Palace Capital

LN: PCA

Market Cap£125m

Last Close 269p

Palace Capital is a UK property investment company. It is not sector-specific and looks for opportunities where it can enhance long-term income and capital value through asset management and strategic capital development in locations outside London.

Investment summary

The FY22 results will be published on 14 June. Ahead of that, in an early April trading update PCA said that it expects recurring earnings to be ahead of market expectations. This is underpinned by leasing and other asset management activity, as well as acquisitions which have added £1.9m to annualised net rental income, adjusting for disposals, lease expiries and disposals. PCA plans to increase the Q422 DPS to at least 3.75p (Q222: 3.25p), taking the FY22 total to at least 13.25p. With the disposal strategy ahead of target and sales of Hudson Quarter residential units picking up significantly, PCA is well placed for further acquisitions, accretive to income and enhancing the quality and rent growth potential of the portfolio, focused on offices and industrial. As it seeks to maximise shareholder value and close the discount to NAV, the board will also consider a return of capital.

Y/E Mar	Revenue (£m)	EBITDA (£m)	PBT (£m)	EPS (p)	P/E (x)	P/CF (x)
2020A	21.1	14.6	8.0	17.5	15.4	7.9
2021A	17.3	10.6	7.5	16.4	16.4	11.0
2022E	16.8	13.8	6.9	15.1	17.8	3.3
2023E	17.3	13.8	7.7	16.7	16.1	3.8

Industry outlook

The commercial property market is cyclical, historically exhibiting substantial swings in capital values through cycles while income returns have been significantly more stable. Despite a deteriorating economic outlook market momentum has thus far been maintained. Despite strongly rising inflation interest rates remain relatively low and like other real assets commercial property is expected to offer a degree of inflation hedging.

Last updated on 30/06/2022