 million, giving a Loan to Value of 34.4% based on 31 December 2019 portfolio valuation (31 December 2019: 31.4%), with a further £50 million in undrawn facilities. The cash position has reduced as a result of the payment of the 2019 final dividend, debt repayment and the equity element of the Nuremberg acquisition.

In 2020, the Group has £114.5 million of debt, across 9 loans, due to be refinanced and we are on track to repay or refinance all of them. Five loans (£90.4 million) have been extended or have approved terms for a refinancing or an extension and one loan (£5.1 million) has been repaid as the property, Park Avenue in Lyon, is shortly to undergo a substantial refurbishment. We are in advanced discussions for the remaining three loans (£24.1 million).

Acquisition

On 1 June 2020, we announced the acquisition of Georg-Elser-Strasse 7, Nuremberg for £16.5 million excluding costs. It is a modern, four-storey office building comprising 63,647 sq. ft (5,913 sqm) of space fully let to Deutsche Telekom. The asset has a WAULT of 7 years to breaks with £1.0 million net rent per annum, reflecting a net initial yield of 5.8%.

The associated financing has now been completed with Sparkasse Nürnberg, a new lender to the Group. The 7-year, 70% LTV financing is at an all-in fixed rate of 0.96% including costs.

Developments

A resolution to grant planning permission for a new 29,000 sq. ft (2,694 sqm) office development at Vauxhall Walk next to our Spring Mews property was granted in May. Detailed design and site investigations are ongoing, alongside office market assessments, before an anticipated construction start at the beginning of 2021. In May, we also secured building permission for our Vor dem Lauch building in Stuttgart. The permission is for a new office development of c.141,000 sq. ft (13,099 sqm) of lettable space and we are now starting to market the building before making a decision as to how to proceed.

-ends-

For further information, please contact:

CLS Holdings plc

(LEI: 213800A357TKB2TD9U78)

www.clsholdings.com

Fredrik Widlund, Chief Executive Officer

Andrew Kirkman, Chief Financial Officer

+44 (0)20 7582 7766

Liberum Capital Limited

Richard Crawley

Jamie Richards

+44 (0)20 3100 2222

Whitman Howard

Hugh Rich

+44 (0)20 7659 1261

Elm Square Advisers Limited

Jonathan Gray

+44 (0)20 7823 3695

Smithfield Consultants (Financial PR)Alex Simmons

Rob Yates

+44 (0)20 3047 2546

Forward-looking statements

This announcement 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 should not be relied upon as an indicator of future performance or construed as a profit forecast.