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RNS Number : 3673V
Palace Capital PLC
14 April 2021
14 April 2021
PALACE CAPITAL PLC
("Palace Capital" or the "Company")
Trading update
Palace Capital (LSE: PCA), the Main Market listed property
investment company that has a diversified portfolio of UK
commercial real estate in carefully selected locations outside of
London, provides the following trading update ahead of its annual
results for the period ended 31 March 2021, which are expected to
be announced in early June.
Continuing high rent collection levels
Rent collection continues to be very strong, despite the
backdrop, with 92% of rents received for the December quarter and
94% collected for the financial year to 31 March 2021. As at the
date of this announcement 82% of March 2021 quarter rents have been
collected or are expected to be received under monthly payment
plans, with 69% cash collected, 3% lease amendments and deferrals
and 10% on payment plans or monthly not yet due. We expect to have
collected in excess of 90% by the beginning of the June 2021
quarter, as we have in previous quarters.
Consistently high levels of rent collection, as a result of
proactive asset management initiatives and positive tenant
engagement, have enabled Palace Capital to pay successive quarterly
dividends of 2.5p since July 2020, including the recent quarterly
dividend of 2.5p, paid on 9 April 2021.
Cash reserves at 31 March 2021 were GBP9.4 million with a
further GBP5.0 million available from the revolving credit
facility, providing good liquidity.
Net debt as at 31 March 2021 was GBP117.9million.
Hudson Quarter
Notwithstanding the tight restrictions imposed due to the
pandemic over the last 12 months, the Company's flagship Hudson
Quarter development in York is due to be completed on budget and
handed over to Palace Capital before the end of this month. 40
apartments have been sold at an aggregate value of GBP10.77
million, with a further six under offer at a total of GBP1.75
million. Most of the apartments sold to date have been studios and
one-bedroom apartments, with the larger, higher value apartments
still available, and accordingly the average value has been at the
lower price point for the scheme.
Encouragingly, since the Government's announcement on 23
February providing a roadmap out of lockdown, enquiries and
reservations on the residential units have increased significantly.
Based on enquiry levels, interest to date and insight into the
local residential market, the Company currently expects no less
than 50% of the remaining 81 available apartments to be sold by the
end of this financial year. All things being equal, these sales
would generate circa GBP20 million allowing the Company to repay
the Barclays loan facility in full by the end of 2021. Only GBP9.5
million of the GBP26.5 million loan will remain outstanding once
the 40 apartments sold have been handed over and those transactions
complete.
The 34,500 sq ft office building at Hudson Quarter, known as HQ,
is the only newly developed office space in the City of York,
positioning it well for the flight to quality that is expected in
the office market post pandemic. It is grade A standard and has
secured BREEAM excellent and WiredScore Platinum ratings. 4,588 sq
ft of the office space was pre-let in February 2020 to the listed
law firm Knights, on a 10-year lease at a record rent for the city
of GBP25.00 per sq ft.
Given the significant supply constraints in the market, the
direction of underlying occupier trends and the high quality of the
space available at HQ, it is expected that the remaining space
should be let or under offer by the end of this financial year.
Continuing asset management and portfolio activity
Since December, 22,000 sq ft of office space at Bank House, King
Street, Leeds has been let on short term leases to coincide with
the other lettings in the building, providing income streams until
2023, pending a major accretive refurbishment of the asset.
Four lettings have been secured since the start of the year at
the Company's two leisure assets in Northampton and Halifax. At
Halifax which we acquired in 2016 a letting to the Secretary of
State for Communities & Local Government was agreed, providing
a strong covenant and resilient income of GBP71,424 per annum on a
five year term, and a small restaurant chain has taken a 15 year
lease without a break at GBP50,000 per annum. A further unit was
leased to a sports bar operator the day after the Company's
financial year end.
A pizza operator has signed an agreement to lease a unit at Sol
Northampton for 15 years at a rental of GBP22,000 per annum.
While these two assets have unsurprisingly been impacted by the
government enforced lockdown, they have continued to contribute
strong cash flow from good covenants. The current expectation is
that the UK's leisure investment market will recover as hospitality
returns to normal and international travel continues to be
restricted. As the portfolio is refocused towards the office and
industrial sectors, exit plans will be implemented for these assets
and the capital recycled.
The ongoing disposal strategy, focused on non-core properties,
largely where the Company's business plan has been concluded, has
continued with the sales at a premium to book value of Harbour
Court in Portsmouth and 124-126 Upper Bar Street, Southampton for a
total of GBP2.45 million.
At least a further 15 properties with an aggregate value in
excess of GBP30 million have been identified for disposal during
the course of this financial year. Since the Company listed in
2013, 15 non-core properties with a value greater than GBP1 million
have been sold, all of which were completed at or in excess of book
value, delivering significant shareholder value and further
improving the portfolio quality and income profile.
Neil Sinclair, Chief Executive of Palace Capital commented: "The
last 12 months have no doubt been the most testing of the Company's
history, as they have been for many businesses. Despite the
constraints, we will have reached a significant milestone with the
imminent completion of Hudson Quarter and our proactive asset
management has resulted in continued strong rental collections,
enabling us to maintain our dividend payments uninterrupted since
July last year."
For further information please contact:
PALACE CAPITAL PLC
Neil Sinclair, Chief Executive
Stephen Silvester, Finance Director
Tel. +44 (0)20 3301 8331
Broker
Numis Securities
Heraclis Economides / George Fry
Tel: +44 (0)20 7260 1000
Broker
Arden Partners plc
Corporate Finance: Paul Shackleton / Daniel Gee-Summons
Corporate Broking: James Reed-Daunter
Tel: +44 (0)207 614 5900
Financial PR
FTI Consulting
Claire Turvey / Methuselah Tanyanyiwa
Tel: +44 (0)20 3727 1000
palacecapital@fticonsulting.com
The information contained in this announcement is deemed by the
Company to constitute inside information for the purposes of
Article 7 of the Market Abuse Regulation (EU) No. 596/2014
About Palace Capital plc
Palace Capital plc (LSE: PCA) is a UK REIT that has a GBP281.6
million diversified portfolio of UK regional commercial property.
The Company maintains a disciplined investment strategy focused on
towns and cities outside of London that are characterised by
thriving local economies and strengthening fundamentals. Within
those locations the highly experienced management team select
assets that provide opportunities to drive both capital value and
long-term rental income through tailored active asset management
programmes ultimately delivering attractive shareholder
returns.
www.palacecapitalplc.com
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