Palace Capital Plc - Interim Results for the 6 months ended 30 September 2018
· Joined FTSE SmallCap and FTSE All-Share Index in May 2018 following the premium listing on the Main Market in March 2018
· EPRA NAV per share up 1.4% to 421p (Mar-18: 415p)
· Total accounting return for the period of 4.0% (NAV growth plus dividends paid)
· Portfolio valuation £283.3m, up 2.4% from 31 March 2018 (Mar-18: £276.7m)
· Gross rental income £9.2m, up 29.0% (Sep-17: £7.1m)
· IFRS Profit after Tax of £7.3m, up 67.1% (Sep-17: £4.4m)
· Quarterly Dividends maintained at 4.75p per quarter
· Adjusted EPS of 8.0p, 0.84x covering dividends of 9.5p for the 6 months (uncovered due to increased equity base following £70m raise in October 2017 and patient strategy on acquisitions)
· Net debt £84.0m, maintaining conservative net LTV of 30.3% (Mar-18: 29.9%)
· Average cost of debt 3.5% with 70% fixed (Mar-18: 3.4% and 70% fixed)
· Total property return of 5.3%, outperforming the MSCI IPD Quarterly Benchmark of 3.3%
· Like-for-like valuation increase of 1.7%, driven by industrial and office sectors
· Annualised contracted rental income £17.4m per annum with significant reversionary potential (ERV: £21.1m per annum)
· Demolition due to be completed next month of 2-acre Hudson Quarter site in York, ready for construction to start in first quarter of 2019
· One disposal for £0.95m, 30.1% above 31 March 2018 book valuation
· 22 lease events in the period across 140,000 sq ft 9% ahead of ERV
· Overall EPRA occupancy remains high at 88% (Mar-18: 90%) to a sustainable tenant base
· WAULT of 5.5 years to break and 7.3 years to expiry
Neil Sinclair, CEO of Palace Capital, said:
"Today's results are further evidence of the continued success of our focus on total returns, driving both income and capital growth.
"Following a busy 12 months to 31 March 2018, where we added significantly to our portfolio with the £68 million RT Warren portfolio acquisition, this period has very much been one of consolidation. We have been actively assessing the investment market, but remain resolute in our adherence to our investment strategy and have found it difficult to find value, where an appropriate return can be delivered to our shareholders, in the current market. However, in these somewhat uncertain times we believe there will be opportunities over the coming six months and, with a strong balance sheet, we are well positioned to act when the right opportunity arises."
Stanley Davis, Chairman of Palace Capital, said:
"I am very pleased to report that the Company is delivering increasing growth both in income and capital value. While our EPRA NAV per share was diluted somewhat last year with the successful £70 million equity raise, notwithstanding this we have virtually doubled our NAV since listing five years ago and we have outperformed the sector over that period on a total accounting return basis of 128%.
The acquisition of the RT Warren portfolio will in due course be earnings and value enhancing for the company and, with momentum building in our asset management progress, the signs of this are beginning to show. Our strategy of selectively investing in the best towns and cities in the UK outside of London is delivering and with a positive outlook for regional fundamentals, we believe we are well positioned for the year ahead."