CLS Holdings Cuts 2026 Earnings Outlook as Vacancy and Property Values Weigh

What has CLS Holdings announced?

CLS Holdings PLC has warned that slower-than-expected leasing, falling property valuations and the departure of a major tenant will put material pressure on earnings during 2026.

The commercial property group now expects full-year EPRA earnings per share to land between 4.6p and 5.5p. That compares with current analyst consensus of 6.8p, meaning the new range is roughly 19% to 32% below the previous market expectation.

EPRA earnings are an industry measure designed to show the recurring operational profits generated by a property company, excluding certain valuation movements and one-off items.

The weaker outlook is clearly disappointing. However, the update also contains evidence that CLS is making progress with its plans to sell properties, reduce debt and refinance upcoming borrowings.

Investors can read the original company announcement for the full regulatory disclosure.

CLS Holdings trading update at a glance

Measure	Latest update
Expected H1 EPRA EPS	2.7p
Expected 2026 EPRA EPS	4.6p to 5.5p
Current 2026 analyst consensus	6.8p
Expected vacancy rate	14.5%
Expected EPRA NTA per share	177.7p
Property valuation movement	Down 4.6% in local currency
Disposals completed to date	£62 million
Full-year disposal target	£100 million
Debt due for refinancing in 2026	£190 million
Refinancing completed	More than half

Leasing progress has been slower than expected

CLS described leasing transactions during the first half as steady, but slower than expected. Vacancy is anticipated to remain broadly unchanged at 14.5%.

A stable vacancy rate is preferable to a further deterioration, but 14.5% still represents a meaningful portion of the portfolio that is not producing rental income. Slower leasing also suggests CLS may need more time to fill available space and improve the portfolio's income generation.

The situation has been complicated by news from the group's largest tenant at Spring Gardens. The tenant will no longer seek a short-term extension when its lease expires on 28 September 2026.

That expiry is expected to affect earnings during the second half. The amount of rent associated with the tenant was not disclosed, but the board said the combined factors in the update would have a material impact on second-half EPS.

Spring Gardens has already been sold subject to planning. CLS therefore does not expect the tenancy ending to have a further impact on the property's valuation at the year-end. That provides some protection against an additional valuation hit, although it does not remove the near-term loss of earnings.

Property valuations remain under pressure

EPRA net tangible assets, or NTA, are expected to stand at 177.7p per share as at 30 June 2026. NTA is a measure of the value of a property company's tangible net assets after adjusting for certain items under industry reporting standards.

The figure reflects a 4.6% fall in property valuations in local currency. CLS attributed this mainly to property yield expansion across all its markets.

In simple terms, when the investment yield demanded by buyers rises, the implied value of a property generally falls unless rental income increases enough to compensate. This can place pressure on a landlord's asset values and balance sheet even if its buildings continue to generate rent.

The fact that valuation declines occurred across all markets indicates that this was not confined to a single location. No breakdown by country or individual property was provided in this announcement.

Investors seeking further context on the group's earlier challenges can read about the CLS Holdings 2025 loss and strategic overhaul.

The earnings downgrade is the main negative

The new 2026 EPS range of 4.6p to 5.5p sits below the stated analyst consensus of 6.8p.

Even at the top of management's range, earnings would be around 19% below consensus. At the lower end, the shortfall would be approximately 32%.

That is a material downgrade and reflects several pressures arriving at the same time:

• Leasing transactions have taken longer than expected.
• Vacancy is expected to remain at 14.5%.
• The largest Spring Gardens tenant will leave in September.
• Property disposals reduce the rental income generated by the portfolio.
• Falling valuations continue to weigh on net tangible assets.

The disposal strategy creates an important trade-off. Selling buildings can help CLS reduce debt and improve financial flexibility, but it can also lower earnings because the sold properties no longer contribute rental income.

Disposals and refinancing provide the brighter news

The strongest part of the update concerns balance sheet management.

CLS has completed £62 million of property sales so far and remains on track to reach its £100 million year-end target. It has therefore completed 62% of the planned programme.

The company intends to use the sales programme to reduce debt. This matters because lower debt can reduce financial risk and leave the group better placed to handle weak property markets or refinancing costs.

Progress has also been made on the £190 million of borrowings due for refinancing during 2026. More than half has now been completed, although the exact amount, interest rates and other refinancing terms were not disclosed.

Completing these arrangements reduces some near-term uncertainty. However, investors will still need to assess the cost of the new financing and the plan for the remaining debt when further details become available.

What investors should watch on 12 August

CLS will publish its results for the six months ended 30 June 2026 on 12 August. Those figures should provide a fuller picture than this relatively brief trading update.

The main areas to watch include:

1. Rental income and leasing activity - Investors will want to understand where demand is strongest and why transactions have progressed more slowly than expected.
2. Vacant space - Detail on the 14.5% vacancy rate may show how much is concentrated in particular assets or markets.
3. Spring Gardens exposure - The financial contribution from the departing tenant was not disclosed in this announcement.
4. Property valuations - A market-by-market breakdown should help explain the 4.6% decline.
5. Disposal proceeds - The prices achieved relative to previous book values will be relevant when judging the success of the sales programme.
6. Refinancing terms - The cost, maturity and security attached to the completed refinancing were not disclosed.
7. Dividend implications - The announcement did not provide an update on the dividend.

Balance sheet progress meets an earnings setback

This update delivers a clear near-term warning. Earnings expectations have been reduced, vacancy remains elevated and property valuations have fallen across the group's markets.

Against that, CLS has completed £62 million of disposals, remains on track for its £100 million sales target and has refinanced more than half of the £190 million due during 2026. Those actions should improve financial flexibility, but they do not offset the immediate pressure on rental income and EPS.

The half-year results on 12 August will now need to show how management plans to rebuild occupancy and recurring earnings while continuing to reduce debt. That balance between protecting the balance sheet and preserving income is the central issue for CLS investors.