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CLS Holdings PLC on Wednesday raised its interim dividend and launched a share buyback programme, even as profit dropped due to lease incentives.
For the six months ended June 30, the London-based commercial property investor reported a pretax profit of £20.3 million, down 18% from £24.7 million the same period a year prior.
CLS attributed the profit drop to a wider loss on the fair value of investment property at £6.0 million from £2.8 million, as a result of higher lease incentives. There was also a one-off gain made in the first half of 2021 through the sale of equity investments.
Net rental income however increased 0.9% year-on-year to £52.8 million from £52.3 million, as a result of a stronger performance from CLS's hotel and student operations.
As at June 30, the group's net asset value stood at 329.2 pence, a 0.8% rise from 326.6p at the end of December, while CLS's total portfolio value rose 3.2% at £2.26 billion from £2.19 billion the same date a year prior.
CLS declared an interim dividend of 2.60 pence per share, up 11% from 2.35p a year before.
In addition, the group declared a tender offer to return up to £25.5 million to shareholders through the repurchasing of up to 10.2 million shares at 250p each.
The reasoning for the tender offer is that CLS's shares have continued to trade at a significant discount to the net transaction value per share.
As at June 30, CLS shares were trading at 202.50 pence, a 42% discount to its NTA per share of 352.8p on the same date.
On Wednesday morning, shares in CLS were up 3.6% at 215.50 pence in London.
‘We continue to believe the share price discount is unjustified and today are announcing an initial £25.5 million tender offer share buyback to address the issue. If the share price discount persists, we will consider further buybacks in tandem with disposals demonstrating the board's commitment to delivering shareholder value whilst maintaining the group's gearing at appropriate levels,’ said Chief Executive Officer Fredrik Widlund.
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