CLS 2025 results: smaller loss, lower values, and a laser focus on debt and vacancy
CLS Holdings has reported a statutory loss after tax of £50.3 million for 2025, an improvement on the £93.6 million loss in 2024, as it works through a strategic reset. The numbers reflect a tricky office market, deliberate asset sales, and higher vacancy while newly refurbished space is filled. Management is leaning hard into three priorities for 2026 – reduce vacancy, sell non-core assets to cut leverage, and keep refinancing risk under tight control.
Headline numbers investors should know
| Metric | 2025 | 2024 | Comment |
|---|---|---|---|
| EPRA earnings | £30.2m | £36.4m | Lower income after disposals and higher vacancy |
| EPRA EPS | 7.6p | 9.2p | Down 17.4% |
| Statutory loss after tax | £50.3m | £93.6m | Valuation declines still the big driver |
| EPRA NTA per share | 200.7p | 215.0p | -6.7% on lower property values |
| Dividend per share | 4.0p | 5.28p | 1.9x covered by EPRA EPS |
| Net rental income | £101.3m | £114.0m | -11.1% |
| Vacancy (EPRA) | 14.5% | 12.7% | Lease expiries and two German insolvencies |
| Portfolio value | ~£1.7bn | ~£1.85bn | Like-for-like -3.8% |
| Loan-to-value | 50.0% | 50.7% | Slightly improved |
| Weighted average cost of debt | 3.8% | 3.8% | Stable despite heavy refinancing |
| Disposals completed | £144.2m | £66.1m | Includes £101.1m Spring Mews Student |
What moved the dial in 2025
EPRA earnings per share fell to 7.6p, mainly because CLS sold assets and carried more empty space than planned. EPRA is a sector-standard measure that strips out property valuation swings to gauge underlying profit. On the statutory side, a £79.2 million net fall in investment property values kept the Group in the red, although the decline was smaller than in 2024.
Portfolio values eased 3.8% in local currency – UK -4.6%, Germany -2.7%, France -4.5%. Notably, the UK figure includes a change in basis at Spring Gardens, Vauxhall, which is now valued as a residential development site. Excluding that, the UK fell just 1.6%. That is a sign valuations may be stabilising as interest-rate pressure eases.
Leasing momentum vs vacancy drag
CLS signed £17.0 million of contracted annual rent across 99 lettings and renewals at rents 6.3% above the 31 December 2024 estimated rental values. Rent collection remains excellent at 99%.
Even so, vacancy rose to 14.5% from 12.7%. The culprits were expected lease expiries at New Printing House Square in London and Inside in Paris, plus two unexpected tenant insolvencies in Germany near year-end. Management is targeting a long-term 5% vacancy rate and says 2026 has started with a noticeable pickup in enquiries.
There were some standout wins, including an eight-year, index-linked lease for 14,700 sqm at Gotic Haus in Dortmund, commencing November 2026, which lifted that asset to 85% occupied and drove a valuation uplift of more than 40% at the property.
Balance sheet, refinancing and LTV – why this matters now
Net debt fell by £86.2 million to £852.5 million thanks to disposals. CLS refinanced, extended or repaid £373.7 million of loans in 2025, keeping its average cost of debt at 3.8% and extending weighted average maturity to 3.6 years. At year-end, 69% of borrowings were fixed and a further 7% capped.
Loan-to-value sits at 50.0%, with a medium-term target of 35% to 45%. Management plans £100 million to £150 million of disposals in 2026, which, absent further valuation falls, would nudge LTV to between 45% and 47%. In plain English – still above the top end of target, so there may need to be more sales or value gains to finish the job.
Liquidity is adequate but not lavish. Cash and cash equivalents were £49.4 million at year-end. Undrawn facilities are described as £38.0 million in the highlights and, in the CFO detail, as £28.0 million of committed facilities plus a £10.0 million overdraft. 2026 refinancing needs are much lower at £199.3 million and the Group is already in discussions with lenders.
