CLS in £60m deal to buy three UK office buildings

Landlord CLS demonstrated a vote of confidence in the office market on Monday, by inking a £59.7 million deal to buy three properties in Greater London and the South East.

The FTSE 250 firm gave the update as its boss told the Evening Standard that occupancy levels at the firm’s existing London buildings have improved over the last month.

A month ago in London, where CLS has 35 buildings, occupancy levels stood at about 15-20% at the firm’s sites. That has increased to around 30-35% currently, according to Fredrik Widlund, chief executive of CLS.

CLS said it has unconditionally exchanged contracts to acquire sites from Aviva Investors.The purchase comprises offices in Richmond, Chelmsford and Leatherhead. All of the offices are close to train stations.

The decision to invest comes despite concerns across the industry about how much demand there will be for London offices in the future.

Numerous people have been working from home since March when the lockdown started, and some companies are not planning for most employees to return to UK offices until 2021.

Widlund said: “This transaction further builds our presence in London and the South East, delivering attractive yields as well as opportunities to actively manage the buildings to create additional value.”

Widlund added: “We have remained disciplined in our approach to acquisitions and the strength of these assets, combined with our long-term conviction in the UK market, makes this an exciting addition to our portfolio.”

He said the company is “taking a long term view” on the market.

The portfolio is 94% let and delivers £3.7 million net rent per annum.

CLS said there are significant opportunities to add further value, such as through additional refurbishments.