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 of London, has contractually agreed the surrender of the occupational lease at Priory House, Gooch Street North, in Birmingham.
The tenant, Forensic Archive Ltd, has agreed to surrender its lease, which runs to December 2027 at a rent of £322,000 per annum, and to pay effectively all rent due to expiry, totalling £2.85 million. The contract for surrender will complete on 31 May 2019, with the tenant continuing to pay all outgoings until then. The Company will continue to be liable for empty rates and insurance.
Forensic Archive Ltd vacated the building in 2012 and it has remained unoccupied since then. The lease surrender will allow Palace Capital to move forward with a business plan for the property, with all options to maximise shareholder value currently being assessed.
Neil Sinclair, Chief Executive of Palace Capital, commented:
“This is another example of our team's keen asset management skills. To have secured vacant possession and received all rents due up front puts us in a strong position to be able to fully evaluate our options for this property, which include a potential refurbishment or redevelopment in conjunction with the freeholder, or alternatively the sale of our leasehold interest. The transaction also further boosts our cash balance giving us more flexibility in terms of investment opportunities.”
Palace Capital acquired the leasehold of the 63,000 sq ft property, held until December 2027 at a rental of £100 per annum, from Quintain in October 2013 as part of the Sequel Portfolio. As at 30 September 2018, the Company's interest in Priory House was valued at £2.2million.