CLS Holdings Regulatory News (CLI)

PRESS RELEASE

Release date: 14 January 2021

Embargoed until: 07:00

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

Trading Update for the period 8 October 2020 to 13 January 2021

RENT COLLECTIONS Remain strong, acquisitions to drive future growth

Fredrik Widlund, Chief Executive of CLS, commented:

"With stricter lockdown measures being reimposed across the UK, Germany and France, our focus remains on the welfare of our staff and other stakeholders. All of our offices remain open to allow for essential work with safety measures in place to support our tenants. Our diverse tenant base with a strong underpinning of government and major corporations, as well as limited exposure to those sectors that have been most impacted by Covid-19, such as retail, hospitality and leisure, has again been reflected in strong rent collections.

We continued to sign leases and extensions in the fourth quarter, which were on average above ERV, and our successful execution of financings with Aviva and Deutsche Pfandbriefbank, in particular, together with selected acquisitions, leave us well placed to deliver future growth when the economy returns to more normal conditions."

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

Q1 2021 rent collections

The Group's rental income in the UK and France is due on a quarterly basis with the current payment due between 25 December 2020 and 1 January 2021. In Germany, rents are due monthly and the current payment was due on 6 January 2021.

By close on 13 January 2021, we had received 90% of contractual rents due or 93% taking into account those tenants we are supporting by switching to monthly rents (2020: 91% of rents had been collected by 13 January 2020).

Update on 2020 rent collections

For the fourth quarter of 2020 we have now collected 99% of rents due (2019: 97%), which is an increase of 9% since our 8 October 2020 trading update. Overall, for entire year of 2020, we have received 99% of contractual rents due (2019: 98%).

Vacancy and lettings (as at 31 December 2020)

As expected, vacancy has increased from 8 October 2020. This increase is due to completed refurbishments, now available to let, and some recent lease expiries across the portfolio, both of which have been harder to let due to the restrictions resulting from the responses to Covid-19.

· Vacancy rates (Based on June 2020 ERVs):

Since 8 October 2020, there have been 23 deals securing £2.2 million of annual rent at 13% above ERV. Notable transactions include a five-year lease extension to 2030 with the Institute for Hematopathology Hamburg in Fangdieckstraße, Hamburg resulting in an increase of £0.1 million contracted rent effective December 2020. The strong market and letting performance in Germany is forecast to positively influence the year-end valuation.

Liquid resources and financing

The Group's balance sheet remains well-capitalised and robust. As at 31 December 2020, CLS had cash of around £235 million and a loan to value ratio of around 35% based on 30 June 2020 portfolio valuation (30 September 2020: 35.0%), with a further £50 million in undrawn facilities.

As a result of the sale of Albert-Einstein-Ring in Hamburg and the proposed development of Vor dem Lauch in Stuttgart, the loan secured by the group of properties known as the Metropolis portfolio was refinanced in December with Deutsche Pfandbriefbank. €74.3 million (55% LTV) was secured at a 1.30% fixed rate of interest with the loan expiring in 2027. In September 2020 CLS executed its first green loan for £154 million with Aviva Investors at a 2.62% fixed rate of interest for 11 years on average.

Acquisitions

In Germany, the Group unconditionally exchanged on the acquisitions of Goldstuck in North-West Berlin for €43.5 million and The Brix in Essen for €38.2 million in December 2020. They present excellent opportunities for the refurbishment and reletting of existing vacancy to capture market rents with a combined estimated reversionary yield of 6.3%. Both properties are expected to complete in Q1 2021.

In the UK, the Group unconditionally exchanged on the acquisition of Radius House in Watford for £16.9 million in December 2020 at a net initial yield of 5.6%. 51% of the current income is contracted to a UK government agency until 2030. The acquisition is expected to complete in January 2021.

In France, the Group completed the acquisition of additional floors at Park Avenue in Lyon for £3.3 million. The Group now owns the entire building and will be carrying out a significant refurbishment.

Disposals

In Germany, the Group completed on the sale of Bismarckallee 18-20 in Freiburg for €22.5 million in December 2020 at 12.3% above the 30 June 2020 valuation.

In the UK, in December 2020 the Group unconditionally exchanged on the sale of Quest House in Hounslow and Atholl House in Aberdeen for a combined total of £5.9 million at 9.3% above the 30 June 2020 valuation. Both sales are expected to complete in the first half of 2021.

Development opportunities

In the UK, planning consent was secured for a new 10-storey office adjacent to the Group's head office in December 2020. This development on Vauxhall Walk will provide 28,500 sq. ft of grade A office space with a roof terrace, café, shower and changing facilities along with secure cycle storage.

Listed building consent and planning permission was granted for a major refurbishment of 9 Prescot Street in the City of London in December 2020. The building will be transformed by reconfiguring the main entrance, creating a new central reception and café, extending the roof terrace and enhancing shower and cycle facilities.

The works on the properties are sustainably focused with both expected to achieve BREEAM Excellent on completion.

-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

Panmure Gordon

Hugh Rich

+44 (0)20 7886 2733

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.