Palace Capital (LSE: PCA)

Currency in GBP

Last close As at 26/01/2023

GBP2.06

−6.00 (−2.83%)

Market capitalisation

GBP93m

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.

The commercial property market is cyclical, historically exhibiting substantial swings in capital values through cycles while income returns have been significantly more stable. Across all main sectors, valuations are negatively adjusting to higher risk-free rates, in many cases despite continuing rent growth. Unlike previous downturns, there are few areas of over-supply and gearing is generally lower.

Sector

Real Estate

Equity Analyst

Martyn King

Martyn King

Director, Financials

Key Management

  • Matthew Simpson

    CFO

  • Richard Starr

    CEO

Balance Sheet

Forecast net debt (£m)

61.6

Forecast gearing ratio (%)

37

Share Price Performance

Price Performance
% 1M 3M 12M
Actual (3.7) (8.9) (18.4)
Relative (7.3) (17.5) (20.4)
52 week high/low 297.0p/195.0p

Financials

PCA’s strategy focuses on maximising cash returns to shareholders, while remaining mindful of sector consolidation, but reflecting recent market conditions significant disposals have paused. Disposals ytd amount to £8.9m at a 22% premium to book value. A further 13 Hudson Quarter apartments have been sold for £5.7m with 10 units (£3.9m) under offer. 24 units remain. Rent collection remains strong (H123: 99%) and occupancy stable (H123: 88.9%) and leasing progress continues, adding £0.7m pa to H123 gross rents and £0.9m pa to net rents. Annualised admin cost reductions of £1.2m pa represent 26% of the FY22 total and 16% of EPRA earnings. The portfolio value was 6.5% lower on a like-for-like basis and EPRA NTA per share was 356p (FY22: 390p). H123 gross debt was 13% lower versus FY22 but LTV increased to 32% (FY22: 28%) due to the reduction in portfolio value.

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 11.8 6.0
2021A 17.3 10.6 7.5 16.4 12.6 8.4
2022E N/A N/A N/A N/A N/A N/A
2023E N/A N/A N/A N/A N/A N/A

Thematics

Consumer

IPO apocalypse

TMT

ESG, moving beyond the box tick

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