Dividend reset and an optional enhanced scrip
The Board proposes a final dividend of 2.7p, taking 2025’s total to 4.0p, down from 5.28p. Coverage is 1.9x by EPRA EPS, which is inside the stated 1.5x to 3.0x policy range. Importantly, CLS plans to offer an optional enhanced scrip dividend for the final dividend – shareholders who opt in would receive new shares at a 5% discount to the reference price instead of cash. That lets income investors reinvest on favourable terms and helps CLS conserve cash for asset investment.
Key dates: ex-dividend 9 April 2026, record date 10 April 2026, payment 22 May 2026.
Country colour: UK, Germany, France
- United Kingdom – Values fell 4.6% but only 1.6% if you strip out Spring Gardens’ change of valuation basis. EPRA vacancy is 18.0%. The sale of Spring Mews Student at £101.1 million was well timed. Planning for the Spring Gardens residential redevelopment has been submitted, with disposal expected late 2026 or early 2027.
- Germany – A modest 2.7% valuation decline in local currency and EPRA vacancy up to 11.1% after some large tenant departures and two insolvencies. Index-linked leases are a strength here, covering 76.0% of contracted rent.
- France – Values down 4.5% in local currency with vacancy at 12.1% after a key lease expiry at Inside, Paris. All French leases are fully indexed and recent refurbishments are attracting interest.
ESG progress that should support leasing
CLS cut like-for-like landlord energy use by 5.8% and reduced Scope 1 and 2 emissions by 9.3%. In the UK, 84% of the portfolio by space now has an EPC of A-C. These upgrades are not box-ticking – they are increasingly essential to win and retain tenants and, in many markets, to comply with regulation.
Risks to watch – the going concern caveat
CLS again discloses a material uncertainty related to going concern. The plan relies on refinancing and property disposals over the assessment period to July 2027. While the Board is confident – pointing to £373.7 million successfully refinanced, extended or repaid in 2025 and progress on 2026 deals – the timing and pricing of disposals and refinancings are not fully within management control. That disclosure will keep leverage, disposal execution and lender appetite firmly in focus.
Why this matters for shareholders
There are clear positives. Valuation declines moderated to 3.8%, debt costs are well contained at 3.8%, major 2025 maturities were dealt with, and leasing is being achieved above valuers’ ERVs. The disposal of Spring Mews at book value and the conditional sale route for Spring Gardens show CLS can execute in tricky markets.
There are also real challenges. Vacancy at 14.5% is a drag on earnings and cash, LTV at 50.0% is still above target, and the going concern caveat reflects continued dependence on external markets. 2026 earnings are likely to be softer as disposals, refinancing and redevelopment prep bite before benefits flow through.
My take – a disciplined clean-up, but patience required
This is a pragmatic playbook for a late-cycle office landlord: sell non-core, refinance early, invest selectively in what tenants want and fill space. If CLS delivers £100 million to £150 million of disposals and keeps leasing momentum, LTV should track down and NTA should become less volatile. The enhanced scrip option is a sensible tool to balance income and balance sheet needs.
Near term, expect more grind than glory – higher vacancy and a slimmer portfolio will cap 2026 earnings. Medium term, the ingredients for a better outcome are there: indexation on 58.7% of rent, stabilising yields, limited new office supply in several markets and a clear plan to recycle capital. For investors comfortable with the risks, this remains a deleveraging and leasing story to track quarter by quarter.
What to watch in 2026
- Disposals – target £100 million to £150 million, with around £140 million already under offer including Spring Gardens.
- Vacancy trend – progress from 14.5% towards the 5% long-term target, particularly at Artesian, The Coade and Paris assets.
- LTV and debt maturities – execution on the £199.3 million maturing in 2026 and movement of LTV towards 45% to 47%.
- NCA lease expiry at Spring Gardens and planning outcome for the residential redevelopment.
- Dividend take-up for the enhanced scrip and its effect on cash retention.
