Palace Capital Plc - Disposal of Birmingham Asset
PALACE CAPITAL PLC
("Palace Capital" or the "Company")
PALACE CAPITAL DISPOSES OF BIRMINGHAM ASSET AT 25% ABOVE BOOK VALUE
Palace Capital (LSE: PCA) the Main Market listed real estate investment company that has a diversified portfolio of UK commercial real estate in carefully selected locations outside London, has surrendered its short leasehold interest at Priory House, Gooch Street North, Digbeth, Birmingham for a nominal sum of £25,000, saving the Company approximately £170,000 per annum.
The Company acquired the leasehold interest of this 63,000 sq ft office building as part of the Sequel Portfolio acquisition in October 2013 with Palace Capital paying £100 per annum in rent until December 2027. Priory House was let to Forensic Archive Ltd ("Forensic") for the same lease term at a rental of £260,000 per annum exclusive increasing on review to £322,000 per annum in December 2016.
The Company announced on 7 May 2019 that it had accepted the surrender of the lease held by Forensic for a payment of £2.85 million.
The Company has received £2.875 million less seven months holding costs of £99,000, therefore it has effectively disposed of its entire interest for £2.78 million which is 25% above the £2.1 million book value as at May 2019.
Neil Sinclair, Chief Executive of Palace Capital commented:
"This is a strong example of our team's asset management skills. On 7 May 2019 a significant sum was received from the tenant but the crucial element was then to dispose of the leasehold interest in this vacant building which was costing the Company, on an annualised basis, approximately £170,000 largely in empty rates, insurance and security. Moreover, by removing 63,000 sq ft of non-core, vacant office space, our portfolio occupancy has increased from 84% to 86%, with the remainder mostly comprising tactical vacancies as we progress our value enhancing Capex strategy."