At first glance, Palace Capital (PCA) delivered an uninspiring first-half performance, but a closer look reveals pretty good progress from the regional commercial property developer. Despite the dilutive effect of a share placing, adjusted net asset value grew by 9 per cent to 404p.
The group's cautious approach to acquiring new assets meant that there were just three acquisitions in the first half. And while gross debt was higher, a £2.3m valuation uplift - albeit down from £7.29m a year earlier - helped to keep the loan-to-value ratio steady at just 23 per cent. In addition, a £20m loan facility was renegotiated at 2.45 per cent, down from 3.75 per cent previously, saving £0.26m in interest costs.
Planning for 82 apartments and 37,000 sq ft at Hudson House in York has been submitted, with consent expected in the first quarter of next year, while the surrender of the lease by Gala Casinos on Sol Central in Northampton brought in £3m and £0.8m in lieu of dilapidations. Initial proposals suggest changing the site to accommodate new restaurant units. The lease surrender helped to boost net property income from £3.0m to £7.5m.
Analysts at Arden Partners are forecasting adjusted pre-tax profits for the year to March 2016 of £5.5m, from £4.6m in FY2015.
| PALACE CAPITAL (PCA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 370p | MARKET VALUE: | £95m | |
| TOUCH: | 360-380p | 12-MONTH HIGH: | 398p | LOW: 325p |
| DIVIDEND YIELD: | 3.8% | DEVELOPMENT PROP: | nil | |
| DISCOUNT TO NAV: | 9% | |||
| INVESTMENT PROP | £140m | NET DEBT: | 30% | |
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 374 | 8.4 | 60.5 | 6 |
| 2015 | 407 | 7.6 | 30.6 | 7 |
| % change | +9 | -10 | -49 | +17 |
Ex-div: 3 Dec Payment: 30 Dec | ||||
