Search Share Prices
Palace Capital makes good progress as it gears up for quarterly divi
(WebFG News) - Property investment company Palace Capital updated the market on activity in its property portfolio on Tuesday, for the period since the publication of its interim results on 4 December - a period its board described as "exciting times".
The London-listed firm highlighted its move up to the main market of the London Stock Exchange, from AIM, on 28 March, as well as the acquisition of RT Warren Investments in October at below independent valuation, which was already "bearing fruit".
It comprised 21 commercial buildings and 65 residential units.
Palace also said its "strong" cash position was allowing it to pursue several potential acquisitions to boost its rental income.
Taking a look at the portfolio, the board said it was still amid ongoing discussions to sell 60 of the RT Warren residential units, with three residential units already sold at 14% above book value.
Two units would be retained by the company for "strategic reasons".
The firm also acquired Nicholson Gate Fareham, a 5,500 square foot office building with vacant possession, for £0.75m, adjoining Admiral House, on the High Street in Fareham, which is part of the RT Warren portfolio.
Collectively, the two properties stood in approximately 1.3 acres and, based on planning advice, had medium-term potential for development.
Solaris House in Milton Keynes was let to Monier Redland for 10 years, at headline rent of £0.24m per annum exclusive - £16.55 per square foot 0 indicating the potential for a rental increase at upcoming reviews on the company's adjoining office buildings in December, where £10.55 per square foot was currently being paid.
Demolition was also underway at Hudson House in York, which should result in a saving of £0.75m per annum from February in respect of rates and the service charge shortfall.
On the financial front, Palace Capital said its adjusted profit before tax, allowing for the major acquisition and fundraise, was "likely" to be ahead of market expectations, before profits on disposals and any revaluation gains.
Three properties at Exeter, Coventry and West Molesey were sold for total proceeds of £4.76m, which was above book value, which the board said continued its policy of actively recycling its capital.
The refinancing of its Nationwide and Barclays facilities with a new five-year £40m facility with Barclays was signed in January.
Additionally, its Santander and Barclays facilities were hedged in March, with interest on 70% of the firm's debt now fixed, and the average cost of debt as at 31 March standing at 3.4%.
Palace Capital said it would begin quarterly dividend payments from April.
Its board said it was continuing to implement its brand of active asset management, to grow both its rental income and net asset value per share.
Two senior asset managers were recently appointed to join the management team.
During the period, three properties - which were either vacant, or had limited or no growth potential - were sold above book value.
"I am delighted with our progress since December of last year. In acquiring RT Warren, we have bought the best portfolio we have seen in over two years and I expect us to make a very strong return from it, as we have from the Sequel and PIH portfolios," said chief executive Neil Sinclair.
"Our potential development in York with its strong residential market is provoking strong interest."
Sinclair said that, together with its active management strategy on other properties pursued by Palace's team, meant the company was "very well placed" to serve its shareholders well in the future.
"I continue to be positive not only about securing the right opportunities outside London but also our prospects for the existing portfolio."