Palace Capital (PCA) specialises in acquiring and adding value to commercial property outside London, and the year to March delivered another big uplift in the portfolio. Through a combination of acquisitions totalling £66m and a higher valuation, the portfolio jumped 69 per cent to £174.5m.
The fall in headline profits reflected a smaller valuation uplift than the previous year but, crucially, net rental income leapt by three-quarters to just under £13m. The latest acquisition is the Broad Street Plaza in Halifax for £24m. And having replaced an existing short-term facility with a new £15.2m loan fixed at 3.5 per cent, the current 14.5 per cent return on equity will rise to 16 per cent in 2017 when fixed rent increases take place. This will lift the net initial yield from 7.25 per cent to over 8 per cent by August 2017, although various initiatives are in place to increase this still further.
Current developments include the Hudson House site in York. This is a 103,000 sq ft office building directly opposite York railway station, and the local council has announced an initiative to see surplus railway land redeveloped. A resolution to grant consent to demolish the property and build 116 apartments and 35,000 sq ft of office space was secured earlier this year.
Analysts at Arden Partners are forecasting adjusted pre-tax profit of £6.8m for the year to March 2017 (from 5.5m in FY2016).
| PALACE CAPITAL (PCA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 365p | MARKET VALUE: | £94m | |
| TOUCH: | 355-375p | 12-MONTH HIGH: | 398p | LOW: 328p |
| DIVIDEND YIELD: | 4.4% | TRADING PROPERTIES: | nil | |
| DISCOUNT TO NAV: | 12% | |||
| INVESTMENT PROP: | £175m | NET DEBT: | 61% | |
| Year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014* | 357 | 21.2 | 432 | 4.5 |
| 2015 | 396 | 13.9 | 82.4 | 13 |
| 2016 | 414 | 11.8 | 43.9 | 16 |
| % change | +5 | -16 | -47 | +23 |
Ex-div: 7 Jul Payment: 29 Jul *14-month period | ||||
