PALACE CAPITAL PLC
(“Palace Capital” or the “Company”)
Trading update
Palace Capital (LSE:PCA ) the Main Market listed property investment company that has a portfolio of UK commercial real estate in carefully selected locations outside of London with a focus on the office and industrial sectors, provides the following trading update for the 6 months ended 30 September 2021, ahead of its interim results which are expected to be announced on Tuesday 16 November 2021.
Highlights:
- 97% of rents collected for the June quarter, with 84% of rents due for the September quarter collected to the date of this announcement, a higher proportion than at the equivalent stage of the September 2020 quarter
- 29 lease events, including 9 new lettings, concluded in the period delivering an additional £0.6 million of annual rent
- A further 28 apartments at Hudson Quarter, York sold at a total value of £9.9 million, with an additional 8 currently under offer to the value of £3.0 million
- Terms agreed to let an additional 11,280 sq ft of new office space at Hudson Quarter
- £26.5 million development facility from Barclays Bank for Hudson Quarter reduced to £1.6 million and expected to be fully repaid next month, ahead of schedule
- £30 million disposal strategy on track with sales already completed or exchanged to the value of £12 million
- 1,592,500 shares in Circle Property plc sold at 200p per share, delivering an 8.6% total return
- Cash reserves of £13.7 million as at 30 September, with a further £5.0 million available from the revolving credit facility
- Loan to value of c36% as at 30 September and on a downward trajectory
Rent collection levels remain high
Rent collection has remained very strong with 97% of rents collected for the June quarter and 84.0% of rents due for the September quarter received to the date of this announcement, 8.2% is subject to agreed payment plans or is due monthly with 7.8% still outstanding. Collection rates are now ahead of this time last year, demonstrating the quality of our tenants, and asset management capabilities thereby underpinning our dividends.
29 lease events, delivering an additional £0.6 million of annual rent, were concluded in the period, comprising 9 new lettings, 10 lease renewals and 10 rent reviews.
Hudson Quarter sales progression
Following completion of the Hudson Quarter development in April 2021, 61 of the 127 apartments have now been sold to the value of £19.2m, whilst 8 are under offer at an aggregate value of £3.0 million. 28 apartments have been sold since the announcement of the Company's Full Year results on 8 June 2021, at a total value of £9.9 million. We are seeing increasing interest in the 58 remaining units.
Successful completion on half of the 8 apartments (by value) under offer at Hudson Quarter should enable us to repay in full the associated Barclays Bank Development Facility next month.
Terms have been agreed for the top two floors of the development's stand-alone office building, HQ at Hudson Quarter, comprising 11,280 sq ft. Completion of the letting is targeted by the calendar year end, following which 41% of the 39,000 sq ft of the grade A office space will have been let.
In recent weeks, Hudson Quarter has been recognised with the Gamechanger Award at The Variety Yorkshire Property Awards in Harrogate and the Best Residential Development of the Year for over 50 units at The Yorkshire Insider Property Awards in Leeds.
Strategic disposal programme on track
As announced on 30 September, the Company's entire 5.58% stake in Circle Property plc was sold, delivering an 8.6% total return.
Our disposal programme, targeting the sale of £30 million of non-core properties, is on track with £10.3 million of sales already completed and 1 at £1.7m exchanged. Proceeds will be recycled into accretive opportunities in line with our strategy.
Neil Sinclair, Chief Executive of Palace Capital commented:
“The first half of the year has been yet another busy period for Palace Capital with progress achieved across the portfolio. With rent collections continuing to be strong and sales at Hudson Quarter progressing well alongside our disposal programme, we are building up our cash reserves, as we continue to monitor the market for opportunities to recycle capital in line with our regional strategy focusing on the office and industrial sectors.”