Palace Capital

LN: PCA

£82m market cap

178p 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

The flagship Hudson Quarter development in York, which we expect to be a key driver of income growth and value creation over the next couple of years, continues to make good progress. The number of residential units pre-sold or under offer has reached 30% of the total and a first pre-let has been signed for the commercial space at a record high rent for the City of York. H120 property level return was a positive 1.5%, supported by a focus on regional office and industrial property and low retail exposure. Recurring adjusted earnings of £3.9m (H119: £4.3m) or 8.5p per share showed the expected impact of lettings deferral as the company invests in several assets to improve their quality and enhance future income and capital value potential. DPS was maintained at 9.5p, 90% covered by current earnings, reflecting management’s confidence in the prospects for future income (and value) growth. EPRA NAV per share was 391p.

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 8.4 N/A
2019A 18.8 12.4 8.9 17.3 10.3 N/A
2020E 20.7 14.1 8.0 16.7 10.7 N/A
2021E 18.1 11.7 8.1 17.6 10.1 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 31/03/2020
Share price graph
Balance sheet
Forecast net debt (£m) N/A
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (40.0) (45.3) (38.2)
Relative* (29.0) (26.2) (20.9)
52-week high/low 345.0p/170.5p
*% relative to local index
Key management
Neil Sinclair CEO
Stephen Silvester CFO

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