London-based commercial property investor CLS Holdings has posted a £69.6m loss in its half year results to the end of June, deepening from £24.4m in H1 2025.
CLS sold Spring Mews to Barings for £100m in 2025
The group said this was primarily driven by falling valuations, with its investment properties falling in value by £84.2m. The total portfolio valuation fell 4.6%.
The UK suffered the most out of the firm’s three main geographic markets, the other two being Germany and France, falling 7.2%. CLS said this was the result of a property yield expansion and a 1.8o% decline in estimated rental values (ERVs).
Earnings per share fell 32.5% to 2.7p, from 4p in June 2025, which the group attributed to lower rental income caused by asset sales and tenant departures.
In response to the half-year results, the group said it was prioritising asset disposals, refinancing and investing selectively.
CLS said it was committed to its long-term strategy of owning and managing offices across the UK, Germany and France with a short-term focus on reducing vacancy rates and strengthening its balance sheet through refinancing and disposals.
It warned that modest economic growth and higher-for-longer interest rates are affecting occupiers’ decision-making, investment and financing costs, but “the outlook is gradually becoming more supportive”.
The company is making progress with its disposals programme, with £75.7m of sales completed or exchanged during the H1 and £22.5m under offer, putting it on track for around £100m of sales across the year.
With near-term earnings under pressure, the board said it now expects 2026 full year earnings per share to be in the range of 4.6p to 5.5p.
Net rental income fell 13.1% to £46.3m, reflecting a combination of lease expiries – the majority relating to its New Printing House Square scheme in Clerkenwell, central London – tenant insolvencies and the impact of £201.2m of property disposals since the start of 2025.
However, the portfolio vacancy rate remained stable at 14.5% and £5.7m of new rent was secured during H1. This was down from £7.5m in the same period last year and while new leases increased during the period, they were signed at and average 8.9% below 31 December ERV.
Net debt fell by £44.2m in H1, mainly due to disposals, but its loan-to-value ratio rose to 51.6% due to falling valuations.
CLS chief executive officer Fredrik Widlund said: “The first half reflects the earnings and valuation pressures we set out in our trading update on 4 August. Our priorities are clear: to focus on the actions within our control and execute them effectively across the portfolio.
“Our local teams remain focused on active, asset-by-asset management of our well-located, multi-let offices: leasing vacant space, reducing void costs, progressing disposals and refinancing, and investing selectively where there is clear occupier demand or an opportunity to improve the use of an asset. We have made progress in each of these areas, but there is more work to do.
“Our focus for the second half is on completing that activity and converting it into improved occupancy and financial flexibility over time. The actions we are taking to strengthen the business over the medium term are positioning CLS for sustainable long-term growth.”
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