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Palace Capital

Income and NAV growth in H1

Update | Property | 04 Dec 2017

Palace Capital has announced its interim results for the six months ended 30 September 2017. These show good progress in income, earnings, and NAV. The interim dividend had been previously announced, showing growth of 5.6% to 9.5p per share. The significant acquisition of the RT Warren portfolio and accompanying capital increase came after the period under review and is not reflected in the results. Our forecasts reflect the near-term dilution from the acquisition but not the upside from asset management, due to uncertainty as to the timing and impact. Despite that, Palace offers a highly attractive yield and discount to NAV, while the increased market capitalisation and intention to seek a Main Market listing are likely to broaden Palace’s appeal to a wider investor base.

Palace Capital

A year of significant development and growth

Update | Property | 12 Jun 2018

The year ended 31 March 2018 was one of significant development and growth for Palace, including the GBP 68m acquisition of RT Warren, its largest acquisition to date, a GBP 70m capital raise, and a move to trading on the Main Market of the LSE. The shares will join the FTSE Small Cap Index and FTSE All Share Index on 18 June. The portfolio, enlarged by the RT Warren acquisition, offers significant asset management opportunities, while management seeks further accretive acquisitions, neither of which is reflected in our estimates. The shares offer an attractive yield and trade at a significant discount to NAV.

Palace Capital

Continuing to move ahead

Outlook | Property | 21 May 2018

With its move to the Main Market of the LSE completed, Palace recently provided an update on trading for the year to March 2018, ahead of preliminary results on 11 June. Management expects to report adjusted earnings (excluding revaluation movements and other one-offs) ahead of market expectations. Looking forward, the portfolio, enlarged by the RT Warren acquisition, offers significant asset management opportunities, while management seeks further accretive acquisitions, neither of which is reflected in our estimates. The shares offer an attractive yield and trade at a significant discount to NAV.

Palace Capital

Executive interview - Palace Capital

Edison TV: | Property | 25 Oct 2017

Palace Capital is an AIM-listed UK commercial property investment company. It is sector-agnostic and seeks opportunities where it can enhance the long-term income and capital value through asset management and strategic capital development in locations outside London. In this interview FD Stephen Silvester discusses Palace's strategy, the strong track record of value creation and the prospects for the most recently completed portfolio acquisition and capital raising. The latter provides significant further opportunities for asset management and scale economies, and lifts the company's market capitalisation above £150m. Palace will now seek a Main Market listing.

Palace Capital

Aiming high with acquisition and placing

Update | Property | 11 Oct 2017

Palace Capital shareholders have approved the significant acquisition of RT Warren, with a mixed use investment portfolio valued at GBP 71.8m, and the issue of shares to fund it. Management has built a strong track record of value creation from previous acquisitions and expects its management of these newly acquired assets to yield similar results. That potential is not reflected in our revised estimates with the effect that earnings and NAV are diluted. Our dividend forecasts remain the same, and fully covered, such that Palace retains a highly attractive yield and discount to NAV. The increased market capitalisation and intention to seek a Main Market listing are likely to broaden Palace’s appeal to a wider investor base.

Palace Capital

Approval granted for Hudson House plans

Flash note | Property | 21 Aug 2017

York City Council has approved Palace's planning application to demolish Hudson House and replace the existing office building with a mixed-use development comprising residential, office and commercial areas. While we have not changed our estimates, pending further information on the costs and timings of the project, the approval removes one risk associated with the asset and may have a positive effect on its next valuation.

Palace Capital

Portfolio growth

Update | Property | 07 Aug 2017

Palace Capital has completed the previously announced GBP 20m acquisition via a corporate deal, more than replacing rental income from disposals made in FY17. The new assets are fully let at a higher yield than our previous estimates. This leads us to raise our forecasts slightly and provides scope for rental and valuation uplifts in future, in line with Palace’s strategy of providing capital growth as well as stable income.

Palace Capital

Income and capital growth beat estimates

Update | Property | 07 Jun 2017

Palace Capital has published strong FY17 results, with rental income of £14.3m feeding through to adjusted EPRA earnings of 22.2p per share (FY16: 18.9p). EPRA NAV of 443p per share was 3.5% ahead of our forecast (431p) and 7% higher than at 31 March 2016 (414p), driven by asset management initiatives, selective disposals at above book value and modest yield contraction. The regional occupier market is reported to be healthy and we continue to expect Palace's geographic and sector focus, as well as the relatively high yields on the portfolio, to provide some protection from macroeconomic headwinds, including the effects of Brexit, when compared with property in London.

Palace Capital

Net asset value growth

Update | Property | 02 May 2017

Palace Capital (Palace) has released a positive portfolio and trading update detailing disposals made in FY17, significant ongoing projects at ten properties and the possible acquisition of a fully let office building for c £20m, which would more than replace rents at properties sold in the year. These developments demonstrate Palace's ability to add shareholder value through active management and to recycle capital efficiently. We have revised our estimates and note that management expects the March 2017 NAV to beat market expectations.

Palace Capital

Another NAV-accretive disposal

Update | Property | 14 Mar 2017

Palace continues to demonstrate its ability to grow NAV per share through its strategic recycling of assets. The disposal of a property in Maldon has realised value created through recent asset management initiatives. As with two other recent sales, this is in line with the company's strategy to increase shareholder value through active management of the investment portfolio. We have adjusted our forecasts for the £1.56m gain in value and, although we have not assumed any additional acquisitions, would expect Palace to reinvest the proceeds in other regional property assets at attractive yields and with further scope for capital gains.

Palace Capital

NAV-accretive disposals

Update | Property | 28 Feb 2017

Palace Capital (Palace) has announced the disposals of two properties: one in Leeds and one in Stockport. The rationale for each is clear and in line with the company’s strategy to deliver shareholder value through capital and income growth. The disposals, totalling GBP 3.7m, will crystallise value from active asset management, free capital to be recycled, increase the portfolio’s average unexpired lease term to first break and reduce void costs. We have adjusted our forecasts accordingly and expect Palace will reinvest the proceeds in other regional property assets in due course.

Palace Capital

Income and capital growth outside London

Initiation | Property | 31 Jan 2017

Palace Capital (Palace) invests in commercial real estate outside London, mainly through corporate acquisitions. Palace has more capital flexibility to reinvest in its portfolio than many REITs and has successfully provided capital growth plus a comparable yield by recycling capital and improving its properties through active asset management. Palace selects properties in good locations near public transport, typically with scope for physical improvement, possibly including redevelopment, change of use or active management. In this way it gains access to higher yields than are available in London, while providing tenants with good accommodation at reasonable rents, and investors with sustainable income and value growth.