Palace Capital

LN: PCA

£133.1m market cap

290p last close

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

Interim results will be published on 19 November. REIT conversion from 1 August 2019 will support total return by reducing future tax liabilities and may also broaden the appeal of the shares to a wider group of investors. H119 income and capital values continued to grow and the FY19 total property portfolio return of 7.1% was well ahead of the MSCI UK Quarterly Property Index return of 4.6%, benefiting from a focus on office and industrial properties (together c 60% of the portfolio). Adjusted PBT increased to £8.9m (FY18: £8.5m) and EPRA NAV per share was slightly lower at 407p. FY19 DPS was held at 19p in anticipation of the future income growth that management expects from asset management and potential acquisitions. The portfolio contains significant reversionary potential and we also expect the Hudson Quarter development in York to be a key driver of growth over the next two years. Recent lease renewals and rent reviews have added more than £0.4m to passing rent, an average c 26% uplift and c 3% above ERV.

Y/E Mar
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2018A 16.7 10.7 8.5 21.2 13.7 N/A
2019A 18.8 12.4 8.9 17.3 16.8 N/A
2020E 20.9 14.9 8.2 17.1 17.0 N/A
2021E 18.3 12.3 8.4 18.2 15.9 N/A
Industry outlook

The supply demand balance for regional office and industrial property remains generally firm, and a positive yield spread between the regions and London offers potential for further narrowing. Rents and capital values in the retail sector have continued to weaken.

Last updated on 13/11/2019
Share price graph
Balance sheet
Forecast net debt (£m) N/A
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 4.3 (0.7) (6.8)
Relative* 2.9 (2.8) (10.8)
52-week high/low 328.0p/265.0p
*% relative to local index
Key management
Neil Sinclair CEO
Stephen Silvester CFO

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