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Palace Capital posts double-digit uplift in NAV

Palace Capital has reported an 11.4% uplift in EPRA net tangible assets (NTA) in a positive set of annual results to the end of March 2022.

The group, which owns a diverse portfolio of property assets mainly in the industrial and office sectors, said the increase in EPRA NTA to 390p per share (2021: 350p) was driven by a portfolio valuation gain of 3.9% on a like for like basis and profits from its disposal strategy through the year.

Total dividends paid or declared for the year increased by 26.2% to 13.25p per share (2021: 10.50p). This was covered 128% by adjusted earnings per share of 16.9p (2021: 16.4p).

The group’s loan to value (LTV) reduced to 28% (2021: 42%) as a result of £45.3m reduction in net debt.

Operational highlights

  • Disposal strategy ahead of target with £31.5m of gross proceeds achieved, which was 19% above March 2021 book value, 12% ahead of purchase prices and capital expenditure, and delivered an ungeared IRR of 11%.
  • 55 lease events completed in the period totalling 319,000 sq ft at an average of 11% premium to estimated rental value (ERV).
  • An additional £1.9m of annualised net rental income gained in the year through asset management lease activity, acquisitions, and reduction in non-recoverable property costs. This takes into account income lost through disposals, lease expiries and lease breaks.
  • Portfolio now consists of 37 properties with EPRA occupancy of 88.5% (2021: 86.4%) and a WAULT of 4.7 years to break, 6.5 years to expiry.
  • Rent collection for the year was 98%.

It was also announced today that Neil Sinclair, chief executive and co-founder, will be stepping down from the board with immediate effect. Sinclair co-founded Palace Capital with Stanley Davis and Andrew Perloff in 2010 and helped grow the business through a combination of corporate and property acquisitions, with the company moving up from AIM to the Main Market in 2018 and converting to a REIT in 2019.

Steven Owen, currently non-executive chairman, will assume the role of Interim Executive Chairman with immediate effect.

Owen commented: “On behalf of the board, I would like to thank Neil for his dedication, commitment and contribution to Palace Capital since 2010. The board and staff of Palace Capital wish him well.”

On the results, he added: “The group has delivered a robust set of results driven by a combination of active operational and financial activity, property revaluation gains and profits arising from the disposal strategy resulting in a total accounting return of 14.8%.

“The board announced in the trading update on 6 April 2022 that, in consultation with shareholders, it was considering a range of strategic options, including a return of capital, to unlock further value in the business. We expect to update the market on the strategic options that we will pursue before the Annual General Meeting in July 2022. The board remains committed to maximising value for shareholders and closing the current share price discount to NAV.”

PCA : Palace Capital posts double-digit uplift in NAV

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