Join our community of smart investors

Buy recovery play Palace at a deep discount

Buy into the ongoing recovery in regional property with Palace Capital while its shares trade at a deep discount to book value
July 3, 2014

If it's value and recovery potential you're after, look no further than regional commercial property group Palace Capital (PCA). The shares trade at a deep discount to book value, boast an attractive 4 per cent forecast dividend yield almost twice covered by earnings, and offer potential upside from both a recovering regional property market and active management of the group's expanding portfolio.

IC TIP: Buy at 300p
Tip style
Value
Risk rating
Medium
Timescale
Long Term
Bull points
  • Deep discount to book value
  • Improving regional property market
  • Attractive yield
  • In talks over another acquisition
Bear points
  • Challenging property portfolio
  • Thinly traded

"We think we've got in early," says Neil Sinclair, Palace's 70-year-old chief executive officer with nearly 50 years' experience in the property sector. He is referring to the company's transformational £39m acquisition in October of a portfolio of mixed-use commercial property from Quintain Estates (QED), which sold the non-core assets to focus on the London market. "We took the view that London [prices] had grown quite a lot since 2009, but that the regions really hadn't grown at all," Mr Sinclair told us. "This is only the beginning of the regional upturn, which started last year."

This is subscriber only content
Start your trial to keep reading
PRINT AND DIGITAL trial

Get 12 weeks for £12
  • Essential access to the website and app
  • Magazine delivered every week
  • Investment ideas, tools and analysis
Have an account? Sign in