CLS Holdings PLC has announced that it has exchanged contracts with R&F Properties for the unconditional sale of its Vauxhall Square development.

R&F Properties will assume CLS’s obligations for the relocation of the hostel at 62 Bondway, resulting in a net consideration of £144.1m, which will be received in cash at completion on or around 4th May 2017. 

CLS will retain the freehold interest in the Miles Street student accommodation block – having already sold a long leasehold for £24.8m in December 2015 – and residential houses in Wandsworth Road.

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At the end of 2016, Vauxhall Square was valued at £100m and generated net rent of £1.9m last year, which has reduced to £100,000 pa following the expiry of a lease with Cap Gemini. 

The sale is expected to generate a profit of around £40m for CLS after costs and there is no debt secured against the site as it is anticipated that the full sale proceeds will be re-invested into the company’s core business.

Henry Klotz, executive chairman of CLS, said the sale of Vauxhall Square was a milestone in the history of the company.

“Having bought the site nearly 30 years ago and secured planning in 2013, we are pleased now to have exchanged contracts at a price above its year-end valuation.

“R&F Properties has extensive residential development experience and we are delighted that it will soon create a vibrant residential, office and retail development to enhance Vauxhall, an area in which we retain over £330m of long-term investments.

“We intend to reinvest the proceeds in our core business – high-yielding offices with good asset management opportunities – within key European cities.”