Palace Capital's (PCA) success at buying distressed commercial property assets outside London continues to pay off nicely. Adjusted pre-tax profits in the year to March 2015 rose more than threefold to £4.6m, and three acquisitions made during the year helped to lift net asset value by 11 per cent to 396p a share.
And after the year-end the group announced the acquisition of O&H Northampton, the owner of Sol Central, a mixed-use leisure scheme in Northampton. The site has two key tenants; a 10-screen Vue Cinema and a 151-bed Ibis Hotel. The purchase price will be around £20.7m, and will be financed through a conditional placing of 5.55m shares at 380p a share, a modest 3.5 per cent discount to the share price at the time, and designed to raise £20m. Further firepower comes from an £11.4m loan from Santander UK.
The group continues to exploit its business model, which concentrates on acquiring properties with early lease expiries, termination clauses or vacant possession. Notable sites include a 103,000 sq ft office building adjacent to York railway station, where the group is close to reaching agreement with the local authority for a major refurbishment to include quality office space and residential use.
Gearing remains relatively modest at 31 per cent, and a year-end loan-to-value ratio of 35 per cent should show an improvement when including the Sol Central site. Palace has also increased its final dividend to give a 13p-a-share payout for the year.
Analysts at Arden Partners are forecasting adjusted pre-tax profits for the year to March 2016 of £6.6m and a dividend of 14p a share.
