CLS renews leases for 14 government properties

CLS Holdings has renewed leases on 14 government properties across the UK with average rent falling 15%.

The FTSE 250-listed company, which bought the properties as part of a £119m parcel of 34 four years ago, has agreed an annual rent from the 14 properties of £5.5m, down from the previous £6.5m, with the majority index-linked to the consumer price index.

The 14 properties, most of which are used as Job Centres by the Department for Work and Pensions, had leases which were due to expire, or had a break clause effective, next March.

New 10-year leases have been granted on 13 of the properties which, with 11 having breaks in 2023 or 2026, provide a weighted average unexpired lease term to first break of 6.8 years, while the remaining property's lease has been extended on a short-term basis.

Chief executive Fredrik Widlund said: "In 2013, when CLS bought its portfolio of government-let properties yielding 12%, it was confident that the vast majority of the leases with events in 2018 would successfully renew.

"I am delighted that our in-house asset management team has secured such a positive outcome which addresses the uncertainty which these lease events had caused, and which is likely to result in a commensurate increase in the values of the relevant properties at 31 December 2017."