Three members of Palace Capital’s board have today resigned from the company after shareholders revolted against the company’s change in strategy, which was announced earlier this month.
Mickola Wilson (Senior Independent Director), Kim Taylor-Smith (Non-Executive Director) and Paula Dillon (Non-Executive Director) have all stepped down from the board with immediate effect, leaving no independent directors on the board (chairman Steven Owen is interim executive chairman until a new chief executive is appointed following the resignation of Palace co-founder Neil Sinclair in June).
The turmoil at the company comes after shareholders previously expressed concern at the strategy and lack of performance at the company. A new strategy to focus on offices with strong ESG credentials (or the potential to enhance value through sustainability works) was announced on 4 July, with the group’s industrial assets (worth around £46.5m) to be sold to fund the new strategy.
However, today the company said that “in light of shareholder feedback following that update, it has been decided by the board that such a strategy needs amending. The board will therefore now focus on maximising cash returns to shareholders, whilst continuing to remain mindful of consolidation in the real estate sector as part of its considerations”.
It added : “The board will continue to pursue a sale of the company’s industrial portfolio of eight assets, which were independently valued as at 31 March 2022 at £46.5m. Should a sale of the industrial portfolio be successful it is intended that the net proceeds of the sale, after repayment of debt relating to the industrial portfolio, will be distributed to shareholders by either a special dividend or buyback via a tender offer.”
The company said it would also continue disposing of other non-core investments and seek to complete the remaining sales of the residential apartments at its York asset and distribute these to shareholders too.
A share buyback programme to repurchase up to 2.3m ordinary shares, representing 5% of the company’s ordinary shares, was completed on 11 July 2022 at an average price of 260 pence, which represents a 33% discount to the last reported EPRA NTA per share.
[QD comment: It is clear that shareholders did not agree with the strategy put in place by the board to focus on regional offices. A sale of the business to a peer or private company now looks a strong possibility given its share price discount to NAV and lack of support from shareholders in continuing to pursue its growth strategy. The resignation of three independent directors does not bode well for the company continuing.]
PCA : Palace Capital suffers board exodus