Palace Capital Interim results to September 2018 reported

Hardman & Co Report Report DownloadsPalace Capital (LON:PCA) reported 1H’19 (six months to September 2018) results on 26 November, in line with expectations. We reduce our forward estimates due to disposal and minor trimming of some 2020 income. The strategy of being overweight offices (48% assets in offices in regional hub locations), well underweight retail continues to deliver, with total returns (5.3%) once again ahead of market benchmarks (of 3.3%). Palace Capital is an active manager: in the six months there were 22 lease events, 9% ahead of ERV (estimated rental value). Since period-end, further capital has been recycled out of assets purchased as part of the 2017 RT Warren acquisition, creating value going forward and capturing a modest value uplift.

Results: Portfolio valuation rose 2.4% in the six months; EPRA NAV per share grew 1.4%. 30.3% LTV maintains ‘fire power’ for attractive investment opportunities being seen and the pending investment into the York development asset. This will deliver a useful income increase and should enhance NAV.

1H’19 (six months to September 2018) total property return of 5.3%: The company once again outpaced the MSCI IPD benchmark, at 3.3%. Strong income supports the dividend payout, the reversion within the current portfolio along with potential accretive acquisitions should take dividend per share cover back usefully above 100% in the medium term.

Capital and income focus: These are important elements of Palace Capital’s philosophy. Assets with strong long-term prospects are held, and reversionary yield stands at 7.6% compared to 5.8% NIY. Also, value-creating (large-scale York development) and occupier-focused enhancements crystallise higher rents and asset revaluation.
Exchange of contracts to sell 50 residential assets in outer London: Cash from the assets, acquired with the RT Warren portfolio and always listed as “assets held for sale”, arrives at an opportune time. Divestment reduces income and recycling of the capital, at Palace Capital’s choice of asset and timing, will raise it again.

Risks: The short-term acquisition opportunities being offered to such an experienced team, amid the current political uncertainty, are good. Palace Capital has been holding back, optimising its upside, which could lead to minor erosion of operating profits given it has successfully exchanged on a meaningful disposal.

Click to view all articles for the EPIC:
Or click to view the full company profile:
    Facebook
    Twitter
    LinkedIn
    Hardman & Co

    More articles like this

    Hardman & Co

    Palace Capital: Dividend recovery ahead of expectations

    Palace Capital plc (LON:PCA) March 2021 annual results were ahead of our expectations; notably, rent was £17.3m vs. our estimated £16.4m. FY20 rent stood at £18.3m, excluding a lease surrender premium, and there have been net

    Hardman & Co

    Palace Capital: Strong trading update

    Palace Capital plc (LON:PCA) December 2020 quarter rents showed 92% received; as of the 14 April trading update, 82% of the rents due end-March under the monthly payment plans had been received – a good initial

    Hardman & Co

    Palace Capital Encouraging full-year results

    The healthy liquidity position of Palace Capital plc (LON:PCA) takes risks down to a modest level, as does the overweight to regional offices and minimal shops. The Hudson Quarter mixed-development site is selling well, and profitability

    Hardman & Co

    Palace Capital 1H’20 results announced

    Palace Capital (LON: PCA) is the topic of conversation when Mike Foster, Analyst at Hardman & Co joins DirectorsTalk. Mike provides a little background on the company, talks us through the results, the company as a developer,

    Hardman & Co

    Palace Capital 1H’20 results announced

    Palace Capital (LON:PCA) 1H’20 results were announced on 19 November. Seventeen lease events have been completed. Impressively, these were 25% above passing rent and 3% above ERV (i.e. previous estimated valuers’ levels). FY19 was struck 14%

    Hardman & Co

    Palace Capital Portfolio and trading update

    Palace Capital (LON:PCA) portfolio and trading update of 2 May showed underlying values up year- on-year. A lease event, resulting in a profit and cash upgrade, was announced on 7 May. This showed a cash premium

    Hardman & Co

    Palace Capital Hudson Quarter, York, development commences

    Palace Capital (LON:PCA)  is a real estate investor. It has recently commenced construction of its mixed residential and commercial development at Hudson Quarter, having secured a new £26.5m debt facility and fixed price contract. Supply in

    Hardman & Co

    Palace Capital Initiation of coverage

    Palace Capital (LON:PCA) has almost doubled NAV since the initial investment in October 2013. Good income generation is evidenced by the EPRA EPS and the DPS track record, whilst undertaking incremental refurbishments and development. The investment

    Hardman & Co

    INTERVIEW: Palace Capital – Hardman say it ticks all boxes

    Palace Capital plc (LON:PCA) is the topic of conversation when Hardman & Co Analyst Mike Foster talks to DirectorsTalk. Mike Explains who the company are, talks about the portfolio, its asset types, income generated, risks and valuation.