Ahead of interim results that will be published on 19 November, Palace Capital has provided details of some significant lease renewals and rent reviews. It has completed 12 lease renewals and five rent reviews at an average c 26% above the previous rent levels and 3% above the estimated rental value (ERV). This adds more than £0.4m per annum to passing rent and increases the weighted average unexpired lease term to first break (to 5.2 years).
Generating income growth from its existing portfolio is a core element of Palace’s strategy, supported by significant investment. As a measure of the organic recurrring income growth opportunity within the existing portfolio, the 31 March 2019 ERV of £21.5m, or £22.4m including the £0.9m rent potential from the Hudson Quarter commercial assets, was well ahead of passing rent of £17.7m. Significant refurbishment and redevelopment opportunities in the portfolio have the potential to create additional value, counter-cyclically, on a phased basis over several years.