CLS Holdings plc (LSE:CLI) has reduced its earnings guidance for 2026 after weaker-than-expected leasing activity during the first half of the year. The company expects vacancy levels to remain around 14.5%, while the departure of the largest tenant at its Spring Gardens property, following the expiry of its lease in late September, is also expected to affect occupancy. CLS now anticipates reporting interim EPRA earnings of 2.7 pence per share and EPRA Net Tangible Assets of 177.7 pence per share at 30 June, following a 4.6% decline in property valuations driven by higher market yields.
The softer trading environment is expected to continue into the second half, leading the Board to lower its full-year EPRA earnings guidance to between 4.6 pence and 5.5 pence per share, below existing market expectations. Despite this, the company said its balance sheet improvement programme remains on schedule. CLS has completed £62 million of asset disposals and remains on track to achieve £100 million of sales by the end of the year. It has also made significant progress in refinancing more than half of the £190 million of debt due to mature during 2026.
Management said its long-term strategy remains unchanged despite the near-term challenges. The company believes its locally managed property portfolio, together with ongoing debt reduction and refinancing initiatives, will strengthen financial flexibility and leave the business better positioned to benefit from an eventual recovery in the commercial property market.
CLS Holdings’ investment outlook continues to be affected by persistent losses, relatively high leverage for an office-focused real estate investment group and weak technical indicators, with the shares trading below key moving averages and a negative MACD signal. However, a relatively attractive dividend yield and generally positive cash flow provide some support, although these factors do not fully offset concerns over profitability and market trends.
More about CLS Holdings
CLS Holdings plc is a UK-based real estate investment company that owns and manages office properties across several European markets. Its portfolio is concentrated in well-located commercial assets, while the company continues to execute a strategy of selective disposals and refinancing to improve its balance sheet and enhance financial flexibility.
The group’s performance is closely linked to rental income, occupancy levels and property valuations, making metrics such as EPRA earnings and EPRA Net Tangible Assets important indicators of operating performance. Through active portfolio management and local market expertise, CLS aims to position the business for improved returns as conditions in the office property sector recover.
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